11-001084PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Ronald C. Hormes Status: Closed Recommended Order on Friday, June 10, 2011.

Summary: The agency proved one of three counts by clear and convincing evidence; recommend penalty of $1,000 and two years' probation.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE , )

)

Petitioner , )

)

vs. ) Case No. 11 - 1084PL

)

RONALD C. HORMES , )

)

Respondent . )

)

RECOMMENDED ORDER

Pursuant to notice to all parties, a final hearing was

conducted in this case on April 21, 2011, in St. Petersburg,

Florida, before Administrative Law Judge R. Bruce McKibben of

the Division of Administrative Hearing s. The parties were

represented as set forth below.

APPEARANCES

For Petitioner: Donna Christine Lindamood, Esquire

Department of Business and

Profession 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 ISSUE

The issue in this case is stated in three counts set forth

the Admi nistrative Complaint 1/ : Count I, whether Respondent,

Ronald C. Hormes ("Hormes"), is guilty of violating s ection

475.624(15), Florida Statutes (2008) , 2/ by failing to exercise

reasonable diligence when preparing or developing an appraisal

report; Count IV , whether Hormes is guilty of obstructing an

investigation in violation of s ection 475.626(1)(f ) ; and

Count V, whether Hormes is guilty of failing to properly and

adequately supervise a registered trainee appraiser in violation

of s ection 475.624(4) ; and F lorida Administrative Code Rule

61J1 - 4.010.

PRELIMINARY STATEMENT

On or about January 5, 2011, Petitioner, Department of

Business and Professional Regulation, Division of Real Estate

(hereinafter the "Division") , filed an Administrative Complaint

charging Hormes as set forth above. Hormes returned the

Election of Rights form seeking a formal administrative hearing.

The Administrative Complaint and Election of Rights form were

forwarded to the Division of Administrative Hearings (" DOAH ") on

February 28, 2 011 , and the case was assigned to the undersigned

Administrative Law Judge so that a formal administrative hearing

could be conducted. The hearing was held on the date set forth

above, and both parties were present and represented by counsel.

At the fin al hearing, the Division called two witnesses:

John Menard, accepted as an expert in real estate appraisal; and

Michael R. McKinley, former investigator for the Division. The

Division's Exhibits 1 through 4 were admitted into evidence.

Official recognit ion was taken of Exhibits 6 through 8 and of

s ection 475.611.

Hormes called two witnesses: Ronald C. Hormes, and

Robert E. Keller, accepted as an expert in real estate

appraising and appraisal instruction. One exhibit offered by

Hormes was received int o evidence.

A transcript of the final hearing was ordered by the

parties. The T ranscript was filed at DOAH on May 16, 2011. The

parties were given ten days from filing of the transcript to

submit proposed recommended orders. Each party timely submitte d

a Proposed Recommended Order, and each was duly considered in

the preparation of this Recommended Order.

FINDINGS OF FACT

1. The Division is responsible for monitoring all licensed

and certified real estate appraisers in the state. It is the

Division' s duty to e nsure that all appraisers comply with the

standards set forth in relevant statutes and rules.

2. Hormes has been a certified residential real estate

appraiser for approximately 30 years. He operates a

family - owned real estate appraisal busine ss.

3. At all times material hereto, Mariano M. Alvarez II

("Alvarez"), a state - registered trainee real estate appraiser,

was performing appraisal duties under Hormes' supervision.

Alvarez is one of approximately 55 trainees who have worked

under Hormes' supervision since 1993. Alvarez first became a

trainee in Hormes' office in May 1997. He left the office early

in 2004 , but returned as a trainee in July 2004. Alvarez

remained a trainee in Hormes' office until April 2011.

4. At issue in this case are three appraisals which will

be referred to collectively herein as the "Townsend" appraisal.

5. In May 2008, Alvarez was technically working as a

trainee with Hormes. However, Hormes had not given Alvarez any

assignments since some time in 2007. Alvar ez had become engaged

in the operation of a business outside the area of real estate

appraising and was not actively seeking work from Hormes in the

appraisal field.

6. In the Spring of 2008, Alvarez received a request to

engage in some appraisal work. He received an assignment letter

for appraisal work from Karen Maller, an attorney representing

some members of the Townsend family who were in a dispute

concerning land and property left in an estate. The assignment

letter dated May 30, 2008, asked Alva rez to prepare an appraisal

and also to be an expert witness in an upcoming trial. It

appears the assignment letter was emailed to Alvarez, i.e.,

there is no physical address for Alvarez on the letter. Most

assignments are commenced by way of a letter set ting forth the

scope of the intended work to be performed. Sometimes the

assignments are made by way of email, but hard copy letters are

most common. The assignment letter was sent directly to

Alvarez; Hormes was not an addressee on the letter , and it wa s

not copied to him. A real estate appraisal trainee is generally

not authorized to accept appraisal assignments directly.

7. Alvarez apparently accepted the assignment from Maller

and began working on the Townsend appraisal. The correspondence

listed b elow followed the initial assignment letter:

Ʊ A June 30, 2008 , letter from Maller concerning the

upcoming trial dates in January 2009. The letter

contained no physical address , but had email

addresses for both Alvarez and Hormes. The email

address for H ormes was his personal address, not his

work address.

Ʊ A September 8, 2008 , email from Maller to Alvarez,

copied to Hormes, indicating receipt of Alvarez' s

draft appraisal.

Ʊ A September 14, 2008 , email from Maller to Alvarez,

copied to Hormes, seeking a draft for the

residential portion of the appraisal.

Ʊ A September 15, 2008 , email from Maller addressed to

both Alvarez and Hormes, providing comments on the

appraisal that had been submitted.

Ʊ A November 7, 2008 , letter addressed to Alvarez

(only) at H ormes' business address.

8. Hormes does not admit any knowledge of the assignment

accepted by Alvarez prior to receiving Maller's emails in

September. At that time, Hormes became concerned and called

Maller to inform her that she was not a client of his office.

Hormes left messages with Maller concerning this fact, but it is

unclear whether he ever talked directly to Maller. Hormes also

attempted to call Alvarez about the purported assignment.

Hormes testified that, "I put in, you know, phone calls to him.

He is difficult to contact." Again, it is unclear at what point

in time Hormes initially talked directly to Alvarez about this

matter.

9. After Hormes contacted Maller to inform her that she

was not his client, Maller then sent Alvarez a letter in which

Hormes was not copied. That letter dated November 7, 2008,

basically reiterates the facts concerning the upcoming trial in

January 2009, one of the two purposes set forth in the original

assignment letter to Alvarez. The computer - generated footer a t

the bottom of the letter states: T: \\ Carrie \\ Geiger,William \\

Townsendv.Morton \\ Correspondence \\ Witness 002 - Alvarez.doc , as

compared to the footer on the original (June 30, 2008) letter

which says: F: \\ Carrie]Geiger,William \\ Townsendv.Morton \\

correspondence \\ A lvarez - Hormes 001.wpd . Clearly the November

correspondence was meant for Alvarez only. The reason for that

change cannot be determined from the evidence presented at final

hearing in this matter. It may reasonably be inferred that as

of November, Maller no longer considered both Hormes and Alvarez

her expert appraisers. Instead, the November 7 , 2008, letter is

addressed solely to Alvarez as "Expert - Appraiser."

10. Alvarez was using Hormes' office during the time he

was acting as a trainee. Hormes exp ected each of his trainees

to do their work at his office , rather than operating remotely.

Trainees had access to the office computers, fax machines,

copiers, and a library of information. That being the case, it

is difficult to ascertain why Hormes had difficulty contacting

Alvarez once he found out about the Maller assignment. That is,

if Alvarez was using Hormes' office to prepare the appraisal, he

would seem to be accessible to Hormes.

11. During his interview with the Division's investigator

in Dece mber 2009, Hormes acknowledged some supervisory

involvement with the Townsend appraisal. Hormes could not

remember making any statement to that effect to the investigator

at the final hearing in this matter. However, the investigator

received confirmatio n from both Hormes and Alvarez that the

appraisals provided to Maller were only in draft form. The

investigator's testimony in this regard is credible.

12. Hormes' attorney wrote a letter to the Division dated

December 9, 2009, in which Hormes was describ ed as the

"Supervising Appraiser" for the Townsend appraisal. The

attorney who wrote the letter was eventually released by Hormes

based upon issues relating to competency. The attorney's law

firm did not require Hormes to pay for that attorney's work.

H ormes seemed to insinuate at final hearing that the release of

his attorney indicates that the statements made in the

December 9 , 2009, letter were inaccurate. However, there was no

competent or persuasive evidence to support that insinuation. 3 /

13. Durin g the investigation undertaken by the Division

concerning the propriety of the Townsend appraisal, Hormes and

Alvarez were questioned by an investigator at a single

interview. During that interview, Alvarez did most of the

talking and responded to most of the questions about the

appraisal. It is clear that Alvarez had the greatest amount of

knowledge and information concerning the Townsend appraisal, but

it is unclear how much knowledge Hormes had. Hormes was at

least aware of the work that Hormes had do ne on the appraisal.

14. The Townsend appraisal was, by everyone's admission,

not an acceptable work product. It was flawed in many areas and

failed to meet the minimum standards for a real estate

appraisal. Hormes simply says that Alvarez had "gone rogu e" and

that he had done the appraisal on his own. At final hearing ,

Hormes disavowed any direct work on the appraisal or that he

supervised Alvarez' s work on the appraisal. In fact, Alvarez

admitted to the investigator that he had forged Hormes'

signatur e on the reports and that Hormes was not aware of that

fact.

15. During the course of the investigation by the

Division, Hormes was asked to provide copies of the Townsend

appraisal, along with the two other draft appraisals that

Alvarez had been working o n for Maller. Hormes advised the

investigator that he would provide copies of the report, but he

did not provide them. Portions of the work file from Hormes'

office were provided to the investigator, but copies of the

reports were never provided to the D ivision.

16. Hormes contends he never knew about the Townsend

appraisal and , therefore , did not have a work file concerning

the report. However, if Alvarez was working on the reports

using Hormes' office and equipment and Alvarez was still under

Hormes' s upervision at the time of the investigation, it is

difficult to reconcile Hormes' stated inability to have the

appraisal reports and Alvarez' s work file made available.

Further, as Alvarez' s supervising appraiser, it seems that

Hormes would be able to dir ect Alvarez to provide the reports.

17. Alvarez was retained as a real estate appraisal

trainee in Hormes' office throughout the investigation and

during the preparation for final hearing in this matter. At

some point just prior to the final hearing, Alva rez was released

by Hormes.

CONCLUSIONS OF LAW

18. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to s ections 120.569 and 120.57(1), Florida

Statutes (2010).

19. The burden of proof is on the Division to show, by

clear and convincing evidence, that Hormes committed the acts

alleged in the A dministrative C omplaint. Ferris v. Turlington ,

510 So. 2d 292 (Fla. 1987). The clear and convincing evidence

standard is used in the insta nt case because the action is a

penal licensure proceeding. Munch v. Dep ' t of Prof ' l Reg . ,

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

20. Clear and convincing evidence is an intermediate

standard of proof which is more than the "preponderance of the

evidence" standard used in most civil cases , but less than the

"beyond a reasonable doubt" standard used in criminal cases.

See State v. Graham , 240 So. 2d 486 (Fla. 2d DCA 1970). Clear

and convincing evidence has been defined as evidence which:

[ R ] equires that t he 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 in confusion as to the facts in

issue. The evidence must be of s uch 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.

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

(citations omitted).

21. The Division is given the right to discipline an

appraiser's license for certain violations. Section 475.624

states in pertinent part:

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

regis tration, 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, whe ther 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

me mber 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.

* * *

(15) Has failed or refused to exercise

reasonable diligence in developing an

appraisal or preparing an appr aisal report.

22. Disciplinary actions as contemplated in the

above - referenced statute may be based only upon those offenses

specifically alleged in the Administrative Complaint . See

Cottrill v. Dep't of Ins. , 685 So. 2d 1371 (Fla. 1st DCA 1996);

Kinney v. Dep't of State , 501 So. 2d 129, 133 (Fla. 5th DCA

1987); and Hunter v. Dep't of Prof ' l Reg . , 458 So. 2d 842, 844

(Fla. 2d DCA 1984). A statute imposing a penalty is never to be

construed in a manner that expands the statute. Hotel and Rest.

Comm'n v. Sunny Seas No. One , 104 So. 2d 570, 571 (Fla. 1958).

23. Count I alleges Hormes failed to practice with the

level of care and skill which is recognized by a reasonably

prudent appraiser as being acceptable under similar conditions

and circumstances. See § 475.624(15) . The evidence presented

at final hearing addressed Hormes' lack of knowledge about the

Townsend appraisals. However, there is persuasive evidence that

Hormes had some prior knowledge of Maller's request for work

from Alvarez. There are at least three emails from Maller which

were copied to Hormes and at least one letter went to Alvarez at

Hormes' business address. Inasmuch as Hormes testified that his

trainees did their work at his office, using his equipment, it

is incongruous to say tha t Hormes was totally unaware of

Alvarez' s activities , vis - à - vis , the Townsend appraisal.

Hormes' previous attorney represented that Hormes had overseen

Alvarez' s work, although the attorney may have been misinformed.

Despite all that, however, it does no t appear that Hormes was in

any way involved in the actual preparation of the Townsend

appraisal or that he failed to practice at an appropriate level

of skill as to the reports issued pursuant to that project. The

Division did not meet its burden of proo f as to Count I.

24. Count IV alleges failure by Respondent to provide,

upon demand, copies of three appraisal reports prepared by his

office for Maller, thereby obstructing or hindering the Division

in its enforcement of the law. See § 475.62 6 (1)(f) . Th e

evidence presented at final hearing is not sufficiently clear

and convincing to prove that Hormes refused or failed to provide

documentation within his control. Although it would seem

logical that Hormes could use his authority over Alvarez to make

the trainee provide copies of the report to the Division, there

is no evidence that Hormes had custody of the reports. The

Division did not meet its burden of proof as to Count IV.

25. Count V alleges Hormes failed to properly and

adequately supervise a train ee operating within his office.

See § 475.624(4) and r ule 61J1 - 4.010(1). The version of r ule

61J 1 - 4.010 in effect at the time of the violations alleged in

the Administrative Complaint stated:

(1) All registered trainee appraisers shall

be subject to dir ect supervision by a

supervising appraiser who shall be state

licensed or certified in good standing.

(2) The supervising appraiser shall be

responsible for the training and direct

supervision of the appraiser trainee by:

(a) Accepting responsibility f or the

appraisal report by signing and certifying

the report is in compliance with the Uniform

Standard of Professional Appraisal Practice

[USPAP].

(b) Reviewing the appraiser trainee

appraisal reports; and

(c) Personally inspecting each appraised

prop erty with the appraiser trainee . . . .

26. It is clear Hormes had supervisory responsibilities

for Alvarez's appraisal work. Under the rule in place in 2008,

Hormes would signify his acceptance of Alvarez's work by way of

signing the report prepared by Alvarez and certifying that the

report was in compliance with USPAP . In the present case,

Hormes did not signify his acceptance of Alvarez's work; Alvarez

forged Hormes' signature on the report. Nonetheless, Hormes

remained responsible for supervising Al varez. Under section

475.624 (2)(b), Hormes was responsible for reviewing the

trainee's appraisal reports. Clearly, Hormes did not review the

Townsend appraisals , even though Hormes was , or should have

been , aware of the request Alvarez received from Mall er (as he

was copied on the emails) . Therefore, Hormes should have been

diligent in determining what services Alvarez had performed for

Maller. He did not do so. The Division met its burden of proof

as to Count V.

27. Hormes was not involved in the prep aration of the

Townsend appraisal, did not authorize Alvarez to undertake that

assignment on his own, and did not accept responsibility for

Alvarez's work by way of signing the reports. But Alvarez was a

trainee under Hormes' supervision , and Hormes faile d to

adequately monitor and supervise Alvarez' s work.

2 8 . The Division did not meet its burden of proof in this

matter as to Counts I and IV in the Administrative Complaint.

There is clear and convincing evidence to support the allegation

in Count V.

RE COMMENDATION

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, finding Respondent, Ronald C. Hormes, guilty of

Count V of the Administrative Complaint. A fine of $1,000.00

and a two - year period of probation should be imposed.

DONE AND ENT ERED this 10th day of June, 2011 , in

Tallahassee, Leon County, Florida.

S

R. BRUC E MCKIBBEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Admin istrative Hearings

this 10th day of June , 2011 .

ENDNOTES

1/ The Administrative Complaint contained five counts, but two

of them were dismissed prior to the final hearing.

2/ Unless specifically stated otherwise herein, all references

to Florida Stat utes shall be to the 20 08 version.

3 / There are gaping holes in the evidence presented in this case

that could have been filled by testimony from attorneys Maller

and Stump, as well as by testimony from Alvarez.

COPIES FURNISHED :

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

Layne Smith, General Counsel

Department of Business and

Professional Regulat ion

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Donna Christine Lindamood, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801 - 1757

Daniel Villazon, Esqu ire

Daniel Villazon, P.A.

1420 Celebration Boulevard, Suite 200

Celebration, Florida 34747

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 excepti ons

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.