09-000642PL Department Of Business And Professional Regulation, Division Of Real Estate vs. James Edward Lester, Jr. Status: Closed Recommended Order on Tuesday, November 24, 2009.

Summary: Petitioner failed to demonstrate the allegations in the Amended Administrative Complaint because Respondent did not sign the reports and the USPAP standards alleged are not the standards incorporated by statute.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 09-0642PL

)

JAMES EDWARD LESTER, JR., )

)

Respondent. )

)

RECOMMENDED ORDER

On September 21, 2009, a duly-noticed hearing was held by

means of video teleconferencing with sites in Tallahassee and

Panama City, Florida, before Lisa Shearer Nelson, Administrative

Law Judge of the Florida Division of Administrative Hearings.

APPEARANCES

For Petitioner: Robert Minarcin, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801-1757

For Respondent: Daniel Villazon, Esquire

Daniel Villazon, P.A.

1420 Celebration Boulevard, Suite 200

Celebration, Florida 34747

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent violated the

(2006)

1/ , as alleged in the Administrative Complaint, and if so,

what penalty should be imposed?

PRELIMINARY STATEMENT

On August 6, 2008, Petitioner, Department of Business and

Professional Regulation (the Department or DBPR), filed a 12-

count Administrative Complaint against Respondent, alleging

violations of Section 475.624(2) and (15), Florida Statutes, and

violation of Section 475.624(14), Florida Statutes, by violating

various portions of the Uniform Standards of Professional

Appraisal Practice (USPAP). Respondent disputed the allegations

in the Administrative Complaint and requested a hearing pursuant

to Section 120.57(1), Florida Statutes. On February 6, 2009, the

case was forwarded to the Division of Administrative Hearings for

assignment of an administrative law judge.

The case was originally noticed for hearing by video

teleconference on April 29, 2009. The matter was continued twice

at the request of Petitioner, and ultimately heard September 21,

2009. On April 13, 2009, Petitioner moved to amend the

Administrative Complaint to correct certain dates in the original

Administrative Complaint, and the Motion to Amend was granted.

At hearing, Petitioner presented the testimony of Diana

Woods and Paul Grimes, and Petitioner's Exhibits 1-6, 8 and 9

were admitted into evidence. Respondent testified on his own

behalf and presented the testimony of Kenneth Ardire.

Respondent's Exhibit 1 was also admitted. The proceedings were

recorded and on October 7, 2009, a two-volume Transcript was

filed with the Division.

At the request of the parties, the time for filing proposed

recommended orders was extended to October 30, 2009. Both

parties timely filed Proposed Recommended Orders, and those

submissions have been carefully considered in the preparation of

this Recommended Order.

FINDINGS OF FACT

1. The Department of Business and Professional Regulation,

Division of Real Estate, is the state agency charged with the

licensing and regulation of property appraisers in the State of

Florida, pursuant to Section 20.165 and Chapters 455 and 475,

Florida Statutes.

2. Respondent, James Lester, Jr., is a Florida state

certified general appraiser, holding license number RZ2783. He

has been licensed by the Florida Real Estate Appraisal Board

since 1991, initially holding a certified residential appraisal

license and then a general appraisal license.

3. Kenneth Ardire and Bradley Scott Bozeman formerly worked

in the office referred to as J. Lester Company. The business was

owned by Respondent's father. Bozeman was a residential

appraiser and Ardire was a registered trainee appraiser

supervised by Bozeman. During the time material to this Amended

Administrative Complaint, Respondent did not act in a supervisory

capacity with respect to either Bozeman or Ardire. Neither man

currently works for the firm, and Bozeman's appraiser's license

has been revoked.

4. In February 2006, Ardire and Bozeman prepared a vacant

land appraisal report (Report 3) related to property located on

Highway 71 in White City, Florida, for Vision Bank.

5. Respondent was not involved in the preparation of the

vacant land appraisal and did not sign the report. Vision Bank

also requested a subdivision analysis of the property. Ardire

and Bozeman were assigned the report regarding the subdivision

analysis because they had prepared the prior report on the same

property. They were assigned to this task by an employee in the

office other than Respondent.

6. Preparation of a subdivision analysis is considered a

commercial appraisal, as opposed to a residential appraisal.

Neither Ardire nor Bozeman is licensed to prepare commercial

appraisals.

7. For reasons that are unclear, Ardire provided a "draft"

report to Vision Bank, which shall be referred to as Report 2.

Report 2 is unsigned and contains only the names of Bozeman and

Ardire. Report 2 was provided by Vision Bank to Donald Giles,

another licensed appraiser. Based on his review of Report 2,

Giles filed a complaint with the Department. The complaint was

identified as DBPR Case No. 2007-3522.

8. In response to a request from the Department, Bozeman

supplied to DBPR a copy of what is now referred to as Report 1

and its supporting work papers. This report indicates that it

was prepared by Respondent, Bozeman and Ardire. Based on this

report and workfile, DBPR Case No. 2008-1566 (the current

proceeding) was initiated against Respondent.

9. Neither report has numbered pages. Reports 1 and 2

differ in the following ways:

a. Report 1 lists all three appraisers, with purported

signatures for each. Report 2 lists only Ardire and Bozeman and

contains no signatures. However, both reports state on the

second page of the cover letter that "the appraisals attached

were written, valued, analyzed and concluded by Kenneth Ardire

and Bradley Scott Bozeman."

b. The cover letter for Report 1 is on company letterhead,

and is addressed to Vision Bank. The cover letter for Report 2

is on plain paper, and is addressed to Capital City Bank, at the

same address listed for Vision Bank. The first page of Report 2

lists Vision Bank as the intended user.

c. On the page labeled "Extraordinary Assumptions," Report

2 contains a sixth assumption which states: "The appraiser

completing this assignment has a small interest in the property.

However, the appraiser was not biased in his final conclusion of

value." This assumption is omitted in Report 1.

d. The certification page in Report 2 also lists Bozeman as

having a minor interest in the property, lists Ardire and Bozeman

but contains no signatures. The certification page for Report 1

has no reference to Bozeman's interest and has three purported

signatures (Ardire, Bozeman and Respondent).

e. On the page entitled Certificate of Value, Report 1 has

three signature blocks and three purported signatures (Ardire,

Bozeman, and Respondent). Report 2 contains two signature blocks

(for Ardire and Bozeman) but no signatures.

f. The third paragraph of the section entitled "Approaches

to Value Omitted" in Report 2 contains the following sentences:

"The market approach is unique since not all properties are

alike. In this case the appraiser compared an area in Lands

Landing in Wewahitchka and Honey Hill Subdivision in

Wewahitchka." These two sentences are omitted from this section

of the report in Report 1.

g. With respect to the Highest and Best Use Discussion, the

first two pages in both reports are identical. Report 1 includes

an additional two pages entitled "Introduction to the Appraisal

Process," which appears to be general information related to the

appraisal process as opposed to specific information related to

the appraisal performed.

h. The written information contained in the "Public and

Private Restriction" section is identical. However, Report 1

also includes maps and pictures of the area.

i. Both reports contain the Land Appraisal Report (Report

3) signed by Ardire and Bozeman. Report 1 contains additional

information with respect to the vacant land report not included

in Report 2.

j. On the page labeled "Land Sales Comparison Chart," under

the Section entitled "Reconciliation and Land Value Estimate,"

Report 2 contains the sentence, "All the sales are zoned for

similar use and felt to have the same potential for use as the

subject." This sentence is omitted from Report 1.

k. On the page labeled "Income Approach," Report 2 contains

the sentence, "Method 2 is the financing and development method."

This sentence is omitted in Report 1.

l. Report 1 contains a blank page entitled "Addendum"

followed by pages from a book with a heading "Subdivision

Analysis."

10. While there are differences between Report 1 and Report

2, they do not make a significant difference in terms of the

quality and usefulness of the reports.

11. Section 475.628, Florida Statutes, requires that

appraisers comply with the USPAP. Section 475.628 was last

amended in 1998, and was enacted in 1991. USPAP is adopted by

the Appraisal Foundation, which is authorized by Congress as the

Source of Appraisal Standards and Appraiser Qualifications.

Pursuant to Section 475.611(1)(q), Florida Statutes, "Uniform

Standards of Professional Appraisal Practice" means the most

recent standards approved and adopted by the Appraisal Standards

Board of the Appraisal Foundation. Section 475.611 was also

enacted in 1991, and the language of this subsection has been

unchanged, although renumbered, since that time. To this end,

the Department has submitted as Exhibit 5 the USPAP Standards

that became effective January 1, 2005. The most recent

amendments for each section of the Standards is reflected on page

four of the exhibit. None of these amendments relevant to these

proceedings occurred prior to 1998.

12. The Department alleges that Report 1 and the workfile

for the report do not conform to several components of the USPAP

standards in effect in 2005. Specifically, the Conduct portion

of the Ethics Rule provides in part that "[a]n 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." Report 1

violated this section of the Ethics Rule contained in USPAP in

that it was difficult for a reader of the report to determine

exactly what was being appraised. Moreover, the inclusion of the

gross sell-out amount on the first page, described as "potential

gross income" in bold type is also misleading, because non-

appraisers would infer that the potential gross income was the

concluded value of the property.

13. The Recordkeeping portion of the Ethics Rule addresses

the need for appraisers to keep a workfile for each appraisal.

The rule provides in pertinent part:

An appraiser must prepare a workfile for each

appraisal, appraisal review, or appraisal

consulting assignment. The workfile must

contain:

- 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 written 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.

14. With respect to Report 1, the workfile does not include

documentation regarding marketing information for Gulf County, as

listed in the report, and also lacks documentation to support any

highest and best use analysis, including the four criteria

necessary to establish the highest and best use for the property.

It also lacks documentation to support the statements in Report 1

regarding the respective public and private restriction section,

and lacks any plans or specifications to indicate the type of

infrastructure proposed for the subdivision. The workfile also

lacks documentation to support the income approach used, and

contains no information to support the construction costs,

closing costs, real estate taxes, expenses or other calculations

used in the Calculations and Comments Section of Report 1. Also

missing is any documentation from the identified engineers to

support the data used for construction costs. Finally, there is

also no documentation to support the data or calculations in the

two-year discounted cash flow analysis in Report 1.

15. With respect to Report 3, the workfile lacks

documentation to support the single family price ranges in the

neighborhood section of the report; lacks documentation to

support the information in the Market Data Analysis Section; and

lacks any multiple listing services (MLS) data or public records

for the comparable sales used in the report.

16. The Amended Administrative Complaint refers to the

Scope of Work Rule. This rule is in actuality entitled Standard

1: Real Property Appraisal, Development and states: "In

developing a real property appraisal, an appraiser must identify

the problem to be solved and the scope of work necessary to solve

the problem, and correctly complete research and analysis

necessary to produce a credible appraisal." Report 1 identifies

the problem as "estimating the value of the proposed subdivision

and determines [sic] a value on a typical lot." However, the

Report does not identify the scope of work and does not complete

the research and analysis necessary to complete the appraisal

properly.

17. Standards 1-1(a), (b) and (c) require the following:

In developing a real property appraisal, an

appraiser must:

(a) be aware of, understand, and correctly

employ those recognized methods and

techniques that are necessary to produce a

credible appraisal;

(b) not commit a substantial error of

omission or commission that significantly

affects an appraisal; and

(c) not render appraisal services in a

careless or negligent manner, such as by

making a series of errors that, although

individually might not significantly affect

the results of an appraisal, in the aggregate

affects the credibility of those results.

18. Report 1 violates these standards because, as discussed

more fully below, the report contains several significant errors,

including the failure to discuss the four criteria for analyzing

highest and best use.

19. Standards Rule 1-2(d) requires that in developing a

real property appraisal, an appraiser must identify the effective

date of the appraiser's opinions and conclusions. Report 1

stated that the value date of the report and the date of the

report itself, were the same as the date of the inspection of the

property, June 7, 2006. Mr. Grimes, the Department's expert,

explained that this was a violation of the standard because in a

situation where the appraiser is estimating a value for a project

that is not now in existence, the hypothetical nature of the

valuation must be adequately explained, and the effective date of

the appraisal should reflect the date in the future when the

subdivision is scheduled to be completed. Mr. Grimes' testimony

is credited.

20. Standards Rule 1-3 requires the following:

When the value opinion to be developed is

market value, and given the scope of work

identified in accordance with Standards Rule

1-2(f), an appraiser must:

(a) identify and analyze the effect on use

and value of existing land use regulations,

reasonably probable modifications of such

land use regulations, economic supply and

demand, the physical adaptability of the real

estate, and market area trends; and

(b) develop an opinion of the highest and

best use of the real estate.

21. Report 1 does not provide an analysis of the highest

and best use of the property. While the factors related to such

an analysis are defined, there is no discussion of these factors

related to the actual property being appraised.

22. Standards Rule 1-4(a),(c) and (g) provides:

In developing a real property appraisal, an

appraiser must collect, verify, and analyze

all information applicable to the appraisal

problem, given the scope of work identified

in accordance with Standards Rule 1-2(f).

(a) When a sales comparison approach is

applicable, an appraiser must analyze such

comparable sales data as are available to

indicate a value conclusion.

* * *

(c) When an income approach is applicable,

an appraiser must:

(i) analyze such comparable rental data

as are available and/or the potential

earnings capacity of the property to estimate

the gross income potential of the property;

(ii) analyze such comparable operating

expense data as are available to estimate the

operating expenses of the property;

(iii) analyze such comparable data as

are available to estimate rates of

capitalization and/or rates of discount; and

(iv) base projections of future rent

and/or income potential and expenses on

reasonably clear and appropriate evidence.

Comment: In developing income and

expense statements and cash flow projections,

an appraiser must weigh historical

information and trends, current supply and

demand factors affecting such trends, and

anticipated events such as competition from

developments under construction.

* * *

(g) An appraiser must analyze the effect on

value of any personal property, trade

fixtures, or intangible items that are not

real property but are included in the

appraisal.

23. While the Amended Administrative Complaint refers to

all three subparagraphs listed above, the evidence presented

dealt solely with the deficiencies related to Standards Rule 1-

4(c). Mr. Grimes opined that with respect to Report 1, the

income approach to the cash flow analysis did not support the

conclusions, projections on income, and with respect to this

project, the sale of lots over a period of time. The statements

made in the report are conclusory in nature, with little or no

explanation of the basis for forming the conclusions.

24. Standards Rule 1-6(a) and (b) provides:

In developing a real property appraisal, an

appraiser must:

(a) reconcile the quality and quantity of

data available and analyzed within the

approaches used; and

(b) reconcile the applicability or

suitability of the approaches used to arrive

at the value conclusion(s).

25. Report 1 indicates that there are three traditional

approaches to value in the valuation process: the cost approach,

the direct sales comparison approach, and the income

capitalization approach. While the report states that all three

approaches will be considered, the appraisal report omits any

discussion of the cost approach and the direct sales comparison

approach. By omitting these approaches from the analysis, the

report omits an important "check and balance" process that would

have caught what Mr. Grimes considered to be a substantial error

in the discounted cash flow analysis.

26. Standards Rule 2-1 provides:

Each written or oral real property appraisal

report must:

(a) clearly and accurately set forth the

appraisal in a manner that will not be

misleading;

(b) contain sufficient information to enable

intended users of the appraisal to understand

the report properly; and

(c) clearly and accurately disclose all

assumptions, extraordinary assumptions,

hypothetical conditions, and limiting

conditions used in the assignment.

27. Hypothetical conditions and extraordinary assumptions

are considered to be two different things. As noted in Report 1,

an extraordinary assumption is defined as an assumption that

presumes certain information to be factual. If found to be

false, the information could alter the appraiser's opinions or

conclusions. A hypothetical condition is something that assumes

conditions contrary to known facts about physical, legal or

economic characteristics of the property being appraised, or

about conditions external to the property, such as market

conditions or trends, or about the integrity of data used in the

analysis. Hypothetical conditions and extraordinary assumptions

should be explained separately in an appraisal report, so that

the intended user is in a better position to understand the true

value of the appraisal.

28. Report 1 lists 6 conditions and assumptions all

together. They are that the proposed subdivision is based on 21

lots; that all plans and specs (unidentified) are to be approved

and accepted by all governmental authorities; all work will be

completed in a quality workmanship manner with quality materials;

assumed the subject property can be developed as proposed; and

information on the number of lots was made available by the

engineer Bailey, Bishop and Lane. The report does not

differentiate which are considered hypotheticals and which are

considered extraordinary assumptions.

29. The report does not contain sufficient information to

enable the intended user of the appraisal to understand the

report and to use it for its intended purpose, i.e. , to determine

whether the highest and best use for the land is subdivision

development.

30. Standards Rule 2-2(b) provides in pertinent part:

Each written real property appraisal report

must be prepared under one of the following

three options and prominently state which

option is used; Self-Contained Appraisal

Report, Summary Appraisal Report, or

Restricted Use Appraisal Report.

* * *

(b) The content of a Summary Appraisal

Report must be consistent with the intended

use of the appraisal and, at a minimum:

* * *

(ii) state the intended use of the

appraisal;

(iii) summarize information sufficient to

identify the real estate involved in the

appraisal, including the physical and

economic property characteristics relevant to

the assignment;

* * *

(vi) state the effective date of the

appraisal and the date of the report;

* * *

(ix) summarize the information analyzed, the

appraisal procedures followed, and the

reasoning that supports the analyses,

opinions, and conclusions;

(x) state the use of the real estate

existing as of the date of value and the use

of the real estate reflected in the

appraisal; and, when reporting an opinion of

market value, summarize the report and

rationale for the appraiser's opinion of the

highest and best use of the real estate;

. . .

31. Report 1 states that the intended use of the appraisal

is to determine the fair market value of the property. It also

provides sufficient information to identify the real estate

involved. However, as noted at finding of fact 18, the effective

date of the appraisal, the date of the property inspection and

the date of the report are the same. Where, as here, the

appraisal is determining value of a proposed subdivision as

completed at some future time, the date of the report cannot be

the effective date of the appraisal. The report fails to have

any discussion or analysis with respect to the property's highest

and best use, and has little or no reasoning or analysis to

support the opinions and conclusions contained in the report.

32. Report 1 contains what purports to be Respondent's

signature. Clearly, by signing an appraisal report, a property

appraiser takes responsibility for the contents of that report.

When speaking with the investigator during the investigation of

this case, Respondent stated that he had little recollection of

the appraisal, but given that his signature was on it, he

acknowledged responsibility for whatever errors it contained.

However, at hearing, Respondent disputed that it was actually his

signature. Respondent's testimony that the signatures contained

in Report 1 are not his is credited. Included in the record of

this proceeding are other documents, including past appraisals

prepared by Respondent, that contain what he acknowledges to be

his signature. After carefully reviewing all of the signatures

in evidence, it cannot be said with any degree of certainty that

the signatures included in Report 1 are indeed the signatures of

Respondent. 2/

CONCLUSIONS OF LAW

33. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties to this

action in accordance with Sections 120.569 and 120.57(1), Florida

Statutes (2009).

34. In this disciplinary proceeding against Respondent's

license, Petitioner must demonstrate by clear and convincing

evidence that Respondent has committed the allegations charged in

the Administrative Complaint. Department of Banking and Finance

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

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

35. Clear and convincing evidence:

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 lacking in

confusion as to the facts in 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 sought to

be established.

In re Henson , 913 So. 2d 579, 590 (Fla. 2005), quoting Slomowitz

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

36. The Amended Administrative Complaint charges Respondent

with violating the following subsections of Section 475.624,

Florida Statutes:

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.

* * *

(14) Has violated any standard for the

development or communication of a real estate

or 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. Count I of the Amended Administrative Complaint charges

Respondent with violating Subsection 475.624(15); Count II with

violating Subsection 475.624(2); and Counts III through XII with

violating Subsection 475.624(14) by virtue of violating various

portions of the 2005 USPAP Standards.

38. All of the charges in the Administrative Complaint are

based upon the assumption that Respondent actually signed Report

1. Paragraph four alleges that Respondent, Ardire and Bozeman

"developed and communicated an appraisal report (Report 1) for a

proposed subdivision . . . ." Paragraph nine alleges that

Respondent made certain errors and omissions in Report 1. In its

Proposed Recommended Order, Petitioner states that "[u]pon

signing of an appraisal report, the signatory (ies) certify that

all certifications listed within the report have been complied

with and that the report is compliant with the Uniform Standards

of Professional Appraisal Practice. . . . Upon signing of an

appraisal report, the signatory (ies) take responsibility for the

report as developed and communicated to the client."

39. Both statements in the Proposed Recommended Order are

correct. An appraiser who signs an appraisal report takes full

responsibility for all of the report, and has an obligation to

review everything contained in the report; to make sure the data

included in the report are supported by the workfile; and that

the report reflects a thorough and accurate description of the

appraiser's opinions and conclusions.

40. However, in this case, there is not clear and

convincing evidence that Respondent actually signed Report 1, or

that he "developed and communicated" the appraisal report. The

evidence is clear that Respondent was not involved in developing

or communicating Report 2 or 3. At most, his involvement was to

provide Bozeman and Ardire access to reference materials for

Report 1.

41. Section 92.38, Florida Statutes (2009), provides that

"comparison of a disputed writing with any writing proved to the

satisfaction of the judge to be genuine, shall be permitted to be

made by the witnesses; and such writings, and the evidence

respecting the same, may be submitted . . . to the court in case

of a trial by the court, as evidence of the genuineness, or

otherwise, of the writing in dispute." The Department could have

presented the testimony of a handwriting expert to prove that

Report 1 actually contained Respondent's signature, or could have

presented the testimony of a lay witness sufficiently familiar

with the Respondent's handwriting. Redmond v. State , 731 So. 2d

77, 78 (Fla. 2d DCA 1999). The only person who testified

regarding Respondent's handwriting who had sufficient familiarity

with the handwriting is Respondent. Here, other exemplars were

supplied by both parties that no one disputes are actually

Respondent's handwriting. The signatures on Report 1 are simply

not the same. The Department has failed to prove by clear and

convincing evidence that Respondent signed Report 1, or

participated in the development and/or communication of the

report in any meaningful way.

42. Evidence was presented at hearing that only Respondent

was authorized to prepare a subdivision analysis because this

type of appraisal requires a certified general appraisal's

license, and that Respondent was the only certified general

property appraiser in the office. However, the Amended

Administrative Complaint makes no allegations that Respondent

failed to supervise persons in his employ, or that he was

responsible for the work of other appraisers in his office.

Disciplinary action can only be taken against a licensee based on

conduct actually alleged in the charging instrumentevisani

v. Department of Health , 908 So. 2d 1108 (Fla. 1st DCA 2005);

Lusskin v. Agency for Health Care Administration , 731 So. 2d 67,

69 (Fla. 4th DCA 1999). Therefore, if there is not clear and

convincing evidence that Respondent developed and communicated

the report, or that he signed the report, he cannot be

disciplined for its contents or lack thereof.

43. Accordingly, Count I, which charges a violation of

Section 475.624(15), Florida Statutes, by failing to exercise

reasonable diligence in developing an appraisal, has not been

proven by clear and convincing evidence and should be dismissed.

44. Similarly, Count II charges that Respondent violated

Section 475.625(2), Florida Statutes, by committing fraud,

misrepresentation, concealment, false promises, false pretenses,

dishonest conduct, culpable negligence, or breach of trust in any

business transaction. The evidence is not clear and convincing

that Respondent was actually involved in a business transaction

in this case. Accordingly, Count II should be dismissed.

45. Counts III through XII involve alleged violations of

Section 475.624(14), by means of violating the USPAP standards,

2005 edition. Even assuming that Respondent signed Report 1,

which is not found in this case, a more fundamental problem

exists with respect to these counts. Where, as here, a

professional standard of conduct is alleged to have been

breached, the Department is obligated to present evidence of both

the standard and the breach of that standard. Purvis v.

Department of Professional Regulation , 461 So. 2d 134 (Fla. 1st

DCA 1984). To this end, the Department alleged and submitted

into evidence the 2005 USPAP Standards.

46. However, in Abbott Laboratories v. Mylan

Pharmaceuticals , 15 So. 3d 642 (Fla. 1st DCA 2009), the First

District Court of Appeal recently held that a statute

incorporating a federal standard can only be interpreted as

applying to editions of the standard in effect at the time of the

enactment of the statute. In a lengthy opinion addressing the

Legislature's use of the Approved Drug Products with Therapeutic

Equivalence Evaluations (Orange Book) published by the United

States Food and Drug Administration, and its application by

virtue of Section 465.0251, Florida Statutes, the court

thoroughly examined the doctrine of unlawful delegation of

legislative authority. It stated in part:

Abbott argues that reversal is nonetheless

required because the ALJ unconstitutionally

applied section 465.0251. Abbott contends

that the legislature could not have intended

to incorporate updated editions of the Orange

Book to govern section 465.0251 because of

the long-established constitutional rule in

Florida that the legislature's adoption "in

advance [of] any federal administrative body

which may be adopted in the future would

amount to an unlawful delegation of

legislative authority." State v. Rodriguez ,

365 So. 2d 157, 160 (Fla. 1978).

Article II, § 3 of the Florida

Constitution provides:

The powers of the state government

shall be divided into legislative,

executive and judicial branches.

No person belonging to one branch

shall exercise any power

appertaining to either of the other

branches unless expressly provided

therein.

This constitutional provision has been

construed "to prohibit the legislature,

absent constitutional authority to the

contrary, from delegating its legislative

power to others." Gallagher v. Motors Ins.

Corp. , 605 So. 2d 62, 71 (Fla. 1992). Under

this non-delegation principle, Florida courts

have long held that while the legislature may

enact laws that adopt provisions of federal

statutes or other regulations of a federal

administrative body that are in existence and

in effect at the time the legislature acts,

where the legislature incorporates in a

Florida statute a future federal act or

ruling of a federal administrative body, such

incorporation constitutes unconstitutional

delegation of legislative power. [Lengthy

citations omitted]

Where a statute generally incorporates a

federal law or regulation, to avoid holding

the subject statute unconstitutional, Florida

courts interpret the statute as incorporating

only the federal law in effect on the date of

adoption of the Florida statute.

15 So. 2d at 654-655.

46. The reasoning in Abbott Laboratories is applicable

here. Accordingly, Sections 475.611(1)(q), 475.628 and

475.642(14) must be construed to refer to the USPAP standards in

effect at the time of their enactment, i.e., 1991. 3/

Notwithstanding the citation to 2005 USPAP standards in the

Administrative Complaint, as a matter of law, 2005 Standards

cannot provide a basis for discipline because they have not been

incorporated into Sections 475.611(1)(q), 475.628 and

475.642(14), Florida Statutes. Because no evidence was presented

regarding the USPAP standards in effect in 1991, the Department

has not proven the violations alleged in Counts III through XII

of the Amended Administrative Complaint by clear and convincing

evidence, and these Counts should be dismissed as well.

RECOMMENDATION

Upon consideration of the facts found and conclusions of law

reached, it is

RECOMMENDED that:

The Florida Real Estate Appraisal Board enter a final order

dismissing the Amended Administrative Complaint.

DONE AND ENTERED this 24th day of November, 2009, in

Tallahassee, Leon County, Florida.

S

LISA SHEARER NELSON

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 24th day of November, 2009.

ENDNOTES

1/ Unless otherwise indicated, all references to the Florida

Statutes are to the 2006 codification.

2/ For example, compare the signature found at Petitioner's

Exhibit 3, page 127 and 129 (the cover letter and certification

page for Report 1) with signature on pages 261 and 264 of

Petitioner's Exhibit 3 (the cover letter and certification page

for another appraisal report prepared by Respondent). The only

letter that is reasonably similar is the "E." for Respondent's

middle initial. The numerous examples of Respondent's signature

contained in the exhibits all contain a legible writing where his

first and last name can be easily deciphered, and the capital

letters all slant to the right. In the "signatures" included in

Report 1, the last name is a scribble and the "J" for Jr., slants

to the left.

3/ The Amended Administrative Complaint clearly references the

2005 USPAP standards, as opposed to the standards in effect in

1991. However, only those standards in effect at the time the

legislature enacted the operative statutes can authorize

discipline. Therefore, while the reports were clearly deficient

under the 2005 standards, and if Respondent were responsible for

the developing the reports would provide a basis for showing

violations under the 2005 standards, those standards cannot

provide a basis for discipline.

COPIES FURNISHED:

Robert Minarcin, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801-1757

Daniel Villazon, Esquire

Daniel Villazon, P.A.

1420 Celebration Boulevard, Suite 200

Celebration, Florida 34747

Ned Luczynski, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida

Thomas W. O'Bryant, Jr., Director

Division of Real Estate

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.