07-000683PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Richard Guilfoyle Status: Closed Recommended Order on Wednesday, August 22, 2007.

Summary: Petitioner failed to prove that the appraisal report prepared by Respondent was misleading or otherwise deficient. Recommended that the Administrative Complaint be dismissed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND ) )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

) Case No. 07-0683PL

vs. )

)

RICHARD GUILFOYLE, )

)

Respondent. )

RECOMMENDED ORDER

A duly-noticed final hearing was held in this case by

Administrative Law Judge T. Kent Wetherell, II, on May 24, 2007,

by video-teleconference between sites in Orlando and

Tallahassee, Florida.

APPEARANCES

For Petitioner: D.C. Lindamood, Esquire

Department of Business and Professional

Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801-1757

For Respondent: Steven W. Johnson, Esquire

Steven W. Johnson, P.A.

Bank of America Building, 23rd Floor

390 North Orange Avenue

Orlando, Florida 32801

STATEMENT OF THE ISSUE

The issue is whether Respondent committed the violations

alleged in the Administrative Complaint, and if so, what

discipline should be imposed.

PRELIMINARY STATEMENT

The Department of Business and Professional Regulation,

Division of Real Estate (Division), alleged in an Administrative

Complaint dated October 5, 2006, that Respondent violated

several provisions of Chapter 475, Florida Statutes, in

connection with a residential appraisal that he performed in

June 2005. Respondent requested a formal hearing on the

allegations in the Administrative Complaint, and on February 12,

2007, this matter was referred to the Division of Administrative

Hearings (DOAH) for the assignment of an Administrative Law

Judge to conduct the hearing requested by Respondent.

The final hearing was initially scheduled for April 11,

2007, but it was rescheduled for May 24, 2007, on the Division’s

unopposed motion. The Division presented the testimony of

Beverly Ridenauer, Jose Ciro, and Cosme Abreu, and the post-

hearing deposition testimony of Ben M. Cole, III. 1 Respondent

testified in his own behalf and also presented the testimony of

Kristen Guilfoyle. The Division’s Exhibits A, B, FF, and PP

were received into evidence. Respondent did not offer any

exhibits. Official recognition was taken of Sections 475.624,

475.629, and 475.6295, Florida Statutes (2005), 2 and of the

Ethics Rule and Standards Rule 2-1 in the 2005 version of the

Uniform Standards of Professional Appraisal Practice and

Advisory Opinions (USPAP).

The Transcript of the final hearing was filed on July 9,

2007, without the exhibits received into evidence at the final

hearing. The transcript of Mr. Cole’s post-hearing deposition

was filed on July 12, 2007. The exhibits received at the final

hearing were filed on July 20, 2007. The parties were given 10

days from the last of those dates to file proposed recommended

orders (PROs), which they did on July 30, 2007. The PROs have

been given due consideration.

FINDINGS OF FACT

1. Respondent is a certified residential real estate

appraiser. His license number is RD-4163.

2. Respondent was licensed as a registered trainee

appraiser in December 2001. He passed the certification exam

and received his current license in November 2003.

3. Respondent has not previously had any disciplinary

action taken against him by the Division or the Florida Real

Estate Appraisal Board (Board).

4. On June 14, 2005, Respondent was engaged by a mortgage

company to appraise the single-family residence located at 620

Adirondack Avenue in Orlando (“the subject property”).

5. The subject property was owned at the time by Cosme

Abreu and his wife. The Abreus also owned a single-family

residence located at 623 Adirondack Avenue, which is across the

street from the subject property.

6. The subject property was at the time of the appraisal

under contract for sale to Jose Ciro, who was a co-worker of

Mr. Abreu's.

7. Respondent previously conducted an appraisal of the

subject property in March 2005. His firm also conducted several

appraisals of the Abreus' property at 623 Adirondack Avenue,

including an appraisal on June 14, 2005.

8. Respondent went to the subject property on June 14,

2005, and walked around the inside and outside of the residence

taking measurements and observing the condition of the property.

He testified that at the time of the appraisal the subject

property was in good overall condition; that all of the

appliances were in place; that the air conditioner was working;

that the carpet and flooring were in place; and that there was

no readily observable water damage or rotten wood on the

interior or exterior of the residence.

9. Respondent prepared an appraisal report of the subject

property on June 14, 2005.

10. Respondent estimated in his report that the market

value of the subject property as of the date of the appraisal

was $185,000. Respondent used the cost approach and the sales

comparison approach to arrive at that valuation.

11. The Division’s expert appraiser, Ben Cole, III, did

not take issue with the methodology used by Respondent in his

appraisal of the subject property. Indeed, Mr. Cole stated in

his report that: “The [comparative] sales were legitimate

transactions, pertinent and in close proximity to the subject.

The home was measured correctly and the square footage correctly

computed with the room count and placement shown properly.”

12. Nevertheless, Mr. Cole testified that the appraisal

report prepared by Respondent was misleading because it did not

disclose the actual condition of the subject property as of the

date of the appraisal. Mr. Cole did not have any personal

knowledge as to the condition of the property as of the date of

the appraisal; his opinion regarding the misleading nature of

Respondent’s appraisal report was based upon the assumption that

the condition of the subject property at the time of the

appraisal was as reflected in the photographs taken in August

2005. However, as discussed below, the validity of that

assumption was not established by clear and convincing evidence.

13. Respondent did not take photographs of the subject

property in connection with the June appraisal. The exterior

photographs of the subject property included in his appraisal

report were the photographs that he took in connection with the

March appraisal.

14. Respondent testified that the March photographs

accurately depicted the condition of the subject property as he

observed it in June, and he stated in his appraisal report that

the subject property has been “maintained in good overall

condition.”

15. Mr. Abreu testified that subject property was in good

condition at the time of the appraisal, which was consistent

with and corroborated Respondent’s assessment of the condition

of the subject property. 3

16. Mr. Ciro had no direct personal knowledge about the

condition of the subject property in June 2005. He did not take

possession of the property until mid-August 2005, even though

the closing occurred in mid-July 2005.

17. Mr. Ciro had only visited the subject property twice

before August 2005. One of those visits occurred prior to the

three hurricanes that hit the Orlando area in August and

September of 2004. Mr. Ciro could not recall the date of his

other visit to the property, but it was before June 2005.

18. Mr. Ciro testified that the subject property was in

good condition at the time of his visits, although he

acknowledged that he did not closely examine the outside of the

house because it was nighttime when he was at the subject

property.

19. The condition of the subject property in August 2005

was not good, as reflected in the photographs and videotape that

were received into evidence. For example, the carpet in the

family room was missing, appliances were missing, the kitchen

sink and cabinets had been removed and were on the back patio,

there was a stain of some kind on the ceiling in at least one of

the rooms, the backyard was overgrown and full of trash, and

there was damage to the soffit on the right-front of the house.

20. Mr. Abreu testified that some of the damage depicted

in the photographs and videotape -- e.g. , removal of the sink

from the kitchen, floor damage caused by a plumbing problem --

occurred between the time of the appraisal and the time that

Mr. Ciro took possession of the subject property, and that he

was in the process of fixing the damage when Mr. Ciro took

possession of the property. Mr. Abreu attributed the remainder

of the damage to Mr. Ciro.

21. Mr. Ciro and the Abreus are currently in litigation

regarding the sale of the subject property and its condition in

August 2005. Respondent is not a party to that litigation.

22. Respondent and Mr. Abreu testified that the August

2005 photographs do not reflect the condition of the property as

of the time of the appraisal on June 14, 2005. That testimony

is called into question by the photograph in the appraisal

report that appears to show that the soffit damage observed in

August 2005 on the right-front corner of the house was present

at the time of the March appraisal, 4 but the evidence was not

clear and convincing on that issue.

23. In October 2005, the Division received a complaint

from Mr. Ciro regarding Respondent’s appraisal of the subject

property. Beverly Ridenauer was assigned to investigate the

complaint.

24. It took Ms. Ridenauer several months to make contact

with Respondent because the address that the Division had on

file for him was incorrect.

25. Respondent was not able to produce his work file for

the subject property when it was initially requested by

Ms. Ridenauer. 5

26. When the original work file could not be located,

Respondent “reconstructed” the file and provided it to

Ms. Ridenauer.

27. The original work file was subsequently located and

provided to the Division during discovery. There is no evidence

of any discrepancies between the “reconstructed” file and the

original file.

28. The work file was not offered into evidence, but

Respondent testified that it included the property appraiser

records, Multiple Listing Service print-outs, and other

information he reviewed and considered in his appraisal of the

subject property.

29. Respondent required his trainees to take interior

photographs of the property they appraised for his use in

reviewing and signing-off on their work, but he did not take

interior photographs of properties that he appraised unless the

lender specifically requested such photographs. As a result of

this case, however, Respondent now takes interior photographs as

a standard practice in order to “protect [him]self.”

30. There is no statute, rule, or USPAP standard that

requires interior photographs to be taken as part of an

appraisal. The Division’s expert appraiser, Mr. Cole, did not

know whether it was even typical for appraisers to take interior

photographs; he simply testified that such photographs “would

have been helpful” in this case.

CONCLUSIONS OF LAW

31. DOAH has jurisdiction over the parties to and subject

matter of this proceeding pursuant to Sections 120.569,

120.57(1), 120.60(5), and, 455.225(5), Florida Statutes (2006).

32. The Division is responsible for prosecuting

disciplinary cases against licensed real estate appraisers. See

§ 475.021(1), Fla. Stat. (2006).

33. The Board is responsible for taking final agency

action in disciplinary cases against licensed real estate

appraisers. See §§ 475.613(2), 475.624 Fla. Stat. (2006); Fla.

Admin. Code R. 61J1-1.008, 61J1-8.002

34. The Division has the burden to prove the allegations

in the Administrative Complaint by clear and convincing

evidence. See Dept. of Banking & Finance v. Osborne, Stern &

Co. , 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington , 510 So.

2d 295 (Fla. 1987).

35. The clear and convincing evidence standard requires

that:

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 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).

36. Section 475.624, Florida Statutes, authorizes the

Board to take disciplinary action against a licensed real estate

appraiser if the appraiser:

(4) Has violated any of the provisions of

this section or any lawful order or rule

issued under the provisions of this section

or chapter 455.

* * *

(14) Has violated any standard for the

development or communication of a real

estate appraisal or other provision of the

Uniform Standards of Professional Appraisal

Practice.

(15) Has failed or refused to exercise

reasonable diligence in developing an

appraisal or preparing an appraisal report.

37. The Administrative Complaint includes four counts,

each of which begins with the phrase “[b]ased upon the

foregoing.” That phrase refers to the “essential allegations of

material fact” that precede the counts in the Administrative

Complaint. See Dept. of Business & Professional Reg. v. Price ,

2007 Fla. Div. Adm. Hear. LEXIS 249, at ¶ 62 (DOAH May 3, 2007).

38. The “essential allegations of material fact” at issue

in this case are:

5. Respondent failed to keep and maintain

his work file for the Subject Property

Report. Respondent failed to include

photographs of the inside of the Subject

Property in the Report.

6. . . . . Upon taking possession of the

Subject Property in August [2005], the Buyer

found extensive hurricane damage: there was

rotten wood in the soffits, and there was a

hole in the air conditioning unit. Interior

damage included missing carpet in the living

room; missing tile in the utility room;

missing kitchen cabinets, sink and

countertops; and missing kitchen appliances.

7. Respondent stated in the Report that

the Subject Property was in “good” overall

condition, and that the tile/terrazzo

flooring and air conditioner were in good

condition at the time of the report.

However, Respondent is unable to produce any

documentation establishing the condition of

the Subject Property at the time of the

Report.

39. The violations alleged in the four counts of the

Administrative Complaint are constrained to these “essential

allegations of material fact.” 6 See , e.g. , Trevisani v. Dept.

of Health , 908 So. 2d 1108, 1109 (Fla. 1st DCA 2005) (licensee

may not be disciplined for an offense not charged in the

administrative complaint).

40. Count I of the Administrative Complaint alleges a

violation of Section 475.624(15), Florida Statutes, based upon

Respondent’s alleged failure to exercise reasonable diligence in

his appraisal of the subject property.

41. There is no statute, rule, or USPAP standard that

defines “reasonable diligence.” The Division’s expert

appraiser, Mr. Cole, testified that reasonable diligence

includes “a thorough observation and inspection of the subject

property” and “thorough research in investigating the

[comparable] sales.” Respondent expressed a similar

understanding of the phrase in his testimony.

42. The Division contends that Respondent failed to

exercise reasonable diligence in his appraisal of the subject

property because the condition of the property was not what he

described in his appraisal report. Thus, to prove Count I, it

is necessary for the Division to establish that the condition of

the subject property as of the date of the appraisal was not as

described in the appraisal report.

43. The Division failed to meet its burden of proof.

Although the condition of the property in August 2005 raises

questions about the condition of the property at the time of the

appraisal (particularly with respect to the soffit damage), the

evidence is not clear and convincing in that regard. Indeed,

the only witness presented by the Division who had personal

knowledge about the condition of the property as of the date of

the appraisal was Mr. Abreu, and he corroborated Respondent’s

testimony that the property was in good condition at the time of

the appraisal.

44. Count II of the Administrative Complaint alleges a

violation of Section 475.629, Florida Statues, which according

to the Division is a violation of Section 475.624(4), Florida

Statutes.

45. Subsection (4) of Section 475.624, Florida Statutes,

refers to violations of “any of the provisions of this section

or any lawful order or rule issued under the provisions of this

section or chapter 455” (emphasis supplied). By contrast,

subsection (1) of Section 475.624, Florida Statutes, refers to

violations of “any provisions of this part . . . .” (emphasis

supplied). Section 475.629, Florida Statutes, is a different

section than Section 475.624, Florida Statutes, but the two

sections are in the same part of the Florida Statutes. Thus, a

violation of Section 475.629, Florida Statutes, could be a

violation of subsection (1) of Section 475.624, Florida

Statutes, not subsection (4) as alleged in the Administrative

Complaint. Accord Price , supra , at ¶ 60.

46. Section 475.629, Florida Statutes, requires licensed

real estate appraisers to “retain for at least 5 years, original

or true copies of any contracts engaging in the appraiser’s

services, appraisal reports, and supporting data assembled and

formulated by the appraiser in preparing appraisal reports.”

47. The Division failed to prove a violation of Section

475.629, Florida Statutes, even though Respondent was not able

to immediately locate his work file for the subject property

when requested by the Division’s investigator. The work file

was subsequently located and provided to the Division, and there

is no credible evidence that the file is not Respondent’s

original work file or that it did not contain the information

required by Section 475.629, Florida Statutes.

48. Count III of the Administrative Complaint alleges a

violation of “the Record Keeping and Conduct sections of the

[USPAP] Ethics Rule,” which is a violation of Section

475.624(14), Florida Statutes.

49. The Record Keeping section of the USPAP Ethics Rule

provides:

An appraiser must prepare a workfile for

each appraisal, appraisal review, or

appraisal consulting assignment. The

workfile must include:

- the name of the client and the identity,

by name or type, of any other intended

users;

- true copies of any written reports,

documented on any type of media;

- summaries of any oral reports or

testimony, or a transcript of testimony,

including the appraiser’s signed and

dated certification; and

- all other data, information, and

documentation necessary to support the

appraiser’s opinions and conclusions and

to show compliance with this Rule and

all other applicable Standards, or

references to the location(s) of such

other documentation.

An appraiser must retain the workfile for a

period of at least five (5) years after

preparation or at least two (2) years after

final disposition of any judicial proceeding

in which the appraiser provided testimony

related to the assignment, whichever period

expires last.

An appraiser must have custody of his or her

workfile, or make appropriate workfile

retention, access, and retrieval

arrangements with the party having custody

of the workfile.

Comment : A workfile preserves evidence of

the appraiser’s consideration of all

applicable data and statements required by

USPAP and other information as may be

required to support the appraiser’s

opinions, conclusions, and recommendations

. . . .

A photocopy or an electronic copy of the

entire actual written appraisal, appraisal

review, or appraisal consulting report sent

or delivered to a client satisfies the

requirement of a true copy . . . .

Care should be exercised in the selection of

the form, style, and type of medium for

written records, which may be handwritten

and informal, to ensure that they are

retrievable by the appraiser throughout the

prescribed record retention period.

A workfile must be in existence prior to and

contemporaneous with the issuance of a

written or oral report. A written summary

of an oral report must be added to the

workfile within a reasonable time after the

issuance of the oral report.

A workfile must be made available by the

appraiser when required by state enforcement

agencies or due process of law . . . .

50. The Division failed to prove a violation of this rule

for the reasons discussed above in connection with the alleged

violation of Section 475.629, Florida Statutes.

51. The Conduct section of the USPAP Ethics Rule provides:

An appraiser must perform assignments

ethically and competently, in accordance

with USPAP and any supplemental standards

agreed to by the appraiser in accepting the

assignment. An appraiser must not engage in

criminal conduct. An appraiser must perform

assignments with impartiality, objectivity,

and independence, and without accommodation

of personal interests.

In appraisal practice, an appraiser must not

perform as an advocate for any party or

issue.

* * *

An appraiser must not accept an assignment

that includes the reporting of predetermined

opinions and conclusions.

An appraiser must not communicate assignment

results in a misleading or fraudulent

manner. An appraiser must not use or

communicate a misleading or fraudulent

report or knowingly permit an employee or

other person to communicate a misleading or

fraudulent report.

An appraiser must not use or rely on

unsupported conclusions relating to

characteristics such as race, color,

religion, national origin, gender, marital

status, familial status, age, receipt of

public assistance income, handicap, or an

unsupported conclusion that homogeneity of

such characteristics is necessary to

maximize value.

52. The Division failed to prove a violation of this rule

because, as discussed above, the evidence was not clear and

convincing that Respondent’s appraisal report inaccurately

described the condition of the subject property at the time of

the appraisal or that the appraisal report was otherwise

misleading.

53. Count IV of the Administrative Complaint alleges a

violation of USPAP Standards Rule 2-1(a) and (b), which is a

violation of Section 475.624(14), Florida Statutes.

54. USPAP Standards Rule 2-1 requires the written

appraisal report to “(a) clearly and accurately set forth the

appraisal in a manner that will not be misleading” and “(b)

contain sufficient information for the intended users of the

appraisal to understand the report properly.”

55. The Division failed to prove a violation of USPAP

Standards Rule 2-1(a) or (b). The evidence was not clear and

convincing that Respondent's appraisal report inaccurately

described the condition of the subject property at the time of

the appraisal or that the appraisal report was otherwise

misleading.

56. Because the Division failed to prove that Respondent

violated the USPAP rules and standards cited in Counts III and

IV of the Administrative Complaint, it failed to prove a

violation of Section 475.624(14), Florida Statutes.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions

of law, it is

RECOMMENDED that the Board issue a final order dismissing

the Administrative Complaint.

DONE AND ENTERED this 22nd day of August, 2007, in

Tallahassee, Leon County, Florida.

S

T. KENT WETHERELL, II

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 22nd day of August, 2007.

ENDNOTES

1 / Respondent moved to strike all of Mr. Cole’s testimony based

upon his “insufficient, and technically illegal review and/or

consulting report.” See Cole deposition, at 83. See also id.

at 11-12; Respondent’s PRO, at ¶ 12 (arguing that Mr. Cole’s

failure to comply with USPAP in his review of Respondent’s

appraisal “should render his opinions moot”). The motion to

strike is denied. However, Respondent’s objections during the

deposition to Mr. Cole’s testimony regarding matters not alleged

in the “essential allegations of fact” in the Administrative

Complaint are sustained, and that testimony has not been

considered. See Conclusions of Law 37-39 and Endnote 6.

2 / On July 12, 2007, the Division filed copies of the 2006

version of the statutes that were officially recognized at the

final hearing even though the parties agreed that the 2005

version of the statutes applies in this case since the appraisal

that is the subject of the Administrative Complaint was

performed in June 2005. See Transcript, at 20. There do not

appear to be any material differences between the 2005 and 2006

versions of these statutes, and unless otherwise indicated, all

statutory references in this Recommended Order are to the 2005

version of the statutes.

3 / The testimony of Mr. Abreu and Respondent was not consistent

in all respects. For example, Mr. Abreu testified that he saw

Respondent take photographs of the interior of the subject

property, but Respondent testified that he did not take any

photographs of the property in connection with the June

appraisal. The inconsistencies, and the pending litigation

between Mr. Ciro and the Abreus, affected the weight given to

Mr. Abreu’s testimony, but those issues did not undermine his

testimony altogether.

4 / Compare Exhibit A, page 11, top photograph (March 2005

photograph) with Exhibit FF, picture 10 (August 2005

photograph).

5 / There is conflicting evidence as to what Respondent and his

wife/office manager, Kristen Guilfoyle, told Ms. Ridenauer

regarding the missing work file. Respondent and Mrs. Guilfoyle

testified that they told Ms. Ridenauer that they could not find

the file because it was likely in one of the boxes that was

destroyed when their air conditioning unit broke and flooded the

room in which the files were kept. Ms. Ridenauer testified that

she was never told about a flood in the file room and that she

was only told that the file could not be found. It is

immaterial to the outcome of this proceeding why the work file

could not be produced or what Ms. Ridenauer was told in that

regard, but these inconsistencies have been taken into account

in assessing the credibility of Respondent and Mrs. Guilfoyle.

6 / The Division presented evidence of other deficiencies in the

appraisal report, including Respondent’s failure to note in the

report or take into account in the valuation of the subject

property the fact that three of the four properties used in the

sales comparison approach had newer roofs than the subject

property. Respondent timely objected to such evidence, and it

has not been considered.

COPIES FURNISHED :

Michael E. Murphy, Director

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street

Suite 802 North

Orlando, Florida 32801-1757

Ned Luczynski, General Counsel

Department of Business and

Professional Regulation

The Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Steven W. Johnson, Esquire

Steven W. Johnson, P.A.

Bank of America Building, 23rd Floor

390 North Orange Avenue

Orlando, Florida 32801

D. C. Lindamood, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801-1757

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.