11-001321PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Jay Alan Whitham Status: Closed Recommended Order on Wednesday, September 14, 2011.

Summary: Petitioner failed to provide a factual predicate for the alleged violations.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE , )

)

Petitioner, )

)

vs. ) Case No. 11 - 1321PL

)

JAY ALAN WHITHAM , )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was conducted in this case on

May 24, 2011 , at video teleconferencing sites in Sarasota and

Tallahassee, Florida, before Administrative Law Judge June C.

McKinney of the Division of Admini strative Hearings, pursuant to

the authority set forth in Sections 120.569 and 120.57(1),

Florida Statutes.

APPEARANCES

For Petitioner: Patrick Cunningham , Esquire

Assistant General Counsel

Department of Business and

Professional Regul ation

Division of Real Estate

400 West Robinson Street, Suite N801

Orlando , Florida 32 801

For Respondent : Steven W. Johnson, Esquire

20 North Orange Avenue , Suite 700

Orl ando, Florida 32801

STATEMENT OF THE ISSUES

In this disciplinary proceeding, the issues are:

( 1 ) W hether Respondent committed the violations alleged in the

Amended Administrative Complaint issued by the Petitioner; and

(2 ) W hether disciplinary penalties should be imposed on

Respondent if Petitioner proves one or more of the violations

charged in its Amended Administrative Complaint.

PRELIMINARY STATEMENT

On December 9, 2009 , the Department of Business and

Professional Regulation, Division of Real Estate ("Petitioner"

or "Department" ) , issued a n Administrative Complaint against Jay

Alan Whitham (" Respondent " or " Whitham " ) . On February 9, 2010,

Petitioner issued a four - count Amended Administrative Complaint,

wherein it was alleged that Respondent engaged i n wrongdoing in

connection with an appraisal report that violated various

provisions of c hapter 4 75 , Florida Statutes. Respondent timely

requested a formal hearing to contest these allegations, and the

matter was referred to the Division of Administrative Hearings

on March 14, 2011 .

The presiding administrative law judge set the final

hearing for May 24, 2011 . Both parties appeared at the

appointed place and time.

At hearing, Petitioner presented the testimony of two

witness es : Dennis Black and Sara Kimm ing . Petitioner also

offered E xhibits numbered 2 through 5 that were admitted into

evidence . Whitham , testified on his own behalf . Respondent

offered E xhibit number 1 , which was received into th e record as

a demonstrative aid .

The proceeding was recor ded , transcribed , and filed with

the Division of Administrative Hearings on August 8, 2011 . Both

parties filed timely Proposed Recommended Orders at DOAH, which

were considered in the preparation of this Recommended Order.

Unless otherwise indicated, cita tions to the Florida

Statutes refer to the 200 6 Florida Statutes.

FINDINGS OF FACT

1. Respondent , at all times material to this matter, was a

state certified general real estate appraiser subject to the

regulatory jurisdiction of the Petitioner. He star ted doing

commercial appraisals in the early 1990s in Florida.

2. Whitham was licensed on July 21, 2003 . Petitioner

issued Whitham license number RZ - 2669 , which expires on August

31, 2012.

3. On or about January 17, 2006, First Priority Bank asked

Whi tham to prepare an appraisal for three parcels of land near

Bradenton, Florida , for use by the bank in determin ing a

collateral loan amount .

4. At the time Whitham was requested to appraise the

parcels, the market was extremely active. There was a very high

demand for development sites, particularly for residential

development sites.

5. During the appraisal, Whitham developed a regional

overview section for the appraisal report. The section

summariz ed the region, history , and economic s that had

contri buted to the evolution of bringing Sarasota and Man a tee

counties to their current state of desirability. Whitham

obtained the information for the section from various published

reports and compiled them into a summary of the region.

6. Whitham's histori cal overview outlined subject matters

all the way back to the 1980s. Each of the older references

specified a date including the following portions of the report:

* * *

The Sarasota - Bradenton MSA is noted for its

attractive barrier islands . . . all of

which have been heavily developed over the

last 50 years. Population growth in the

MSA - 49.3 between 1980 and 1995 -- has also

spread eastward into the woodland area . . .

* * *

New office construction remained highly

constrained through 1996 which had the

effect of reducing existing inventories and

increasing rents. Over the last 36 months

office development particularly in suburban

areas but also including the Bradenton and

Sarasota CBDs has resumed.

* * *

In 1997, per capita income was esti mated at

$21,293, indicating an average annual gain

of 3.97 percent, well above the rate of

inflation.

7. Whitham included a wrong city , Venice , in his regional

overview. When referencing the circus , Whitham reported , "and

the winter headquarters of Rin g l ing Bros - Barnum & Bailey Circus

(Venice) ."

8. Whitham also failed to make clear that Englewood is not

an incorporated city and that North Port 's entire boundaries lie

within Sarasota county . Instead, Whitham reported in the

overview section, " . . . t he incorporated towns of Englewood

and North Port lie in both Sarasota and Charlotte Counties . "

9. While preparing the appraisal report, Whitham properly

used the highest and best use methodology to value the subject

property for his appraisal by applyi ng the four test s :

physically possible, 1 legally permissible, 2 financially

feasible, 3 and maximally productive. 4

10. In doing the analysis, Whitham used the direct sales

comparison approach. He visited the sites and separated out the

subject small parce l, 4.8 acres ("subject 1") that had the river

front age and analyzed that applying c omparable s ales 1 through

3. Whitham used c omparable sales 4 through 6 to perform a

separate analysis of the 17 - acre parcel ("subject 2") that was

not connected to the rive rfront site.

11. Both subject s 1 and 2 were vacant parcels zoned

Planned Development Residential ( PDR ) . Whitham cho se six

comparable s ales that were vacant and physically possible for

residential use like the subject parcels at the time of the

appraisal in 2006.

12. When Whitham evaluated s ubject 1 , he found it

difficult to find waterfront or water view properties to compare

to s ubject 1. As a result , he made proper adjustments to

account for the dissimilarities he encountered under the

substitution p rinciple in order for the comparable s ales to

conform.

13. Whitham determined c omparable sale 1 was legally

permissible because the zoning was Planned Development Projects

("PDP " ) , which provided for development ei ther as residential or

commercial. He f urther determined the property was financially

feasible as the rate of growth in the market for residential

property was at its peak .

14. When Whitman used the substitution principle with

c omparable sale 1, he focused on two primary considerations :

utilit y and desirability. Since the goal was a potential

development and investment , not a completed developer product ,

Whitham compared the two with adjustments. When looking at the

attributes, Whitham determined that traffic was an easy drive to

either prope rty and neither was particularly visible from a

roadway.

15. Comparable sale 2 was a small site zoned Planned

Development Mixed Use, which allows for blending of residential

and commercial uses within the same development. Whitham

researched t he commerc ial possibilities of c omparable sale 2 in

2006 , and the direction of the develop ment had not been

established. As a result , he concluded that it was financially

feasible for residential.

16. Comparable sale 3 's direction of development also had

not bee n finalized when Whitham did his appraisal and it was

zoned for PDP .

17. After finishing his analysis, Whitham was able to

conclude that comparable sale s 1 through 3 were financial ly

feasib l e . Whitham made the determination based on the tenor of

the mark et being good for residential property, which each

comparable could become. He then concluded that it was

therefore financially feasible for each comparable site to be

developed as residential, which would have been both financially

feasible and maximally productive.

18. Whitham evaluated s ubject 2 against comparable sales

without waterfront s , water access, and water view s . Comparable

sales 4, 5, and 6 were either zoned General Agriculture District

or Agricultural, which both allow ed for general agricul tural -

related , normal activity and co - existence of other uses

generally consistent with agricultural activities including

rural residential development.

19. Whitham used c omparable s ales 4, 5, and 6 , since all

had proper zoning, which meant residential w as allowed like the

subject 2 parcel and met the physically possible and legally

permissible portion of the tests . Further, each was financially

feasible since the strength in the market at the time was

residential sites , which would provide for maximal p roductivity .

20. Whitham summarized how each of the six comparable

s ales satisfied the four test criteria for the direct sales

comparison approach in his appraisal report land sales summary

and grid. 5

21. O n or about January 28, 2006, a fter completing his

appraisal analysis, Respondent signed and communicated the

appraisal report, for the property commonly known as ±4.76, ±17,

and ±0.6 Acre Parcels UAs Vacant, Mill Creek Road, Bradenton

Florida 34212 .

22. Whitman's report concluded in the Highest and Best Use

section of the appraisal report that "Our assessment of highest

and best use for the subject is: As Vacant: Residential

development in accordance with the PDR zoning."

23. In 2009 , after a complaint was filed by Ronald Carr ,

the Department opened an investigation on Whitham regarding the

January 2006 appraisal report. Dennis Black ("Black") was hired

as an expert State Certified General Real Estate Appraiser to

review Whitham 's appraisal report .

24. As a result of Black's conclusions on or about

October 27, 2009 , 6 t he Department charged Whitham in a four - count

Administrative Complaint.

The Charges :

25. In C ount I, Pet itioner charges Respondent with having

failed to exercise reasonable diligence in developing an

appraisal report in violation of s ection 475.624(15), Florida

Statutes.

26. In C ount II, Petitioner charges Respondent with fraud,

misrepresentation, concealment, culpable negligence or breach of

trust in any business transaction in violation of section

475.624(2 ) .

27. In C ount III, Petitioner charge s Respondent with

failing to retain, for at least five 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 apprais al reports i n violation of

section 475.629.

28. In C ount IV, Petitioner charges Respondent with making

misleading, deceptive, or fraudulent representations in or

related to the practice of the licensee's profession in

violation of section 455. 227(1)(a ) .

CONCLUSIONS OF LAW

29. T he 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),(2010).

30. Section 475.624(15) , under which Respondent ha s bee n

charged in Count I , sets forth the acts for which the Petitioner

may impose discipline. This statute provides, in pertinent

part:

The board may deny an application for

registration or certification; may

investigate the actions of any appraiser

registere d, 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 certificate

holder :

* * *

(15) Has failed or refused to exercise

reasonable diligence in developing an

a ppraisal or preparing an appraisal report.

31. Section 475.625(2), under which Respondent has been

charged in Count II, sets forth the acts for which the

Petitioner may impose discipline. This statute provides, in

pertinent part:

Has been guilty of fra ud, 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

miscond uct 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 c ertificateholder, or was an

identified member of the general public.

32. Section 475.629, under which Respondent has been

charged in Count III, sets forth the acts for which the

Petitioner may impose discipline. This statute provides, in

pertinent part :

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

apprais er 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 t he 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.

33. Section 455.227(1)(a), under which Respondent has been

charged in Count IV, sets forth the acts for which the

Petitioner may impose discipline. This statute provides, in

pertinent part:

( 1) The following acts shall constitute

grounds for which the d isciplinary actions

specified in subsection (2) may be taken:

(a) Making misleading, deceptive, or

fraudulent representations in or related to

the practice of the licensee's profession.

34. 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. Fla . Real Estate Comm ' n , 281

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

alleged violation "must be construed strictly, in favor of the

one against whom the penal ty would be imposed." Munch v. Dep ' t

of Prof ' l Reg . , Div. of Real Estate , 592 So. 2d 1136, 1143 (Fla.

1st DCA 1992).

35. Here, Petitioner seeks to discipline Respondent's

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

Petitione r has the burden of proving the allegations charged in

the Administrative Complaint against the Respondent by clear and

convincing evidence. Dep ' t of Banking and Fin . Div . of Sec . and

Investor Prot . v. Osborne Stern and Co., 670 So. 2d 932, 9 33 - 34

(Fla. 1 996) (citing Ferris v. Turlington , 510 So. 2d 292, 294 - 95

(Fla. 1987)); Nair v. Dep ' t of Bus . & Prof ' l Reg . , 654 So. 2d

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

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

Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983), th e 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 t hat:

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.

37. A licensee is charged with knowing the practice act

that governs his/her license. Wallen v. Fla . Dep ' t of Prof ' l

Reg . , Div . of Real Estate, 568 So. 2d 975 (Fla. 3d DCA 1990).

38. In this matter, Petitioner has failed to meet its

burden by the clear and convincing evidence standa rd in that

Petitioner relied totally on Black 's testimony to prove the

allegations in this case. As delineated in E ndnote five, the

undersigned rejects Black 's testimony as credible , which leaves

the record void of any sufficient credible evidence to esta bli sh

the truth of the allegations charged in the Amended

Administrative Complaint in this matter.

39. The Amended Administrative Complaint alleges that

Respondent failed to exercise reasonable diligence in developing

an appraisal report. However, t he reco rd demonstrates that the

data alleged to be outdated in the regional o verview section of

the report was only a historical overview that clearly

identifies the time period with each of the categories alleged.

Each of the Respondent's references is speci fic: between 1980

and 1995; through 1996; and in 1997. Identifying years

specifically in a sentence during a time period does not mislead

the reader . Further, Respondent put Venice as the wrong city

for the circus location and improperly worded a sentenc e , which

place d North Port in the wrong county. The undersigned believes

that Respondent could have been more careful , but s uch errors

are not material to the valuation of the property. And,

therefore such errors are neither a failure to exercise

reasona ble diligence in violation of section 475.624(15) n or a

misrepresentation in violation of section 475.624(2).

40. In this case, the Amended Administrative C omplaint

also alleged that Respondent's analysis of the highest and best

u se for the subject prop erty and his d irect s ales c omparable

analysis were improperly employed. However, having no evidence

to the contrary, the record demonstrates that Respondent used

correct methodology for the h ighest and b est u se analysis as

well as the appropriate recogniz ed methods and techniques in his

direct sales comparison approach. Further, Respondent properly

used adjustments in his direct sales comparison a pproach to

account for dissimilarities he encountered so that the

comparables w ould conform. And in doing his report, Respondent

also made accurate characterizations of the subject property's

attributes and the comparable sales attributes. Therefore, the

record is void of credible sufficient evidence to show any

misrepresentation in violation of section 475.624( 2) or any

misleading actions in violation of section 455.227(1)(a) .

41. As to C ount II I , t here is no dispute. Petitioner

asserts in its Proposed Recommended Order that it is no longer

addressing the charge nor asking for a finding of guilt .

RECOMMEND ATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Business and

Professional Regulations, Division of Real Estate, enter a final

order that finds Respondent not guilty as charged in C ounts I ,

II, III, and IV of the Amended Administrative Complaint .

DONE AND ENTERED this 1 4 th day of September , 2011 , in

Tallahassee, Leon County, Florida.

S

JUNE C. McKINNEY

Administrative Law Judge

Division of Administrative Hearing s

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 Administrative Hearings

this 14 th day of September , 20 11 .

ENDNOTE S

1 A determination of any physical constraints on the parcel.

2 A determination of h ow the parcel can be used legally.

3 A determination of economical feasibility and whether a

positive return for the parcel can be obtaine d.

4 A determination of the best way to develop the land.

5 Petitioner's exhibit 2 page s 33 and 34.

6 Petitioner presented Black as an expert witness to testify

that his review found Respondent to have violated the

allegations in the Amended Administ rative Complaint. The

undersigned is not persuaded by Black's testimony and finds the

Respondent more credible than Black. Black's credibility was

diminished when a reporter observing the hearing interjected

during Black's testimony and provided him answ ers to a question.

Therefore, the undersigned rejects Black's opinion. In Thompson

v. Dep't of Child . & Fam . , 835 So. 2d 357, 360 (Fla. 5th DCA

2003), the court held that the trier of fact may accept or

reject all or any part of an expert's testimony and is in no way

bound by uncontroverted expert opinion testimony.

COPIES FURNISHED :

Patrick Cunningham , Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801 - 1757

Steven W. Johnson, Esqu ire

20 North Orange Avenue, Suite 700

Orlando, Florida 32801

Layne Smith, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399

Thomas W. O'Bryant, Jr., Director

Divisi on of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street, N801

Orlando, Florida 32801

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.