Findings Of Fact The Petitioner is an agency of the State of Florida charged with licensing and regulating the practice of real estate salesmen and brokers by the various provisions of Chapter 475, Florida Statutes. Included in those duties and enforcement authorities is the duty to investigate conduct by realtors allegedly in violation of Chapter 475, and related rules, and prosecuting administrative proceedings filed as a result of such investigations in order to seek imposition of disciplinary measures against the licensure status of miscreant realtors. The Respondents, at all times pertinent hereto, were licensed real estate brokers or salesmen in the State of Florida, having been issued the license numbers depicted in the Administrative Complaint. Respondent Hurbanis last was issued a license as a broker/salesman located at Sanibel Realty, Inc., Sanibel, Florida. Respondent Pauline Seely was last licensed as a broker/salesman located at VIP Realty Group, Sanibel, Florida. Respondent John M. Parks was licensed as a broker/salesman, last issued for a location at The Realty Shoppe of Lee County in Fort Myers, Florida. Respondent Jean Maxwell was licensed as a broker/salesman located at Suite 205, 1619 Periwinkle Way, Sanibel, Florida. At all times pertinent hereto, the Respondents were licensed and operating in the real estate brokerage business in the employ of VIP Realty Group, Inc., a licensed corporate real estate broker. Concerning the charges in Count I, one Eric Rosen, a real estate salesman employed by VIP Realty Group, Inc., the same firm employing Respondent Pauline P. Seely, obtained Nicholas Fontana and John Priebbe as purchasers of a certain piece of property by sales contract which was owned by Clarence Liebscher and Joseph Kubosch. The sales contract was entered into June 3, 1983, and reflected a purchase price of $315,000, including the sale of certain furniture and other personal property. The complaint alleges that former Respondent Rosen and Respondent Hurbanis, together with the purchasers and sellers, conspired to enter into a second bogus sales contract (so called "double contracting") substantially similar to the first contract, except the sales price was shown to be $350,000 and the terms concerning sale of furniture and other personalty was deleted. It is alleged that this contract was prepared by Rosen under the direction and approval of Respondent Hurbanis for the purpose of obtaining a mortgage loan from a lending institution in an amount greater than the normal percentage of the sales price that the banking laws and policies of such lenders provide as the maximum amount of mortgage financing which can be obtained on a given piece of property. It is alleged that these Respondents were thus attempting to obtain a loan commitment in an amount greater than could have been obtained had the actual sales price of $315,000 been revealed to the lender. The bogus contract showing the $350,000 sales price was allegedly submitted to the lender, AmeriFirst Savings and Loan Association, without the Respondents notifying AmeriFirst that the actual sales price was $315,000. Although witness Rosen for the Petitioner, testified that he believed the contracts involved in this count had been discussed with Mr. Hurbanis he could not say for certain and could not recall the conversation. In fact, another Petitioner witness, Brandy Vallois, stated several times that Mr. Hurbanis was on vacation during the time that the contract was negotiated, executed and submitted to the lender and that, although Respondent Hurbanis was the office manager at VIP Realty Group at the time, others were serving in his stead at the time he was on vacation (the time of the incident alleged in Count I). Although the Department elicited testimony to the effect that seminars had been given where the Respondent, as well as other realtors, had discussed "creative financing," there was no testimony or other evidence that such lectures by the Respondent or others advocated a policy of "double contracting" or in effect deluding lenders into lending more money for real estate purchases than they normally would have if true purchase prices were disclosed. In any event, both the seller and buyer were aware of the situation concerning this transaction and the lender was never deceived or misled because in fact the loan never closed and no funds were disbursed. There was no evidence that the true particulars of this transaction were not disclosed to the lender. Count II Count II concerns a transaction in which Respondent John Parks was the listing and selling salesman and Respondent Hurbanis was the office manager with the same real estate firm. Allegedly, Respondent Hurbanis directed and approved Respondent Parks' preparation of two sales contracts on or about December 16, 1982, calling for the purchase and sale of certain real estate by Mike Volker from Dr. Robert Pascotto and Gaspar Turanna. Both contracts were similar and pertained to the same parcel of property, but one reflected an actual sales price of $149,000, whereas the allegedly bogus, second contract reflected a total sales price of $157,000. It is thus alleged that these two Respondents conspired with the purchasers and sellers to enter into the higher priced, bogus contract for the purpose of obtaining a mortgage loan commitment principal amount at a greater percentage of the sales price than could have been obtained if the actual sales price had been disclosed to the lender. It is alleged that these two Respondents submitted the bogus contract reflecting the $157,000 false sales price together with loan application documents to First Federal Savings and Loan Association of Fort Myers without informing that institution that the actual sales price was $149,000. No competent, substantial evidence was offered, however, to show that Respondent Parks was anything other than the listing salesman. It was not established that he drafted the contract nor that he submitted either contract to the lender. Concerning Respondent Hurbanis, although it was shown that he was the office manager at the time of the incident, it was not established that he directed or approved the drafting of either contract, directed or approved the submission of either contract to the named lender nor that he was involved in the negotiation or closing stage of the transaction in any way. In fact, although the two contracts show differing purchase prices, neither contract depicts any different amount to come from mortgage financing by First Federal. In fact, both contracts reflect that a mortgage would be obtained from First Federal in the amount of $125,600. Nothing any different was disclosed to First Federal. The difference comes in a differing deposit amount held in escrow by VIP Realty Group, Inc., according to the terms of the contract. One contract, that with the lower purchase price, reflects $7,000 in deposit money toward the purchase and the second contract reflects $15,000 deposit money held toward the purchase. This accounts for the $8,000 difference in the amount of the two contracts, but, in any event, the amount to be obtained by mortgage funds from First Federal was the same on each contract. There was no evidence to prove that the deposit amounts depicted on either contract were bogus or other than the result of bona fide arm's length negotiations between the parties. In any event, there was no evidence that First Federal or its lending officers were not aware of any of the particulars in the transaction. There was no showing that that the lender relied on either contract to its detriment. Count III Respondent Pauline Seely, as listing salesman and owner of certain real property, with former Respondent (since dismissed) James O'Neill as selling salesman, and allegedly with Respondent Charles Hurbanis' direction and approval, prepared and obtained execution of two sales contracts on or about December 30, 1982, for the purchase and sale of her real property by Thomas and Sheila Floyd. Both contracts were substantially similar and pertained to the same parcel, but one contract reflected an actual earnest money deposit of $8,660 and a purchase money mortgage in the amount of $24,000, whereas the supposed bogus, second contract reflected a total earnest money deposit of $14,000 and a purchase money mortgage in the principal amount of $18,660. It is alleged that the Respondents then submitted this to the lending institution for the purpose of obtaining a greater percentage of the sales price in mortgage funds than could have been obtained had the actual sales price, terms and conditions been revealed to the lender. In fact, testimony of record and Respondent Seely's Exhibit 2 reveals that the lender was furnished all documents with regard to this transaction which revealed to the lender, as the loan officer involved stated in the letter constituting this exhibit, that the buyers and the seller had agreed that the seller would take back a second mortgage in the amount of $24,000 and that a contract addendum existed (which is in evidence) reflecting this second agreement. Thus, AmeriFirst, the lender, did in fact have a copy of the agreement stating that the seller would hold the second mortgage for the above amount and that AmeriFirst was aware of all details concerning the transaction. In point of fact, both contracts in evidence, one of which reflects a purchase money mortgage of $18,660 which the seller would hold and which reflects that $7,000 would be paid in cash to the seller at the time of contracting, and the second contract, are identical as to purchase price. The second contract also shows a purchase price of $125,000, the difference being essentially that the second contract shows the $24,000 purchase money mortgage amount instead of the figure of $18,660 shown on the first contract. Both contracts merely call for assumption of a mortgage already made in favor of AmeriFirst in the amount of $92,340. There is no evidence that any additional funds are being sought from AmeriFirst at all. There was no evidence that any action by the Respondents would result in any impairment of the security of AmeriFirst's first mortgage lien on the premises. The purchase money mortgage referenced in the testimony and evidence, regardless of its ultimate amount as that relates to the manner in which the total purchase price would be paid the seller, would, in all events, be a subordinate mortgage lien and it is difficult to see how AmeriFirst could rely on either contract to its detriment, even had it not known of one of the contracts. They both represented a purchase price of $125,000 and merely varied as to ways the purchase price would be paid, over and above the $92,340 outstanding first mortgage loan (which was to be assumed). In all events, however, AmeriFirst and its lending officer was fully aware of all details of this transaction and had no objection to the manner in which the transaction was to be closed and disbursements made, nor to the conditions of the assumption of its mortgage. The so called "double contract" that Ms. Seely is alleged to have entered into was shown thus to be an innocent modification of terms of the original sales contract. No wrongdoing or concealment was shown to have been committed by Respondent or any person who participated in the sale of Pauline Seely's property to Thomas and Sheila Floyd. Count V Concerning Count V, it is alleged that Respondents Seely, Parks and Hurbanis obtained two sales contracts on or about January 24, 1983, for the purchase and sale of certain real property by Computer Maintenance Corporation, purchaser, from James and Loretta Cottrell as sellers. Both contracts pertain to the same piece of real property. Both contracts showed a "purchase price" item of $310,000. One contract, however, actually reflected a total price of $344,000, arrived at by combining a $279,000 "90 percent mortgage loan" with a $60,000 purchase money mortgage and a $5,000 cash deposit. This contract contains a notation at the bottom that the "seller agrees that a separate contract for purchase will be given to the Savings and Loan for loan approval." The other contract related to this sale lists a total purchase price of $310,000 only, with a $5,000 deposit noted with no purchase money mortgage being shown, rather there is shown, in addition to the $279,000 90 percent mortgage loan, a balance of $26,000 cash being paid to the seller. This contractual situation is somewhat mysterious and it may indeed be that an attempt was made to conceal the $60,000 purchase money mortgage on the first contract and make it appear to the lender that the purchaser was actually putting up an additional $26,000 in cash at the closing as an inducement to obtain the principal first mortgage of $279,000 from Naples Federal Savings and Loan, AmeriFirst or some other lender. In point of fact, however, the witness, Ms. Heavener, from AmeriFirst indicated that the bank did not act upon the advice contained on the face of the contract, but rather loaned a percentage of their own independent appraisal value and thus did not act to its detriment upon any information contained on the face of either contract. She indicated that that lender was fully informed about all aspects of this transaction in any event. The evidence does not reflect that Mr. Hurbanis nor Ms. Seely had any part in drafting the contract nor presenting it to the lender. Seely's only involvement was as listing agent, that is, the realtor who obtained the listing from the sellers. There is no evidence to indicate that she participated in any fashion in the sale of the property, the negotiations, nor the drafting or presenting of the contracts. No evidence was offered to show for what purpose, whether illicit or innocent, the two different contracts were drafted. In any event, Ms. Seely was not involved in the preparation of the contracts. Mr. Hurbanis was not connected by any competent, substantial evidence, with any activity concerning the drafting of the contracts nor the presenting of them to the lender. A representative of the lending institution testified that she did not recall any discussions at all with Mr. Hurbanis concerning this transaction and upon cross-examination clearly indicated that the lending institution had protected itself against a "double contract" situation by reliance upon its own independent appraisal in making its lending decision, rather than the contract or contracts themselves. Count VI In this count, it is alleged that Hurbanis obtained a sales contract on January 22, 1983, between T N T Partners, a general partnership as seller and Christopher Smith as purchaser. The pertinent terms of the sale were $30,000 total purchase price, $3,000 deposit and $4,500 cash to be allegedly furnished at closing, together with a $22,500 new note and mortgage on the property. It is alleged, in essence, that Respondent Hurbanis falsely represented to Naples Federal Savings and Loan Association that the purchaser would pay $4,500 cash at closing. The transaction closed on April 15, 1983, but instead of the cash, the seller took back a purchase money mortgage in the amount of $4,500. Thus, the issue here is whether the $4,500 mortgage was properly disclosed to the lender. The evidence is silent as to any connection of Mr. Hurbanis with this transaction. In any event, however, it would appear from the face of the contract itself that the lending institution could not have been deceived by the parties to the contract nor any realtor involved, since the contract itself does not require cash in the amount of $4,500 but rather requires "cash or equivalent at closing." Thus, even if there had been a participation by Respondent Hurbanis in this transaction, which was not proven, it is impossible to detect any concealment or deception since the words "or equivalent" would clearly not preclude the use of a purchase money mortgage in the amount of $4,500 as consideration for this portion of the purchase price, rather than actual cash. Indeed, any other thing of equivalent value could have been used as consideration in this particular without violating the terms of the contract, of which the lender clearly had notice.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the candor and demeanor of the witnesses and the evidence of record, it is, therefore RECOMMENDED that the Administrative Complaint be dismissed in its entirety as to all Respondents. DONE and ORDERED this 7th day of October, 1987, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of October, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-0140 Petitioner: Petitioner filed no Proposed Findings of Fact and Conclusions of Law. Respondent Hurbanis: The Proposed Findings of Fact by Respondent Hurbanis are subsumed in those made in this Recommended Order to the extent that that Respondent's submissions constitute bona fide Proposed Findings of Fact. In the main, the "Findings of Fact" in the Post-Hearing Submission by this Respondent constitute largely recitations of evidence and testimony, discussion of the weight thereof, inextricably intermingled with Proposed Findings of Fact which cannot be separately ruled upon because of multiple factual findings, legal argument and evidence discussion intertwined in the same paragraph. Respondents Maxwell's and Seely's Proposed Findings of Fact: 1-12. Accepted. COPIES FURNISHED: James H. Gillis, Esquire Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 John P. Milligan, Jr., Esquire Suite 201, Royal Palm Square 1400 Colonial Boulevard Fort Myers, Florida 33907 Kenneth G. Oertel, Esquire Suite C 2700 Blair Stone Road Tallahassee, Florida 32301 Johnny W. Parks c/o The Realty Shoppe of Lee County 12635 Cleveland Avenue Fort Myers, Florida 33907 Tom Gallagher, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 William O'Neil, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Harold Huff, Executive Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
The Issue The issues in this case are whether Respondent committed the violations alleged in the Administrative Complaint, and, if so, what discipline should be imposed.
Findings Of Fact Admitted Facts Per Pre-Hearing Stipulation Petitioner is the state agency charged with regulating the practice of contracting pursuant to section 20.165 and chapters 455 and 489, Florida Statutes. Respondent is a state-certified building contractor in the State of Florida, having been issued license No. CBC 039025. Respondent was the licensed primary qualifying agent for Thom Colan Construction, Inc., from June 10, 2004, to September 4, 2008. On January 10, 2006, Thom Colan Construction, Inc., entered into a contract with Kathleen and Robert Masten to construct a house and pool on property located at 547 Bradenton Road, Venice, Florida (the project). The contract price for the project was $260,000.00. The project was completed with the issuance of a certificate of occupancy. Additional Findings of Fact Based on the weight and credibility of the testimony and evidence presented, the following additional facts are found: The contract between Respondent and the Mastens was a fixed-price contract. Although the contract price was $260,000.00, the Mastens paid a total of $320.394.19 for the project. The payments were made by the following methods: $49,968.58 was paid by check from the Mastens directly to Respondent; Respondent obtained an additional $222,320.71 in total bank draws, pursuant to a construction loan that authorized Respondent to draw funds directly from the bank for the project; and the remaining $48,104.90 was paid by check or credit card by the Mastens directly to subcontractors for labor and materials provided for the project. Thus, the Mastens paid $60,394.19 more than the contract price. At issue, and the subject of much dispute at the final hearing, was why the project exceeded the contract price by over $60,000.00. Respondent asserted that the entire amount by which the contract price was exceeded was attributable either to changes to the contract terms required by the Mastens or to circumstances beyond Respondent's control, such as price increases by subcontractors.2/ It was difficult to establish the causes for the price increases, in part, because the parties to the contract did not adhere to the formalities called for by the contract. For example, while both witnesses acknowledged that the Mastens requested changes as the project progressed, there was substantial disagreement about the extent of these changes and the cost differential. Unfortunately, there were no written change orders as required by the contract. Written change orders would have documented exactly what was changed and what cost was attributable to the change. Another problematic area in attempting to pinpoint why the contract price was exceeded was that there was no clear proof of the contract specifications detailing the design features of the house and pool. The written contract described a process of developing "plans" with "specifications" as to design elements. Initially, the plans would be preliminary, with items designated for buyer selections. The contract contemplated that the buyer would make these selections, which would become part of the plans, and the plans would then be considered final. Thus, certain buyer selections would be part of the contract. Thereafter, if the buyer wanted to change the final plans and specifications, the buyer would be responsible for the increased costs. No evidence was presented as to what the plans provided with respect to design features and which of those design features provided for buyer selections. Neither the preliminary plans and specifications for the Masten contract, nor the final plans and specifications after buyer selections, were offered into evidence, and it is unclear whether the process contemplated by the written contract was even followed. Nonetheless, Mrs. Masten admitted that she requested certain changes, which she acknowledged were not contemplated by the contract and were more costly than what the contract contemplated. For example, Mrs. Masten acknowledged that she requested an upgrade in kitchen appliances, increasing the cost by $2,703.55. She also acknowledged that she requested an upgrade in bathroom fixtures, but she was unsure of the cost attributable to the upgrade. Respondent testified that the total cost increase for upgrades requested by Mrs. Masten to plumbing and fixtures was $4,745.42. Mrs. Masten thought that amount was too high; it included changes claimed by Respondent, but disputed by Mrs. Masten, such as an upgrade to a hot tub that Mrs. Masten said she did not want but, apparently, was installed. The circumstances surrounding other apparent changes were in dispute. For example, an expedition, including Mrs. Masten and Respondent, trekked to a tile outlet store in Fort Meyers to pick out tile to use in the shower stall and floors. For the shower stall, Respondent testified that he "insisted" on travertine; Mrs. Masten apparently agreed, but said that she felt pressured to do so. The purchase was made, and Respondent returned to haul the travertine and other tile for the flooring on a trailer back to Venice. At some point, Mrs. Masten changed her mind about the travertine after being told by a competitor that travertine was a high-maintenance bad choice. Respondent claimed it was too late to return the tile, which he valued at $750.00, and so he testified that he threw it away. Mrs. Masten then selected different tile from the competitor at a price that was $1,292.16 higher than the travertine. The circumstances surrounding the selection of cabinetry were also in dispute. Respondent testified that he planned to use Enrique Benitez, a subcontractor who was doing other work in the house, to make the cabinets. Respondent claimed that he had Enrique prepare wood samples with different stains and that Mrs. Masten approved the samples and picked out the stain. At that point, Respondent said he paid Enrique $2,970.00 to begin constructing the cabinets. Mrs. Masten claimed that she never approved any samples, was shown only a rough, long plank of splintered wood that she said was awful and would not approve, and that she did not like any of the work this particular subcontractor was doing throughout the house. At some point, Mrs. Masten impressed upon Respondent that she would not accept these cabinets, and she selected different cabinets at an increased cost of $6,886.00. If Enrique ever built cabinets for the Mastens, he kept them. Another outing was made to select countertops. Mrs. Masten did not like the granite pieces that Respondent had intended to use, and the result was that the cost of the granite countertops selected by Mrs. Masten was $5,000.00 higher. Respondent and Mrs. Masten also could not agree on the extent of requested changes to the plans for flooring or the cost of those changes. Respondent testified that Mrs. Masten changed the mix of tile and carpeting, but Mrs. Masten disagreed. Respondent testified that Mrs. Masten required an upgraded carpet style, and although Mrs. Masten acknowledged that she selected a different carpet style, there was no evidence pinpointing the cost difference of the carpet upgrade. Additionally, Respondent acknowledged that one reason why the total cost for flooring was higher than expected was that Enrique Benitez increased the price to install the tiles from $3,000.00 to $7,500.00. Respondent sought to blame Mrs. Masten for the increased installation price, claiming that Mrs. Masten "fired" Enrique over the cabinet debacle, but Respondent had to rehire Enrique to install the floors and had to pay the increased price to overcome Enrique's hurt feelings. Mrs. Masten denied the claim that she "fired" Enrique, though she acknowledged that she was not happy with his work and that she refused to approve the cabinets Enrique was supposed to build, because the sample was unacceptable. Respondent testified that an additional $3,079.90 was spent for upgraded lighting and fans requested by the Mastens and for other electrical upgrades to accommodate other changes, such as the pool heater and spa tub. The cost to construct the pool increased by $3,700.00. According to Respondent, this increase was due to the cost of adding a pool heater that was not part of the original plans, at the request of the Mastens. Mrs. Masten disputed that this was a change. Respondent testified that there was a $323.00 cost increase because of the Mastens' request for an upgraded water softener. Post-contract changes made by the engineer to relocate the septic tank system necessary to obtain the requisite permits, altered the elevation and slope of certain parts of the property, including the space where the air conditioner would sit. Those changes resulted in the need to add a concrete slab and platform for the air conditioner. This additional cost was $419.25. Also because of the septic system design change, the county imposed additional landscaping requirements in order to obtain a certificate of occupancy. This resulted in an additional $979.05 spent to purchase trees. Respondent testified that permitting fees imposed by the county exceeded the estimated cost by $2,365.63. Respondent attributed the increase to the higher impact fee charged by the county as a condition to obtain a certificate of occupancy because the post-construction value of the house was higher than estimated. In other words, the combination of cost increases and upgrades led to imposition of a higher impact fee. The rest of the difference between the contract price and the total paid by the Mastens was attributable to increases in costs because of the delay in completing the project or increases in prices charged by subcontractors for their labor and materials. These included increases in the price of concrete, plumbing work, framing, insulation, roofing, drywall, hauling trash, installation of flooring, electrical work, equipment rental, and electricity charges. Respondent explained that he obtained "bids" for various components of the project in September 2005, although he did not sign the contract with the Mastens until January 10, 2006. Respondent anticipated that he would start the project that month, but the start was delayed by more than two months because of the septic system permitting difficulties encountered by the project engineer who had been retained by the Mastens. Mr. Colan utilized the estimates he received from others to develop his overall cost estimates for the project, which he used to establish the contract price. There was no allowance built into the cost estimations for inflation, price increases, or contingency reserves. Although Respondent characterized the price estimates he obtained from subcontractors as "bids," they were not bids in the sense of being firm offers to do work or supply material at a specific cost; they were essentially price estimates subject to change. Respondent testified that at least in some cases, he could count on a bid price being "good" for six months and, in some cases, for as long as seven months. However, Respondent did not lock in any of the bid prices by contracting with the subcontractors in September 2005 or in January 2006 when the Masten contract was executed. Thus, Respondent's reliance on the price estimates given to him in September 2005 was not shown to be reasonable. These estimates would have been four months old before Respondent anticipated starting the project and closer to seven months old before the project actually began. Since many of the price estimates were for items that would not be needed for months after the project began (such as bathroom fixtures, appliances, cabinetry, flooring, and lighting), even under the best-case scenario without any delays, Respondent was plainly taking a risk by using September 2005 cost estimates as if they were guaranteed prices in determining the contract price for the Mastens' project. Not surprisingly, many subcontractors were not willing to honor the stale price estimates when Respondent sought to contract with them many months later. Respondent suggested that he should not bear the risk of others' price increases, because they were not within his control. But Respondent controlled how he went about estimating his costs for the project and how he established the fixed price he agreed to in the contract. No credible evidence was presented to establish that the price increases by Respondent's subcontractors were due to such extraordinary market conditions or delays that they could not have been reasonably anticipated and addressed sufficiently through inflation allowances or contingency reserves built into the cost estimations. While Respondent attempted to characterize certain price increases, such as the rise in the price of cement and copper or the increased cost of dirt, as attributable to a "heated up" construction market, which caused unanticipated demand, Respondent's testimony was not credible and was not supported by any independent non-hearsay evidence. Indeed, Respondent admitted that in most cases, he did not shop around before accepting the price increases demanded by his subcontractors. In some cases, he had checked on prices within the two-county area when obtaining the cost estimates in September 2005, and then he assumed that by identifying the lowest price or best supplier in September 2005, there was no need to check around when that supplier demanded a price increase later. In no instance did Respondent check prices outside of his local area. Respondent acknowledged that the total amount spent for engineering and surveying fees exceeded his estimate by $4,177.12. Respondent argued that these fees were beyond his control, because the Mastens had retained the engineer and surveyor before Respondent entered into a contract with the Mastens. However, Respondent included the engineer and surveyor fee expenses in his cost estimates and assumed the responsibility for covering these fees as part of the overall construction of the house and pool within the fixed contract price. No credible evidence established that the fees were unusually high and could not have been anticipated or addressed by appropriate contingency reserves. Respondent attempted to blame many of the price increases on the two-plus month delay in starting the project because of the engineer's need to relocate the septic system to resolve permitting issues. As pointed out above, this delay did not in and of itself cause the problem of price increases by subcontractors unwilling to honor price estimates quoted in September 2005. In any event, Respondent did not testify that the delays were extraordinary and not reasonably anticipated, even if the exact reason for the delays may not have been known. Instead, various delays for various reasons are to be expected, and, indeed, are expressly contemplated throughout the written contract. Notably, in a section called "Price Guarantee," the contract form allowed the parties to specify a month by which construction had to begin or else the builder would have a qualified right to adjust the contract price. Respondent waived that right by specifying "N/A" in the blank where a start-by month could have been named: This Contract price is guaranteed to Buyer only if it is possible for Builder to start construction on or before the month of N/A. If start of construction is delayed beyond this time by Buyer, or due to any ruling or regulation of any governmental authority, or due to any other cause which is not the fault of the Builder, the Contract price may be adjusted to the current list price or to cover any cost increases incurred by Builder. A plausible explanation for Respondent's lack of care in developing reasonable, achievable cost estimates is that Respondent did not consider the fixed-price contract to be a fixed-price contract. Respondent testified that even though the contract on its face is a fixed-price contract, he believed that he had an understanding with the Mastens that the contract was really a "cost-plus" contract. Respondent testified that despite what the contract said, the Mastens had agreed that they would pay whatever the ultimate costs were, even if the prices went up from his estimates, plus an additional $37,000 for Respondent's profit. Respondent testified that the only reason that the contract was written up as a fixed-price contract was to secure the bank loan. That suggestion would be troubling, if true, because the implication is that Respondent was a party to fraud or deception to induce the construction loan. However, there was no credible evidence to support Respondent's attempt to justify recovering full costs, plus full profit, when the fixed price he contracted for proved inadequate. Notwithstanding Mr. Colan's apparent view that there was a secret deal standing behind the written contract, he signed the written contract, is bound by the fixed-price term, and must bear the consequences of his inadequate cost estimations. At some point when the Mastens became concerned about the extent to which they were apparently exceeding the contract price while Respondent was still drawing bank funds from the Mastens' construction loan, Mrs. Masten testified that she told Respondent not to draw any more bank funds. The evidence did not clearly establish whether Respondent violated Mrs. Masten's instructions by withdrawing more bank funds after the instructions were given. The Administrative Complaint had alleged that the Mastens contacted the bank and ordered the bank to make no further disbursements, and that the next day, Respondent attempted to withdraw all remaining funds in the construction loan account. No evidence was presented to substantiate this allegation. Petitioner incurred total costs of $299.36 in the investigation of this matter, excluding costs associated with attorney time.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Construction Industry Licensing Board, finding that Respondent, Thomas Colan, d/b/a Thom Colan Construction, Inc.: Violated section 489.129(1)(g)3. and (1)(m), as charged in Counts Two and Three, and for those violations, imposing a total fine of $3,000.00; Requiring Respondent to pay restitution to the Mastens in the total amount of $30,083.04; Requiring Respondent to pay costs of $299.36; and further Dismissing Count One (based on Petitioner's voluntary dismissal) and Count Four (based on an absence of proof). DONE AND ENTERED this 14th day of April, 2011, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 2011.
Findings Of Fact On July 2nd, 1974, Closet Maid Corporation (CMC) acquired Beechcraft model BCO from Elliott Flying Service under an agreement which was not introduced into evidence at this hearing. Respondent contends that this is a lease agreement with option to purchase at the expiration of sixty (60) months. Exhibit 3 is a transfer of CMC's interest in this aircraft to NOS Corporation. The Notice of Proposed Assessment (Exhibit 1) claims a tax due of $9,633.70, penalties of $481.69, and interest of $1,011.54 or a total tax due of $11,126.93. The accuracy of this sum was not contested. CMC is a corporation the majority of whose stock is owned by Norman Sauer. NOS Corporation was formed to be the transferee of CMC's interest in the airplane and the stock of NOS is wholly owned by Sauer. CMC and Nodorana Farms, another corporation wholly owned by Sauer, entered into agreements with NOS to lease back the aircraft at a guaranteed minimum monthly rental in excess of $8,000.00, which will provide NOS with sufficient revenues to make the monthly payments on the aircraft of $4,214.89 plus operating expenses. Elliott Flying Service is the registered owner of the aircraft. The only documentary evidence presented regarding the agreement between CMC and Elliott Flying Service is Exhibit 3. Exhibit 3 is a Beech Acceptance Corporation, Inc. (BAC) Transfer of Interest Agreement form which states that the "note, conditional sale contract, lease, chattel mortgage, or other security agreement, herein called 'Instrument'", representing the agreement between CMC and Elliott, requires the consent of BAC for its transfer to NOS. At the date shown on Exhibit 3 of August 1st, 1976, Exhibit 3 recites the balance due on the aircraft of $240,842.39 "is payable in forty-seven (47) consecutive monthly installments of $4,214.89 each, first installment payable August 2nd, 1976, and one final installment of $42,742.56." Exhibit 3 further shows BAC to be the assignee of the "instrument" executed between CMC and Elliott. Exhibit 2C is headed NOS CORPORATION and shows monthly aircraft expenses. Included therein is depreciation of $2480.00 and interest expense of $2192.00. Accounting procedures prescribed by AICPA provide that equipment held on long term lease be capitalized. Accordingly, essentially the same accounting procedures would be used whether the aircraft was obtained on lease or conditional sales contract.
The Issue 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.
Findings Of Fact 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.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the administrative complaint be dismissed. DONE and ENTERED this 29th day of November, 1994, in Tallahassee, Florida. STEPHEN F. DEAN 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 29th day of November, 1994. APPENDIX The Petitioner submitted proposed findings which were read and considered. The following states which of the findings were adopted and which were rejected and why: Petitioner's Recommended Order Findings Paragraph 1 Paragraph 2 Paragraph 2 Paragraph 1 Paragraph 3 Paragraph 4 Paragraph 4 Paragraph 9 Paragraph 5,6 Paragraph 8,9,10 Paragraph 7 Rejected as contrary to better evidence, See Paragraph 13 Paragraph 8 Paragraph 15 Paragraph 9 Paragraph 16 COPIES FURNISHED: Steven W. Johnson, Senior Attorney Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32802 Clifford A. Taylor, Esquire 507 East Moody Boulevard Bunnell, Florida 32110 Darlene F. Keller, Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, FL 32802 Jack McRay, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
The Issue Whether Respondent's application of the inflation protection clause of the agreement to purchase real estate, thereby increasing the purchase price, discriminated against Petitioner in violation of the Florida Fair Housing Act (FFHA) and Sections 760.20 through 760.37, Florida Statutes (2004).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing Petitioner's Petition for Relief. DONE AND ENTERED this 24th day of January, 2006, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 2006. COPIES FURNISHED: Denise Crawford, Agency Clerk Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Tyrone Harrison 8412 Peterson Road Odessa, Florida 33556 Cristina A. Equi, Esquire Gray & Robinson, P.A. 301 East Pine Street, Suite 1400 Post Office Box 3068 Orlando, Florida 32802-3068 Cecil Howard, General Counsel Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
Findings Of Fact The Respondent, William C. Lovelace, has been a certified building contractor in the State of Florida since 1984, holding license number CB CO 29103. The Respondent has been a registered roofing contractor in the State of Florida since January, 1989, holding license number RC 0058368. Case No. 91-0390--The Clarks. On or about June 8, 1987, the Respondent, who was doing business as Lovelace Development Enterprises, Inc., at the time, entered into a contract with James and Nedra Clark, then residents of the State of Ohio, for residential contruction on a residential building lot they owned in a subdivision in Safety Harbor in Pinellas County, Florida. The contract price was $69,900, payable as follows: (1) $100 deposit; (2) $13,960 slab draw, paid August 9, 1987; (3) $17,450 frame draw, paid September 1, 1987; (4) $17,450 dry-in draw, paid September 16, 1987; (5) $13,960 dry wall draw, paid October 30, 1987; and (6) a $6,980 final payment, to be made when the certificate of occupancy was obtained, and paid on December 1, 1987. The contract the Respondent signed and sent to the Clarks in Ohio for their signatures provided for construction to begin within 30 days and to be substantially completed within six months of commencement. Before the Clarks signed and returned the contract to the Respondent by mail from Ohio, they modified the contract to provide for a completion date of November 1, 1987. The Respondent never commented on the Clarks' contract modification and never intimated that there would be any problem with having the Clark home ready for occupancy by November 1, 1987. The Clarks made arrangements to move to their new home one weekend in October, 1987. They flew down on the Saturday before their furnishings and belongings were to arrive by moving van. When the Clarks arrived on Saturday, they were shocked to find that the home was nowhere near ready for occupancy. The Respondent explained that he was having financial problems. The Clarks asked why he accepted their draw payments and never told them that he was having financial problems and was not progressing with construction as scheduled. The Respondent offered to, and did, put the Clarks up in an apartment building he owned until the Clark home was ready for occupancy. The Respondent did not pay three suppliers or subcontractors who worked on the Clark home and who subsequently filed claims of lien. The Clarks themselves satisfied the liens, plus the claimants' attorney fees, in addition to the contract price they had paid the Respondent. These additional payments amounted to approximately $7,000. On or about October 18, 1989, a criminal information was filed against the Respondent in Case No. CTC 8926280MMANO in the County Court for the Sixth Judicial Circuit, in and for Pinellas County, Florida. The information charged the Respondent with misapplication of the Clarks' real property improvement funds in violation of Section 713.345, Fla. Stat. (1989). After a non-jury trial, the Respondent was found and adjudicated guilty as charged and was sentenced to 60 days in jail, suspended, and placed on probation for one year. Conditions of probation included the requirement that the Respondent make restitution to the Clarks in the amount of $9,036.96, payable within one year, with minimum monthly payments set at $100. The Respondent appealed from the judgment of conviction. Execution of the sentence is stayed pending appeal. The appeal was pending at the time of the final hearing. Case No. 91-0391--The Parows. On or about December 28, 1987, the Respondent entered into a contract with George and Barbara Parow for residential contruction on a residential building lot they owned in a subdivision in Pinellas County, Florida, called Windsor Woods II. The contract price was $103,892, payable as follows: (1) $5,750 deposit; (2) $14,721 slab draw, paid February 17, 1988; (3) $14,721 lintel pour draw, paid February 23, 1988; (4) $14,721 frame draw, paid March 18, 1988; (5) $19,629 dry-in draw, paid April 22, 1988; (6) a $19,629 dry wall draw, paid May 11, 1988; and (7) $14,721 final payment to be paid when the certificate of occupancy was obtained. Construction on the Parow home was to begin on January 19, 1988, and actually began on or about February 5, 1988. The Respondent did not pay several suppliers and subcontractors who worked on the Parow home and who subsequently filed claims of lien. As construction progressed, the Parows became aware of liens and discussed them with the Respondent. The Respondent assured the Parows that they all would be taken care of. Instead, more liens of other suppliers and subs were filed. On advice of legal counsel, the Parows withheld the final draw. They also decided to refinance their property in order to finish construction themselves. To do so, they had to file a civil suit in Case Number 88-013508- 023 in Circuit Court, Sixth Judicial Circuit, in and for Pinellas County, Florida. They also had the bank deposit the last draw under the contract with the Respondent into the court registry. In the course of litigation, all valid liens were paid from the money in the court registry. In addition, the Parows were required to pay $957 for a certificate of occupancy, $1,254 that the Respondent was supposed to have paid for carpeting in the home, and $628 for appliances the Parows had paid for but did not get from the Respondent. Additional items were paid by the Parows to finish the house. All told, the Parows paid about $5,000 more out-of-pocket than they should have under the contract with the Respondent, as modified by extras and changes, to complete their home. On or about October 31, 1989, a criminal information was filed against the Respondent in Case No. CTC 8928044MMANO in the County Court for the Sixth Judicial Circuit, in and for Pinellas County, Florida. The information charged the Respondent with misapplication of the Parows' real property improvement funds in violation of Section 713.345, Fla. Stat. (1989). After a non-jury trial, the Respondent was found and adjudicated guilty as charged and was sentenced to 60 days in jail, suspended, and placed on probation for one year, to run concurrent with the probation imposed in Case No. 9826280MMANO (the Clark case). Conditions of probation included the requirement that the Respondent make restitution to the Parows in the amount of $10,178.73, payable $1,000 a month. The Respondent also appealed from the judgment of conviction in the Parow case. Execution of the sentence is stayed pending appeal. The appeal was pending at the time of the final hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Construction Industry Licensing Board enter a final order: (1) finding the Respondent, William C. Lovelace, guilty as charged; (2) imposing an administrative penalty in the amount of $2,000, payable within 30 days; (3) requiring the Respondent to pay the costs associated with the investigation and prosecution of these matters, payable as determined by the Board in consideration of the amount of the costs; (4) requiring the Respondent to make full restitution to the Clarks and the Parows within two years; (5) placing the Respondent on probation for two years conditioned on (a) timely payment of the fine, of the costs, and of the restitution to the Clarks and the Parows, (b) successful completion of continuing education in the areas of financial or general business practices, and (c) such other conditions of probation as the Board may deem appropriate. RECOMMENDED this 19th day of June, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 20th day of June, 1991. APPENDIX TO RECOMMENDED ORDER To comply with the requirements of Section 120.59(2), Fla. Stat. (1989), the following rulings are made on the Department's proposed findings of fact: 1.-4. Accepted and incorporated. The final draw was $14,721. Otherwise, accepted and incorporated. The $250 was designated "fines and costs," and is unnecessary. Otherwise, accepted and incorporated. 7.-8. Accepted and incorporated. 9. The $250 was designated "fines and costs," and is unnecessary. Otherwise, accepted and incorporated. COPIES FURNISHED: Robert B. Jurand, Esquire Senior Attorney Department of Professional Regulation Northwood Centre, Suite 60 1940 North Monroe Street Tallahassee, Florida 32399-0792 William C. Lovelace, pro se 1961 Cove Lane Clearwater, Florida 34624 Daniel O'Brien, Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202 Jack McRay, Esquire General Counsel Department of Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact The complaining witnesses in this case, the Marino's, owned real property in Fern Park, Florida that they listed in November, 1973, with Area One, Inc., a corporate broker. They were very anxious to sell this property. At all times here involved, respondent was a registered real estate broker and was employed as a salesman and office manager of Area One, Inc. The property was listed through salesman Eleanor Stanfield although respondent Greene accompanied her to the Marino's when the listing was obtained. Approximately two weeks thereafter, respondent obtained a prospective buyer for the property who was willing to purchase but couldn't meet the cash down payment required to make up the balance over a 95 percent mortgage. The buyer, Borsack, was an acquaintance respondent had known socially for a year or so. The suggestion was made that if Marino could loan Borsack the money for the down payment the latter would sign a balloon note payable twenty dollars per month for the first five years with the balance then due and payable. When bringing this proposal to Marino, respondent told him it was not the best deal but it was the best he could offer at the moment. At the time, Borsack was employed as a salesman and was apparently earning a good salary. Marino was receptive to the idea and agreed to loan the buyer $2400. Marino was advised by his lawyer that he should have more security for the loan than the note signed by Borsack alone and respondent agreed to guarantee the note. Marino prepared a check for $2400 which he exchanged for a cashier's check for a like amount. This was given to respondent when he executed as the guarantor and was subsequently given to the closing agent. There was conflicting testimony regarding the dispenser of the information that the existence of the note should be withheld from the mortgage broker at the closing. The complaining witnesses contended that respondent so advised them, but he denies ever giving such advice. Regardless of the complicity of respondent in this regard, both parties to the contract were aware that the mortgage would not be approved if the existence of the loan was disclosed to the mortgagee. To account for his cash payment at closing, Borsack produced for the mortgage a letter from his sister reciting a gift from her of $2200. Borsack also signed a residential loan application (Exhibit 8) in which he indicated no financing other than first mortgage and the cash he would pay at closing. Both buyer (Borsack) and seller (Marino) executed an affidavit (FNMA Form 1009)(Exhibit 10) on which they advised the mortgagee no secondary financing was involved in the transaction. At the time the loan was made by Marino to Borsack the former's attorney was aware of the circumstances surrounding the transaction and this attorney advised Marino that it would be all right for him to accept the note provided payment was guaranteed by respondent. Although no testimony was elicited from the attorney in this regard, I would expect him to be cognizant of the fact that the mortgage would not be approved if the mortgagee was aware of the loan from seller to buyer. Considerable testimony was adduced regarding whether or not the promissory note given by the buyer to the seller constituted secondary financing as intended on Exhibits 8 and 10. Since this determination is not necessary to the results reached below, respondent's understanding that "secondary financing" relates only to that financing that would create a lien on the property is likewise immaterial to the result. During a 60 day period including the time this transaction occurred, respondent sold four pieces of property for the Marino's. At no time during the negation which resulted in the sales of the property from Marino to Borsack did respondent give any false or misleading information to the Marinos. Although no evidence was presented to this effect, the complaint alleges, and the answer admits, that after the transaction closed Borsack subsequently defaulted on his mortgage and on his note to Marino; that respondent made a few payments on the note he had guaranteed before stopping these payments; and that Marino obtained a judgment against respondent for the amount of the promissory note. Thereafter, in December 1975, some two years after any act of respondent in this transaction that could have given rise to a violation of Chapter 475, F.S. occurred, the Marinos filed a complaint with the FREC and the investigation and administrative complaint here involved followed.
The Issue Whether Respondents committed the offenses alleged in the Administrative Complaint and the penalties, if any, that should be imposed.
Findings Of Fact 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, in particular, Chapters 455 and 475, Florida Statutes, and Title 61J2, Florida Administrative Code. At all times pertinent to this proceeding, Respondent, Gerry Sullivan & Associates Realty, Inc., was a corporation registered as a real estate broker in the State of Florida, having been issued license number 0215569 in accordance with Chapter 475, Florida Statutes. The last license issued for that corporation was at the address of 7169 West Broward Boulevard, Plantation, Florida. At all times pertinent to this proceeding, Respondent, Geraldine R. Sullivan, was a licensed real estate broker in the State of Florida, having been issued license number 0086238 in accordance with Chapter 475, Florida Statutes. At all times pertinent to this proceeding, Respondent, Geraldine R. Sullivan, was the qualifying broker and office manager of the corporate Respondent. At all times pertinent to this proceeding, Jim Sullivan and Pamela Sullivan were real estate salespersons in the State of Florida and employed by the corporate Respondent. Jim Sullivan is the son of Geraldine R. Sullivan and the husband of Pamela Sullivan. On June 16, 1997, Elaine P. Martin entered into a listing agreement with the corporate Respondent to sell her condominium for the price of $32,900. The listing agreement provided for the seller (Ms. Martin) to pay a brokerage commission of 6% that would be reduced to 5% if Jim Sullivan or Pamela Sullivan found the buyer without the involvement of another broker. The listing agreement also provided that Ms. Martin would pay a processing fee in the amount of $150.1 The listing agreement did not refer to a transaction fee.2 Ms. Martin did not agree to pay any fees other than the commission and the processing fee. In 1996, the corporate Respondent began a practice of charging sellers in certain transactions a fee, referred to as a transaction fee, that was in addition to the processing fee and the commission. The transaction fee was used by the salesperson to pay the salesperson's "facilitator," a person employed by the salesperson to run errands to facilitate the closing of the transaction. Examples of the type errands performed by the facilitator included meeting persons at the property to perform inspections and delivering documents. The practice of charging a transaction fee was not uncommon in Broward County, but it was not standard practice. Whether a particular seller would be charged a transaction fee depended, in part, on the listing salesperson. Typically, if a salesperson employed by the corporate Respondent did not us a facilitator, no transaction fee would be charged. The minutes of the Florida Real Estate Commission for July 16-17, 1996, contain the following entry: It was decided that as long as there is disclosure to all parties involved, the transaction fees indicated on closing statements is not a violation of F.S. 475. The customary practice of the corporate Respondent in June of 1997 was for its salesperson to complete a "net sheet" at the time the listing agreement is executed. The "net sheet" is a good faith estimate of the seller's expenses and reflects the estimated amount the seller will net from the transaction. The evidence established that Respondent, Geraldine R. Sullivan, and Pamela Sullivan could not locate in the Martin file a net sheet was prepared on or about the time Ms. Martin executed the listing agreement on June 16, 1997. From that evidence, and from the testimony of Ms. Martin, it is found that Jim Sullivan did not complete a net sheet when he and Ms. Martin executed the listing agreement. The listing agreement created a principal/agent relationship between Ms. Martin, as the seller, and the corporate Respondent, as the agent. At all times pertinent to this proceeding, the corporate Respondent and Geraldine R. Sullivan, as the qualifying broker of the corporate Respondent, were the agents of Ms. Martin and owed her the fiduciary duties of an agent. In connection with the subject listing agreement, Ms. Martin executed an Agency Disclosure Statement which set forth the fiduciary duties owed by the agent to the principal, in pertinent part, as being the ". . . fiduciary duties of loyalty, confidentiality, obedience, full disclosure, accounting and the duty to use skill, care and diligence." In addition, the statement set forth that the agent owed the duty of honesty and fair dealing.3 A buyer working through another real estate broker made an offer to purchase the Martin property for the sum of $30,000. The offer, dated June 22, 1997, was presented to Ms. Martin by Pamela Sullivan. Because another real estate broker was involved, the real estate commission was based on 6% of the sales price. On June 22, 1997, Pamela Sullivan discussed the offer with Ms. Martin by telephone and informed her, for the first time, of the transaction fee. Later that day, Pamela Sullivan and Ms. Martin met and Pamela Sullivan prepared a "net sheet" that reflected the seller's estimated closing costs. The transaction fee in the amount of $3004 was reflected on the net sheet as an expense of the seller. As of June 22, 1997, Pamela Sullivan knew or should have known that the file on the Martin transaction maintained by her office did not contain a net sheet that was executed at the same time the listing agreement was executed. Prior to signing the contract or the net sheet on June 22, 1997, Ms. Martin placed a question mark next to the line on which the transaction fee was disclosed. Ms. Martin questioned the charge because she did not understand what was being done to earn that fee. Ms. Martin did not accept the explanations Pamela Sullivan gave for the transaction fee. Ms. Martin thereafter had Pamela Sullivan insert the following as a special condition of the contract: The seller reserves the right to have her attorney review the contract at his earliest opportunity. After the special condition was signed, Ms. Martin signed the contract and the net sheet. The net sheet was intended to be informational. By signing the net sheet, Ms. Martin did not intend to agree to pay the $300 transaction fee. Ms. Martin did not agree in writing or verbally to pay the transaction fee. Between June 22 and June 25, 1997, Pamela Sullivan, on behalf of the corporate Respondent, reduced the amount of the claimed transaction fee from $300 to $200. Following the execution of the Sales Contract, Ms. Martin had her attorney review the contract and the net sheet. Ms. Martin informed her attorney by memo dated June 25, 1997, in pertinent part, as follows: . . . We disputed the Transaction Fee of $300.00 and Century 21 lowered it to $200. We asked Pam Sullivan for a break down (sic) on the $200.00 cost. She refused to provide any; stated it was the cost of doing business. Since the housing prices in Broward County have not increased, they charge this extra fee along with their normal commission. . . . Ms. Martin sent a copy of her memo to Pamela Sullivan. Ms. Martin's attorney accepted the sales contract without any changes and informed her that he would address the issue of the transaction fee at the time of the closing. On the day of the closing, Ms. Martin's attorney telephoned Respondent, Geraldine R. Sullivan, to discuss the transaction fee. Geraldine R. Sullivan would not agree to waive the transaction fee after she learned that there was a signed net sheet. She did not realize that there was no net sheet prepared when the listing agreement was first executed. This was the only direct dealing Respondent, Geraldine R. Sullivan, had with this transaction. Between June 25, 1997, the date of Ms. Martin's memo, and July 7, 1997, the date of the closing, neither Ms. Martin nor her attorney voiced additional objection to the transaction fee.5 The transaction closed on July 7, 1997. The sum of $200, representing the amount of the disputed transaction fee, was placed in escrow by the closing agent, where it remained at the time of the formal hearing. All other fees and costs were paid at closing, including a brokerage commission of $1,800 (which was split with the realtor representing the buyer) and a processing fee of $150 (which was retained by the corporate Respondent).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered that finds the corporate Respondent guilty of violating Section 475.25(1)(b), Florida Statutes, and finds Geraldine R. Sullivan not guilty of that charge. It is further RECOMMENDED that the corporate Respondent be reprimanded and fined in the amount of $1,000. DONE AND ENTERED this 4th day of August, 1998, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 4th day of August, 1998
