09-001514 Department Of Business And Professional Regulation, Division Of Real Estate vs. Nestor G. Mendoza And Diamonds Realty Of Miami Beach Status: Closed Recommended Order on Thursday, August 20, 2009.

Summary: Petitioner met its burden and demonstrated that Respondents violated the offenses in the administrative complaint.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 09-1514

)

NESTOR G. MENDOZA, )

DIAMONDS REALTY OF MIAMI BEACH, )

INC., )

)

Respondents. )

)

RECOMMENDED ORDER

This case came before Administrative Law Judge June C.

McKinney of the Division of Administrative Hearings for final

hearing on July 4, 2009, in Miami, Florida.

APPEARANCES

For Petitioner: Patrick Cunningham, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Hurston Building-North Tower

Orlando, Florida 32801

For Respondents: Nestor G. Mendoza, pro se

12501 Southeast 26th Street

Miami, Florida 33175

STATEMENT OF THE ISSUES

In this disciplinary proceeding, the issues are:

(1) Whether Respondents committed the violations alleged in the

Administrative Complaint issued by the Petitioner; and

(2) Whether disciplinary penalties should be imposed on

Respondents, or either of them, if Petitioner proves one or more

of the violations charged in its Administrative Complaint.

PRELIMINARY STATEMENT

On January 17, 2008, the Department of Business and

Professional Regulation, Division of Real Estate ("Petitioner"),

issued a four-count Administrative Complaint against Nestor G.

Mendoza and Diamonds Realty of Miami Beach, Inc.

("Respondents"), wherein it was alleged that Respondents had

violated various provisions of Chapter 475, Florida Statutes.

Respondents timely requested a formal hearing to contest these

allegations, and the matter was referred to the Division of

Administrative Hearings on March 20, 2009.

The presiding administrative law judge set the final

hearing for June 4, 2009. Both parties appeared at the

appointed place and time.

At hearing, Petitioner presented the testimony of two

witnesses: Veronica Hardy, Investigator; and Abdul El Hayek,

complainant. Petitioner also offered Exhibits numbered 1

through 6 1 / that were admitted into evidence. Mendoza, testified

on his own behalf, and Respondents presented the testimony of

one other witness, Luigi Gallegos. Respondents offered Exhibits

numbered 1 through 6, all of which were received in evidence.

The proceeding was recorded and transcribed. The parties

were given until July 21, 2009, to file proposed recommended

orders. Only the Petitioner filed a Proposed Recommended Order,

which has been considered in the preparation of this Recommended

Order.

Unless otherwise indicated, citations to the Florida

Statutes refer to the 2004 Florida Statutes.

FINDINGS OF FACT

The Parties:

1. Respondent, Nestor G. Mendoza ("Mendoza"), at all times

material to this matter, was a licensed real estate broker

subject to the regulatory jurisdiction of the Petitioner.

Petitioner issued Mendoza license numbers 156850 and 3190745.

2. Mendoza has been a broker since 1973 and took the

license exam which he passed to become a broker. He has been

taking continuing education to keep abreast of the law for a

broker's license and is familiar with the rules governing

brokers.

3. Respondent, Diamonds Realty of Miami Beach, Inc.

("Diamonds"), is and was, at all times material in this matter,

a corporation registered as a Florida real estate broker subject

to the regulatory jurisdiction of the Petitioner, and having

been issued license number 1011331.

4. Mendoza was licensed and operating as a qualifying

broker and officer of Diamonds at all times material to this

matter.

5. Abdul El Hayek ("Hayek") lived in an apartment building

that was going to be converted to condominiums. After speaking

with Mr. Gallegos, Mendoza's agent and a realtor for Diamonds,

Hayek decided to buy a unit at Bayview apartments. On

September 17, 2004, Hayek signed a reservation agreement and

gave Gallegos a total deposit of $15,000. Hayek wrote three

separate $5,000 checks, check numbers 755, 756, and 757, dated

September 17, 2004, to Diamonds Realty, as a down payment on the

purchase of property located at 7915 East Drive, Unit 3B, North

Bay Village, Florida.

6. Per Hayek's reservation agreement, Hayek's $15,000 down

payment was to be deposited in Diamonds' escrow account. The

Reservation Agreement stated in pertinent part:

2. Escrow Agreement

The Reservation Deposit will be held in

escrow by the Escrow Agent, Diamonds Realty

of Miami Beach, Inc. Escrow Account with

offices, 960 Arthur Godfrey Road, Suite 212,

Miami Beach, Florida 33140. . . .

7. Hayek's $15,000 deposit was placed in Diamond's

operating account not in the escrow account. Hayek never

authorized release of the deposit to anyone. Hayek provided his

deposit to be held in escrow for the purchase of the unit 3B.

8. The units at Bayview went into receivership and the

condominiums were never converted. Hayek never received a

refund of the $15,000 deposit he provided Diamonds.

9. On September 10, 2007, a final judgment was entered

against Diamonds for $15,000, plus interest and costs, for

failure to return to Hayek, the buyer, the deposit received by

both Respondents for the purchase of the subject property. The

civil judgment has not been satisfied. Mendoza admitted at the

hearing that the monies went in the operating account, that he

had not repaid the $15,000 deposit, and that Hayek had not

received his money back, nor had he obtained a unit at Bayview

apartments.

The Charges:

10. In counts I and II, Petitioner charges Respondents

with misrepresenting a business transaction in violation of

Section 475.25(1)(b), Florida Statutes.

11. In counts III and IV, Petitioner charges Respondents

with failing to account or deliver funds in violation of Section

475.25(1)(d)1., Florida Statutes.

CONCLUSIONS OF LAW

12. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and the

parties thereto pursuant to Sections 120.569 and 120.57(1),

Florida Statutes (2009).

13. Section 475.25, Florida Statutes, under which

Respondents have been charged, sets forth the acts for which the

Petitioner may impose discipline. This statute provides, in

pertinent part:

(1) The commission may deny an application

for licensure, registration, or permit, or

renewal thereof; may place a licensee,

registrant, or permittee on probation; may

suspend a license, registration, or permit

for a period not exceeding 10 years; may

revoke a license, registration, or permit;

may impose an administrative fine not to

exceed $1,000 for each count or separate

offense; and may issue a reprimand, and any

or all of the foregoing, if it finds that

the licensee, registrant, permittee, or

applicant:

* * *

b) Has been guilty of fraud,

misrepresentation, concealment, false

promises, false pretenses, dishonest dealing

by trick, scheme, or device, 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 listing contract,

written, oral, express, or implied, in a

real estate transaction; 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 any

such misconduct and committed an overt act

in furtherance of such intent, design, or

scheme. It is immaterial to the guilt of

the licensee 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 licensee or

was an identified member of the general

public.

* * *

(d)1. Has failed to account or deliver to

any person, including a licensee under this

chapter, at the time which has been agreed

upon or is required by law or, in the

absence of a fixed time, upon demand of the

person entitled to such accounting and

delivery, any personal property such as

money, fund, deposit, check, draft, abstract

of title, mortgage, conveyance, lease, or

other document or thing of value, including

a share of a real estate commission if a

civil judgment relating to the practice of

the licensee's profession has been obtained

against the licensee and said judgment has

not been satisfied in accordance with the

terms of the judgment within a reasonable

time, or any secret or illegal profit, or

any divisible share or portion thereof,

which has come into the licensee's hands and

which is not the licensee's property or

which the licensee is not in law or equity

entitled to retain under the circumstances.

* * *

14. A proceeding, such as this one, to suspend, revoke, or

impose other discipline upon a professional license is penal in

nature. State ex rel. Vining v. Florida Real Estate Commission ,

281 So. 2d 487, 491 (Fla. 1973). Being penal in nature, Section

475.25, Florida Statutes, "must be construed strictly, in favor

of the one against whom the penalty would be imposed." Munch v.

Department of Professional Regulation, Div. of Real Estate , 592

So. 2d 1136, 1143 (Fla. 1st DCA 1992).

15. Here, the Division seeks to discipline Respondent's

license and/or to impose an administrative fine. Accordingly,

the Division has the burden of proving the allegations charged

in the Administrative Complaint against the Respondents by clear

and convincing evidence. Department of Banking and Finance

Division of Securities and Investor Protection v. Osborne Stern

and Co., 670 So. 2d 932, 933-34 (Fla. 1996) (citing Ferris v.

Turlington , 510 So. 2d 292, 294-95 (Fla. 1987)); Nair v.

Department of Business & Professional Regulation , 654 So. 2d

205, 207 (Fla. 1st DCA 1995).

16. Regarding the standard of proof, in Slomowitz v.

Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983), the Court of

Appeal, Fourth District, canvassed the cases to develop a

"workable definition of clear and convincing evidence" and found

that of necessity such a definition would need to contain "both

qualitative and quantitative standards." The court held that:

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 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. Id.

17. A licensee is charged with knowing the practice act

that governs his/her license. Wallen v. Florida Department of

Professional Regulation, Division of Real Estate, 568 So. 2d 975

(Fla. 3d DCA 1990).

18. There is no dispute (for Mendoza admitted at final

hearing) that the $15,000 deposit was deposited into the

operating account not the escrow account. Petitioner asserts in

its proposed recommended order that "As a result of Respondent's

fraud, misrepresentation, breach of trust and culpable

negligence, Mr. El Hayek's deposit was not returned, and was

lost." Although each of Petitioner's allegations is a violation

under Section 475.25(1)(b), Florida Statutes, the undersigned

has to find specific violations of the statute since the 2004

disciplinary guidelines provide varying penalties for each of

the aforementioned violations.

19. Petitioner failed to prove fraud 2 / or

misrepresentation 3 / in this matter because the record is void of

evidence to demonstrate intent, which is required for each of

those violations. However, Petitioner met its burden of

establishing by clear and convincing evidence Respondents

committed a breach of trust and were culpably negligent by not

placing the $15,000 deposit in the escrow account in violation

of Section 475.25(1)(b), Florida Statutes.

20. Petitioner also demonstrated that neither Mendoza nor

Diamonds accounted or delivered the money to the complainant

upon demand. Mendoza admitted nonpayment of the deposit and the

civil judgment supports the proposition that the complainant,

Hayak, tried to get his deposit money back from Diamonds, who

also failed to account and deliver it to him in violation of

Section 425.25(1)(d), Florida Statutes.

Disciplinary Guidelines:

21. Pursuant to Florida Administrative Code Rule 61J2-

24.001, the Division has established disciplinary guidelines

establishing the range of penalties that will be imposed on

licensees guilty of violating Chapter 475. The 2004 guidelines

mandate that the Petitioner "impose a penalty from a $1000 fine

to a 1 year suspension" for culpable negligence and breach of

trust violations of Section 475.25(1)(b), Florida Statutes. The

guidelines further set forth the usual range of punishment for a

violation of Section 475.25(1)(d), Florida Statutes, as "an

administrative fine of $1,000 to a 5 year suspension."

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Commission enter a final order

that: (a) finds Respondents guilty as charged in counts I, II,

III, and IV of the Administrative Complaint; (b) suspends

Respondents' respective real estate licenses for five years; and

(c) imposes an administrative fine of $2,000 against

Respondents, jointly and severally.

DONE AND ENTERED this 20th day of August, 2009, in

Tallahassee, Leon County, Florida.

S

JUNE C. McKINNEY

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 20th day of August, 2009.

ENDNOTES

1 / The undersigned received Petitioner's rebuttal Exhibit

number 6 into evidence. The Exhibit was a Diamonds Realty card

in the name of Luigi Gallegos with the title Realtor-Associate.

2 / Merriam-Webster's dictionary defines fraud as " intentional

perversion of truth in order to induce another to part with

something of value or to surrender a legal right" (Emphasis

added)

3 / Merriam-Webster's dictionary defines misrepresentation as "to

give a false or misleading representation of usually with an

intent to deceive or be unfair." (Emphasis added)

COPIES FURNISHED :

Patrick J. Cunningham, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building-North Tower, Suite N801

Orlando, Florida 32801

Nestor G. Mendoza

Diamonds Realty of Miami Beach

12501 Southwest 26th Street

Miami, Florida 33175

Thomas W. O'Bryant, Jr., Director

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building-North Tower, Suite N802

Orlando, Florida 32801

Reginald Dixon, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399-0792

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.