08-006260PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Deborah M. Hall Status: Closed Recommended Order on Wednesday, April 8, 2009.

Summary: Petitioner did not prove by clear and convincing evidence that Respondent violated the statute.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 08-6260PL

)

DEBORAH M. HALL, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this

case on February 24, 2009, in New Port Richey, Florida, before

Administrative Law Judge R. Bruce McKibben of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Robert Minarcin, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N-801

Orlando, Florida 32801-1757

For Respondent: David P. Rankin, Esquire

Law Offices of David P. Rankin, P.A.

18540 North Dale Mabry Highway

Lutz, Florida 33548

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent violated

standards for a certified real estate appraisal, and, if so,

what sanction should be imposed.

PRELIMINARY STATEMENT

On March 4, 2008, Petitioner, Department of Business and

Professional Regulation, Division of Real Estate (hereinafter

"Department"), filed an Administrative Complaint containing 14

separate counts against Respondent, Deborah M. Hall ("Hall").

The Administrative Complaint alleges violations of the statutes

and rules governing Florida certified residential real estate

appraisers.

Hall timely filed a request for a formal administrative

hearing, which was then forwarded to the Division of

Administrative Hearings ("DOAH") on December 17, 2008. At the

final hearing, the Department called two witnesses: Wendy

Young, Investigative Specialist II with the Department; and

Diane M. Gilbert, an expert in residential appraisal practices.

The Department's Exhibits 1, 2, 6, and 7 were admitted into

evidence; official recognition was taken of the Department's

Exhibits 3, 4, and 5. Hall presented the testimony of two

witnesses: Robert Smith, former employee of Hall; and Deborah

Hall. Hall did not introduce any independent exhibits.

The parties advised the undersigned that a transcript would

be ordered of the final hearing. They were given ten days from

the date the transcript was filed at DOAH to submit proposed

recommended orders. The Transcript was filed on March 25, 2009.

Respondent submitted a Proposed Recommended Order on April 3,

2009; Petitioner's Proposed Recommended Order was filed on

April 6, 2009. Each of the submissions was timely, and they

were given due consideration in the preparation of this

Recommended Order. 1

FINDINGS OF FACT

1. The Department is the state agency which is responsible

for certifying and monitoring the performance of residential

real estate appraisers. It derives its authority in this case

from Chapter 475, Part II, Florida Statutes (2008). 2 The

Department's headquarters are in Tallahassee, Florida.

2. Hall is a State of Florida certified residential real

estate appraiser, holding License No. RD-4615. Hall resides in

Port Richey, Florida.

3. The Department issued an Administrative Complaint

against Hall alleging certain violations concerning an appraisal

for property located at 2850 Gulf of Mexico Drive, Unit 6,

Neptune of Longboat Key, Neptune Beach, Florida (the "Subject

Property"). There were two appraisal reports alleged to have

been issued for the Subject Property by Hall.

4. Hall was hired by Chapman and Associates, on behalf of

Encore Mortgage Enterprises (Encore), to do an appraisal of the

Subject Property, a one-bedroom, one-bath condominium unit

located in a one-building, 12-unit condominium on Longboat Key,

Florida. The approximate square footage of the unit was

773 square feet, with 657 square feet of that space identified

as its living area. The last purchase of the Subject Property

had been in May 2005, when it sold for $297,500. Hall's alleged

appraisal of the Subject Property assigned a value of $472,000.

5. The original appraisal (Appraisal 1) prepared by Hall

for the Subject Property was replete with errors. Those errors

are not in dispute. However, based on the findings made below,

the nature and extent of those errors are not material. Upon

her initial review of Appraisal 1, Hall began to make

corrections to the obvious errors. Her corrections appear in

Appraisal 2, which is actually an updated version of

Appraisal 1, as will be discussed further herein.

6. At all times pertinent hereto, Hall was an independent

real estate appraiser working for herself. She had two

employees, neither of whom was a certified real estate

appraiser. Hall has been certified as a residential real estate

appraiser for five years. During the real estate boom of

2006-2007, Hall did approximately 30 residential appraisals per

month. She is currently doing approximately ten per month,

reflecting the slow-down in the real estate market in Florida.

7. Hall's normal practice is to prepare an appraisal

utilizing a specially designed appraisal software known as

Aurora. The Aurora software had several glitches when Hall

first started using it, some of which still exist. However, it

is a generally user-friendly software program, and Hall is able

to work around the glitches.

8. In April 2007, Hall's process for preparing an

appraisal was as follows: Hall would give basic information

about the subject property to her assistant, Robert Smith.

Smith would input that basic information into an appraisal form,

usually relying on the form from a recently completed appraisal

done by Hall. This practice is known as "cloning," i.e.,

slightly amending an existing form with new information,

resulting in a completely new appraisal form. It was Smith's

practice to find an appraisal from the same geographic area as

the property in question so that when he cloned the form, some

of the same information could be used. For example, information

about the neighborhood, topography, local schools, etc., would

remain the same for properties in the same proximate geographic

location.

9. Once Smith finalized the draft appraisal form, he would

send it via email to Hall in the adjoining office. Hall would

finalize the appraisal by completing all unfinished portions of

the appraisal form, correcting any errors or changes from the

relied-upon form, and adding all the requisite addendums to the

appraisal.

10. Addendums contained such items as color photos of

comparable properties, property information about surrounding

properties, sketches or diagrams of the subject property, maps

of the area, etc. Hall considered the addendums to be her

primary area of expertise and prided herself in having complete

and usable addendums.

11. After emailing the draft appraisal to Hall, Smith's

job would essentially be complete. He would not see the

appraisal again until Hall had finalized it into its ultimate

form, including addenda.

12. Hall would spend some time on the draft appraisal, but

would work on several appraisals at the same time. When an

appraisal was done, she would send it back to Smith with

directions to release it to the client who had ordered it.

13. Appraisal 1 on the Subject Property was cloned by

Smith from an earlier appraisal pursuant to directions from

Hall. When Smith finished his preliminary work and prepared to

email the draft to Hall, the Aurora software would not allow him

to do so unless he electronically "signed" the draft with Hall's

signature. (This is one of the afore-referenced glitches in the

Aurora software.) Because of that glitch, Hall had given Smith

the authority to "sign" her name for the sole purpose of

emailing her the draft. The email was going from one computer

in Hall's office (at Smith's desk) to another computer in the

office (at Hall's desk).

14. Neither Hall, nor Smith, intended the electronic

"signing" of the draft appraisal to suggest that Hall had

approved the draft. It was signed only so that the draft could

be transferred via email to Hall.

15. However, when Smith sent Appraisal 1 to Hall, he also

inadvertently sent it to the client, Chapman and Associates.

Brett Branning, an appraiser working for Chapman and Associates,

received the draft appraisal (Appraisal 1) and apparently

believed it was a final product from Hall. Branning is a

certified appraiser, and it was his job with Chapman and

Associates to do a review of appraisals from outside appraisers.

Branning reviewed Hall's appraisal, determined it to be

inadequate, and then made a complaint to the Department. An

investigation ensued.

16. During the course of the investigation, Hall was asked

to submit her entire work file concerning her appraisal of the

Subject Property to the Department. Contained within that work

file was Hall's somewhat corrected version of Appraisal 1. That

is, the appraisal in Hall's work file (Appraisal 2) was a

further cloned version of Appraisal 1, but it was not yet a

final appraisal. 3

17. Thus, when the Department investigator compared

Appraisal 1 to Appraisal 2 from Hall's work file, it appeared

Hall had issued a new appraisal, but had destroyed or otherwise

eliminated Appraisal 1. Appraisal 2 in the work file was also

replete with errors and omissions. It was, however, not a final

product; it was an updated version of Appraisal 1.

18. The Department's investigator and expert witness each

testified to the extreme number of errors in Appraisal 1 (as

well as, the later version). Their testimony and conclusions

were credible and indicated serious errors within the subject

appraisal. However, inasmuch as the appraisal at issue was not

a final product and not meant for release by Hall, their

findings are not relevant to the decision reached herein.

19. Hall readily and candidly admits that Appraisal 1 is

incorrect, incomplete, and insufficient. However, she maintains

that her electronic signature on the appraisal is not indicative

of its status as a final product; rather, the signature was

added solely for an internal transfer of the appraisal from one

office computer to another. Both her and Smith's testimony in

this regard is credible.

CONCLUSIONS OF LAW

20. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to Section 120.569 and Subsection 120.57(1),

Florida Statutes (2008).

21. Licensure revocation proceedings are penal in nature.

It is incumbent upon the Department in such cases to prove, by

clear and convincing evidence, the truthfulness of the

allegations against the licensee. Department of Banking and

Finance v. Osborne Stern and Co. , 670 So. 2d 932 (Fla. 1996);

Ferris v. Turlington , 510 So. 2d 292, 295 (Fla. 1987).

22. The clear and convincing evidence standard requires:

[T]hat the evidence be found to be credible,

the facts to which the witnesses testify

must be distinctly remembered; the testimony

must be precise and explicit and the

witnesses must be lacking in confusion as to

the facts at issue. The evidence must be of

such a 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 to be established.

Slomowitz v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983).

23. The evidence presented by the Department's witnesses

was indeed clear and convincing as to the errors that appeared

in Appraisal 1, which Hall had initially prepared. Both the

investigator and the expert called by the Department provided an

excellent description of the facts. However, there is no

credible testimony from the Department that Appraisal 1 was a

final product, intended by Hall to be the result of her work on

that job. The fact that an electronic signature appeared on the

appraisal was sufficiently explained by Hall and Smith as an

accident, pure and simple. 4

24. The Department has alleged violation by Hall of three

particular statutory provisions: Sections 475.624, 475.6221,

and 475.629, Florida Statutes, which are set forth in pertinent

part below.

475.624 Discipline.--The board may deny

an application for registration or

certification; may investigate the actions

of any appraiser registered, licensed, or

certified under this part; may reprimand or

impose an administrative fine not to exceed

$5,000 for each count or separate offense

against any such appraiser; and may revoke

or suspend, for a period not to exceed 10

years, the registration, license, or

certification of any such appraiser, or

place any such appraiser on probation, if it

finds that the registered trainee, licensee,

or certificateholder:

* * *

(2) Has been guilty of fraud,

misrepresentation, concealment, false

promises, false pretenses, dishonest

conduct, culpable negligence, or breach of

trust in any business transaction in this

state or any other state, nation, or

territory; has violated a duty imposed upon

her or him by law or by the terms of a

contract, whether written, oral, express, or

implied, in an appraisal assignment; has

aided, assisted, or conspired with any other

person engaged in any such misconduct and in

furtherance thereof; or has formed an

intent, design, or scheme to engage in such

misconduct and committed an overt act in

furtherance of such intent, design, or

scheme. It is immaterial to the guilt of

the registered trainee, licensee, or

certificateholder that the victim or

intended victim of the misconduct has

sustained no damage or loss; that the damage

or loss has been settled and paid after

discovery of the misconduct; or that such

victim or intended victim was a customer or

a person in confidential relation with the

registered trainee, licensee, or

certificateholder, or was an identified

member of the general public.

* * *

(4) Has violated any of the provisions of

this part or any lawful order or rule issued

under the provisions of this part or chapter

455.

* * *

(6) Has had a registration, license, or

certification as an appraiser revoked,

suspended, or otherwise acted against, or

has been disbarred, or has had her or his

registration, license, or certificate to

practice or conduct any regulated

profession, business, or vocation revoked or

suspended by this or any other state, any

nation, or any possession or district of the

United States, or has had an application for

such registration, licensure, or

certification to practice or conduct any

regulated profession, business, or vocation

denied by this or any other state, any

nation, or any possession or district of the

United States.

* * *

(10) Has been found guilty, for a second

time, of any misconduct that warrants

disciplinary action, or has been found

guilty of a course of conduct or practice

which shows that she or he is incompetent,

negligent, dishonest, or untruthful to an

extent that those with whom she or he may

sustain a confidential relationship may not

safely do so.

* * *

(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.

475.6221 Employment of and by registered

trainee real estate appraisers.--

(1) A registered trainee real estate

appraiser must perform appraisal services

under the direct supervision of a licensed

or certified appraiser who is designated as

the primary supervisory appraiser. The

primary supervisory appraiser may also

designate additional licensed or certified

appraisers as secondary supervisory

appraisers. A secondary supervisory

appraiser must be affiliated with the same

firm or business as the primary supervisory

appraiser and the primary or secondary

supervisory appraiser must have the same

business address as the registered trainee

real estate appraiser. The primary

supervisory appraiser must notify the

Division of Real Estate of the name and

address of any primary and secondary

supervisory appraiser for whom the

registered trainee will perform appraisal

services, and must also notify the division

within 10 days after terminating such

relationship. Termination of the

relationship with a primary supervisory

appraiser automatically terminates the

relationship with the secondary supervisory

appraiser.

475.629 Retention of records.--An

appraiser registered, licensed, or certified

under this part shall retain, for at least

5 years, original or true copies of any

contracts engaging the appraiser's services,

appraisal reports, and supporting data

assembled and formulated by the appraiser in

preparing appraisal reports. The period for

retention of the records applicable to each

engagement of the services of the appraiser

runs from the date of the submission of the

appraisal report to the client. These

records must be made available by the

appraiser for inspection and copying by the

department on reasonable notice to the

appraiser. If an appraisal has been the

subject of or has served as evidence for

litigation, reports and records must be

retained for at least 2 years after the

trial.

25. There has not been any showing by the Department that

Hall's unintentional and mistaken "publication" of Appraisal 1

was violative of any statutory prohibition set forth above.

Clearly, there was never any intent on Hall's part to do

anything improper or fraudulent. Nor were Smith's actions--for

which Hall was responsible--intentional or meant to harm,

defraud or otherwise harm a client.

26. In short, the Department did not, by clear and

convincing evidence, establish the violations set forth in the

Administrative Complaint.

RECOMMENDATION

Based on 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, Division of

Real Estate, dismissing the complaint against Deborah M. Hall.

DONE AND ENTERED this 8th day of April, 2009, in

Tallahassee, Leon County, Florida.

R. BRUCE MCKIBBEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 8th day of April, 2009.

ENDNOTES

1/ Petitioner's Proposed Recommended Order violates Florida

Administrative Code Rule 28-106.215 in that it exceeds 40 pages

without leave of the Administrative Law Judge. However, in

light of the ruling herein, there is no prejudice to Respondent

caused by the violation.

2/ Unless particularly stated to the contrary, all references to

Florida Statutes in this Recommended Order shall be to the 2008

version.

3/ In fact, by that time, Hall had been notified by her client

to stop doing work on the file, and she had not taken steps to

further finalize the appraisal.

4/ Ironically, Respondent's Proposed Recommended Order contains

errors ( see paragraphs 17 and 22), which are clearly mistakes

and were not meant to be part of the final product. This is

amusingly indicative of the adage that, "Mistakes happen."

COPIES FURNISHED :

Thomas W. O'Bryant, Jr., Director

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N-802

Orlando, Florida 32801

Ned Luczynski, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Robert Minarcin, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N-801

Orlando, Florida 32801-1757

David P. Rankin, Esquire

Law Office of David P. Rankin, P.A.

18540 North Dale Mabry Highway

Lutz, Florida 33548

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.