11-003009PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Hugh D. Rhea Status: Closed Recommended Order on Friday, February 17, 2012.

Summary: The Department proved that Respondent violated section 475.624(2) and (15). All other alleged volations not proven. Recommend revocation.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case Nos. 11 - 3007PL

) 11 - 3008PL

HUGH D. RHEA, ) 11 - 3009PL

)

Respondent. )

)

RECOMMENDED ORDER

On October 26, 2011 , a duly - noticed hea ring was held by

video teleconference with sites in Gainesville and Tallahassee ,

Florida , before Lisa Shearer Nelson , an Administrative Law Judge

assigned by the Division of Administrative Hearings .

APPEARANCES

For Petitioner: Jennifer Leigh Blakeman, Esquire

Paul N. Rendleman, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street, Suite N801

Orlando, Florida 32801

For Respondent: Nancy Pico Campiglia, Esquire

Keating and Schlitt, P.A.

250 East Colonial Drive, Suite 300

Orlando, Florida 32801

STATEMENT OF THE ISSUE S

The issues to be determined are whether Respondent

committed the violations alleged in the Amended Administrative

Complaints and if so, what penalty should be imposed?

PRELIMINARY STATEMENT

On March 7, 2011, the Department of Business and

Professional Regulation, Division of Real E state ( " Petitioner "

or "the Department" ) filed three Administrative Complaints

against Respondent , Hugh Rhea ("Respondent" or "Mr. Rhea") .

DBPR Case No. 20100239 85 (docketed as DOAH Case No. 11 - 3007) is

a five - count Administrative Complaint alleging deficiencies with

respect to the appraisal of a property at 3009 NE 11th Terrace

in Gainesville, Florida. Count One charges Respondent with

violating section 475.624(15), Florida Statutes (2009)(failing

to exercise reasonable diligence in developing and p reparing an

appraisal report). Count Two charges a violation of section

475.624(2)(committing dishonest conduct or breach of trust in

any business transaction). Count Three charges a violation of

section 475.624 (4)(violating any provisions of chapter 475 ,

Part II or any lawful order or rule issued under this part or

chapter 455) by virtue of violating section 455.227(1)(m)

(employing a trick or scheme in or related to the practice of a

profession). Count Four alleges a violation of section

475.624(4) by violating section 475.611 (the definition of an

appraisal assignment). Finally, Count Five charges a violation

of section 475.624(4) by violation of section 475.623 (failing

to register his business name with the Department).

DBPR Case No. 20100239 93 (d ocketed as DOAH Case No. 11 -

3008) is a three - count Administrative Complaint which alleges

deficiencies with respect to the appraisal performed for the

property located at 12017 NW 164th Terrace, Alachua, Florida.

Count One charges Respondent with violatin g section 475.624(15);

Count Two with violating section 475.624(2); and Count Three

with violating section 475.624(4) by virtue of violating section

475.611 .

Finally, DBPR Case No. 2010023991 (docketed as DOAH Case

No. 11 - 3009) charged Respondent with all eged deficiencies with

respect to an appraisal performed for the property located at

2923 NE 11th Terrace, Gainesville, Florida. Count One charges a

violation of section 475.624(15); Count Two charges a violation

of 475.624(2); and Count Three charges a v iolation of section

475.624(4) by violation of section 475.611.

Respondent disputed the allegations in the three

Administrative Complaints and requested a hearing pursuant to

section 120.57(1), Florida Statutes. On June 16, 2011, all

three cases were ref erred to the Division of Administrative

Hearings for the assignment of an administrative law judge, and

on June 23, 2011, Petitioner filed a Motion to Consolidate the

three cases for hearing. The cases were consolidated by Order

issued June 28, 2011, and on June 29, 2011, a Notice of Hearing

was issued scheduling the matter for hearing to be conducted

August 24, 2011.

On August 9, 2011, Petitioner filed a Motion to Amend Three

Administrative Complaints in order to add a charge of violating

Florida Adminis trative Code Rule 61J1 - 4.010(2)(b). The next

day, the parties jointly moved to continue the hearing. The

Motion to Continue was granted and the hearing rescheduled for

September 29, 2011, and the Motion to Amend Administrative

Complaints was granted by O rder dated August 25, 2011.

On September 27, 2011, Respondent moved for a continuance

based upon the late filing and disclosure of certain exhibits by

Petitioner. Petitioner opposed the continuance . After a

telephone conference on the Motion, the case w as continued and

rescheduled for October 26, 2011, and proceeded as scheduled.

At hearing, official recognition was given to chapters 120, 455

and 475, Florida Statutes; Florida Administrative Code Chapter

61J1; and Uniform Standards for Professional Appr aisal Practice

(2010 - 2011 ed . ). Petitioner presented the testimony of James

Courchaine, Cory Bullard, and Michael Adnot, and Petitioner's

Exhibits 1 - 15 were admitted. 1/ Respondent presented no

witnesses, but Respondent's Exhibits 2 - 5 were admitted into

evidence.

The T ranscript of the proceedings was filed with the

Division on November 16, 2011. At the request of the parties,

the deadline for proposed recommended orders was set for

November 30, 2011. A Joint Motion for Enlargement of Time for

the Proposed Recommended Order was filed, requesting that the

deadline be extended to December 14, 2011. Both parties filed

post - hearing pleadings by that date. On December 15, 2 011,

Respondent filed an Amended Proposed Recommended Order,

apparently to correct some clerical issues, which Petitioner

moved to strike. Petitioner's Motion to Strike is denied, and

both parties' submissions have been carefully considered in the

prepara tion of this Recommended Order.

FINDINGS OF FACT

1. Petitioner is the state agency charged with the

licensing and regulation of real estate appraisers in the State

of Florida pursuant to section 20.165 and chapters 455 and 475,

part II, Florida Statutes.

2. At all times material to the allegations in the Amended

Administrative Complaints, Respondent has been a certified

r esidential real estate appraiser , and has been issued license

number RD 1226. Respondent has been licensed since 1991 and has

no histor y of disciplinary action taken against his license. He

trades as Rhea Appraisals, Inc., located in Gainesville,

Florida.

3. For the period from October 23, 2009 , through May 12,

2010, Responde nt was the supervising appraiser for registered

trainee apprai ser Leslie Corey Bullard. From October 8, 2009 ,

through at least July 2011, he also supervised registered

trainee appraiser Beverly Sanders Archer.

4. Respondent was Mr. Bullard's first supervising

appraiser.

The Program

5. Alachua County elected to participate in the federally -

funded Neighborhood Stabilization Program ("NSP") , which is

administered on the state level by the Department of Community

Affairs. To that end, Alachua County contracted with Meridian

Community Services Group ("Meridian") to assist in the

implementation of the program.

6. In a nutshell, the NSP is a program by which the

Department of Housing and Urban Development provides funding for

local governments to acquire properties in order to rehabilitate

them and re - sell them to lo w - to - moderate - income households, or

to rent them to very low - income households.

7. As explained at hearing, properties that are acquired

through the program cannot be sold for more than the costs of

acquisition, rehabilitation, and "soft costs." As a r esult, the

local government can only purchase the property at one percent

or below the appraised value.

8. In 2010, Alachua County solicited bids for appraisers

to appraise properties that it considered buying through the

NSP. Rhea Appraisals, Inc., ob tained a contract to appraise 20

of the properties for the program. Corey Bullard was involved

in the procurement of the contract to perform the appraisals.

9. The listing price for the properties was generally the

price listed in the multiple listing se rvice ("MLS"). Alachua

County had instructed that the offer for the properties

considered for purchase was to be at the listing price. Once

the appraisal was performed, if it appraisal did not come in at

within one percent of the listing price, then the offer is

amended to reflect one percent below the appraisal . If the

seller does not agree to the change, that property is not

purchased.

10 . Rhea Appraisals, Inc. , was to be paid $225.00 for each

property appraised. Payment for the appraisal was not dependant

on the results of the appraisal.

1 1 . At issue in these cases are the appraisals for three

properties. For each of these properties, two appraisals were

actu ally performed.

The Initial Appraisals

12. An appraisal was communicated by Rhea Appraisals,

Inc., for a pr operty located at 3009 NE 11th Terrace,

Gainesville, Florida (Property 1, related to Case No. 11 - 3007),

on April 8, 2010 (Petitioner's Exhibit 13). The appraisal

report is signed by Cory Bullard and by Respondent as his

supervisor, and the front summary sheet lists Corey Bullard as

the appraiser. The appraisal indicates that the inspection of

the property and of the comparable sales took place on Ap ril 2,

2010, which is listed as the effective date of the report, and

the appraisal is signed by both Mr. Bullard and Respondent on

April 8, 2010.

13. The appraisal report provides an opinion of value of

$52,000. The list price for the property, and thus the offer

made by the County, was $65,000.

14. The Comments on Appraisal and Report Identification

state that "Corey Bullard provided assistance in the gathering

of data, photographing and entering data into this report."

15. Included in the appraisal's certification are the

following statements:

18. My employment and/or compensation for

performing this appraisal or any future or

anticipated appraisals was not conditioned

on any agreement or understanding, written

or otherwise, that I would report or pr esent

analysis supporting a predetermined specific

value, a predetermined minimum value, a

range or direction in value, a value that

favors the cause of any party, or the

attainment of a specific result or

occurrence of a specific subsequent event

(such as approval of a pending mortgage loan

application).

19. I personally prepared all conclusions

and opinions about the real estate that were

set forth in this appraisal report. If I

relied on significant real property

appraisal assistance from any individu als in

the performance of this appraisal or the

preparation of this appraisal report, I have

named such individual(s) and disclosed the

specific tasks performed in this appraisal

report. I certify that any individual so

named is qualified to perform the t asks. I

have not authorized anyone to make a change

to any item in this appraisal report;

therefore any change made to this appraisal

is unauthorized and I will take no

responsibility for it.

16. An appraisal report for a property located at 12017 NW

164th Terrace, Alachua, Florida (Property 2) was communicated on

April 6, 2010 (Petitioner's Exhibit 5 , related to Case No. 11 -

3008 ) . The appraisal report is signed by Corey Bullard and by

Respondent as his supervisor, and the front summary sheet lists

Mr . Bullard as the appraiser. The appraisal indicates that the

inspection of the property and of the comparable sales took

place on April 2, 2010, which is listed as the effective date of

the appraisal, and the appraisal is signed by both Respondent

and Mr. Bullard on April 6, 2010.

1 7 . This appraisal report provides an opinion of value of

$75,000. The list price for the property, and thus the offer

made by the County, was $105,000.

1 8 . The Comments on Appraisal and Report Identification

state that "Core y Bullard provided assistance in the gathering

of data, photographing and entering date into this report.

Appraiser won the bid for 20 properties from Meridian Community

Services for $225 each."

1 9 . Like the report for Propert y 1, the appraisal

certifica tion contained the statements identified in finding of

fact 15.

20 . Rhea Appraisals, Inc. , also issued an appraisal report

for p roperty located at 2923 NE 11th Terrace, Gainesville ,

Florida (Property 3 , related to Case No. 11 - 3009 ) , signed by

Respondent o n April 8, 2010 (Petitioner's Exhibit 10). The

report indicates that the date of the inspection of the property

and of the comparable sales, and effective date of the report ,

is April 5, 2010.

21 . This appraisal report provides an opinion of value of

$54,000. The list price for the property, and thus the offer

made by the County, was $69,900.

22 . The Comments on Appraisal and Report Identification

state that "Beverly Archer, state registered trainee appraiser

#RT2255 provided assistance in the gather ing of data, measuring

and photographing the subject dwelling, and drafting information

into the URAR."

23 . Like the report for Propert ies 1 and 2 , the appraisal

certification contained the statements identified in finding of

fact 15.

The Second Appraisa ls

24. Subsequently, a second appraisal was developed by Rhea

Appraisals, Inc., for each of these properties.

Property 1 (11 - 3007)

25. A second report developed for Property 1 (Petitioner's

Exhibit 14), has an invoice attached to the front, and the

sum mary sheet lists Hugh Rhea as the appraiser. The appraisal

gives an opinion of value of $66,000, compared to the County's

offer of $65,000. The second appraisal lists the effective date

of the appraisal as April 2, 2010, and the date of the signature

and report as April 8, 2010. These dates are the same as those

listed on the appraisal with value of $52,000. There are no

notations in the Comments on Appraisal and Report Identification

section of the report, and while the appraiser's certification

includ es the same statement quoted as paragraph 19 in finding of

fact 15, the first statement, although similar, states:

6. I was not required to report a

predetermined value or direction in value

that favors the cause of the client or any

related party, the amount of the value

estimate, the attainment of a specific

result, or the occurrence of a subsequent

event in order to receive my compensation

and/or employment for performing the

appraisal. I did not base the appraisal

report on a requested minimum valua tion, a

specific valuation, or the need to approve a

specific mortgage loan.

2 6 . No explanation is given as to why the second report

was generated. However, the second report contains the

following additional differences:

a. On page one of the report, in response to the question,

"[a]re there any physical deficiencies or adverse conditions

that affect the livability, soundness, or structural integrity

of the property?", the statement "[s]ubject is not functional in

the current state as of inspection da te" has been deleted in the

second appraisal.

b. In the first report, the condition of comparable sale 1

is listed as "superior." In the second report, it is listed as

"inferior."

c. In the first report, the condition for comparable sale

2 is listed as "average." In the second report, it is listed as

"inferior."

d. In the first report, the condition of comparable sale 4

is listed as "superior." In the second report, it is listed as

" average."

e. In the first report, the condition of what was

described as comparable sale 6 is listed as "average." In the

second report, the original comparable sale 5 is deleted and

comparable sale 6 is listed as comparable 5. Its condition is

described as "inferior."

27. Respondent's work papers to not provide an explanation

for the changes made from the first report to the second report

for this property.

Property 2 (No. 11 - 3008)

2 8 . The second appraisal for Property 2 has an invoice for

$225 attached to the front, and the summary sheet lists Hugh

Rhea as the appraiser, as opposed to Corey Bullard. The opinion

of value is $105,000, which matches the initial offer by the

County. The report contains two different effective dates: on

page 2 the report states that the effective date is April 2,

2010, while the signature block on page 6 indicates that the

effective date is April 6, 2010. The date of the signature and

report is April 14, 2010. The Comments on Appraisal and Report

Identification are the same as those listed in the initial

report, and the appraise r's certification includes the same

statements quoted in paragraph 15.

2 9 . No explanation is given as to why the second report

was generated. However, the second report contains the

following differences:

a. In the first report, the estimated cost to cure the

stated deficiencies was listed as $20,000.00. In the second

report, this amount is reduced to $15,000.00.

b. In the first report, the condition adjustment for

comparable sale 1 is - $27,389.0 0, for a gross adjustment of

41 percent. In the second report, the condition adjustment was

- $6,389, for a gross adjustment of 23.2 percent.

c. The location adjustment for comparable sale 1 is

changed from - $10,000 in the first report to no adjustment at

all in the second report.

d. The condition adjustm ent in the first report for

comparable sale 2 is - $40,000.00. In the second report, it is

listed as - $25,000.00.

e. The location description for comparable sale 2 is

listed in the first report as "urban/sup." In the second

report, it is listed as "subur ban/sup."

f. The location adjustment for comparable sale 2 is listed

in the first report, as - $20,000.00. In the second report, it

is listed as - $10,000.00.

g. The condition for comparable sale 3 is changed from

"superior" in the first report to "averag e" in the second

report.

h. The condition adjustment for comparable sale 3 is

listed in the first report as - $20,000.00. It is changed in the

second report to no adjustment.

i. The room adjustment for comparable sale 3 is listed in

the first report as - $ 4 ,000.00. It is changed in the second

report to - $2,000.

j. The location description for comparable sale 4 is

listed in the first report as "suburban/sup" and changed in the

second report to "suburban."

k. The location adjustment for comparable sale 4 is listed

as - $10,000.00. It is changed in the second report to no

adjustment.

l. The room adjustment for comparable sale 4 is listed in

the first report as $4,000.00. It is changed in the second

report to $2,000.00.

m. The basement adjustment for comparable sale 4 is listed

as - $10,000.00 in the first report, and as - $5,000.00 in the

second report.

n. The condition adjustment for comparable sale 5 is

listed in the first report as - $20,000.00. It is changed in the

second report to - $15,000.00.

o . The location adjustment for comparable sale 5 is listed

in the first report as - $20,000.00. It is changed in the second

report to - $10,000.00.

p . The condition of comparable sale 6 is listed in the

first report as "superior." It is changed in the secon d report

to "average."

q . The condition adjustment for comparable sale 6 is

listed in the first report as - $20,000.00. It is changed in the

second report to no adjustment.

30. Respondent's work papers for Property 2 do not provide

any explanation for th e changes noted above.

31 . The second report for Property 3 (Petitioner's Exhibit

11) also has an invoice attached, which states "summary

complete." The summary sheet lists Hugh Rhea as the appraiser.

The appraisal gives an opinion of value of $71,000, compared to

the County's offer of $69,900. The second appraisal lists the

effective date of the appraisal as April 5, 2010, and the date

of the signature and report as April 8, 2010. These dates are

the same as those listed on the appraisal with value of $54,000.

The Comments on Appraisal and Report Identification are the same

as those listed in the initial report, and the appraiser's

certification includes the same statements quoted in paragraph

15.

32. No explanation is given as to why the second re port

was generated. However, the second report contains the

following differences:

a. The first report contains six comparable sales. The

second contains only four, and of those four, only two (those

with the highest value) from the first report were in cluded in

the second report.

b. The pr operty located at 2610 NE 12th Street was listed

as comparable sale 4 in the first report and as comparable sale

2 in the second report. The gross living adjustment for this

property was listed as - $2,025.00, while in the second report it

is listed as - $1,620.00.

c. With respect to this same property, the carport

adjustment listed in the first report is $1,500.00, and is

listed as $2,000.00 in the second report.

d. The pro perty located at 2703 NE 11th Street was listed

as comparable sale 6 in the first report and as comparable sale

3 in the second report. The condition adjustment for this

property is changed from no adjustment in the first report to

$10,900.00 in the second report.

e. With respect to this comp arable sale, the gross living

adjustment listed in the first report is - $7,125.00 while it is

listed as - $2,340.00 in the second report.

f. In the first report, as part of the cost approach to

estimating value, the remaining estimated life for Property 3 is

listed as 17 years, while in the second report it is listed as

32 years. Similarly, the depreciation figure listed in the

first report is $94,524.00, while in the second report it is

listed as $76,797.00.

33. Respondent's work papers for Property 3 pr ovide no

explanations for the changes listed above.

The Explanations

34 . All three of the initial appraisals, as well as all

three of the second appraisals, state that the price of the

property was to be determined by the appraisals, and that the

appraiser had requested a copy of the contract and was told they

would be forwarded at a later time.

35 . After submission of the first appraisals, Corey

Bullard testified that he received a telephone call from Esrone

McDaniels from Meridian regarding the opinions of value,

indicating that the opinions were too low. Mr. McDaniels does

not recall such a conversation. What is clear, however, is that

at some point Mr. McDaniels spoke to Mr. Rhea regarding the

program to explain the mechanics of the process f or the NSP .

3 6 . On April 13, 20 10, Mr. McDaniels sen t an e - mail to

Mr. Rhea with the title "Alachua County Properties." The e - mail

contained a table listing nine properties, including Proper t ies

1 - 3. The table contained columns listing the property

ad dresses; the initial offer amount; the final acquisition

amount (if the sale was completed); and the appraised value.

The appraised values listed in the chart for P roperties 1 - 3 were

the opinions of value listed in the first reports described,

i.e., the l ower values.

3 7 . Along with the chart was the following message:

Mr. Rhea - - per our conversation, please

find the information requested. Should you

have any questions, please give me a call.

As stated, per the program requirements, our

properties must be purchased at or below 99%

of the appraised value. For example, since

HUD won't adjust the purchase price, the

initial offer should be a minimum 99% of the

appraised value. Therefore, the appraisal

should represent 1% above the initial offer

price above.

Let me know if you have any questions.

Thanks.

38 . Mr. Bullard was aware of the preparation of the second

reports and was not comfortable with them being developed. He

made excuses not to return to work, pass protected his

electronic signatur e and filed a complaint against Respondent

with the Department.

39. Mr. Bullard also testified that Respondent's

electronic signature was not pass - protected, and that all of the

office staff had access to it. No evidence was presented to

refute this statement. However, there is also no evidence that

Mr. Bullard ever used Respondent's electronic signature without

his consent , or that he failed to supervise Bullard's work . To

the contrary, Mr. Bullard testified that for the two appraisals

with which he was involved, Respondent provided supervision and

approved the appraisals before they were communicated to the

client.

40 . While the second appraisal reports for two of th e

three properties indicate that the da te of the signature

predated the e - mail from Esrone McDaniels , the only appraisal

values listed in the e - mail are for the original, lower values.

From the totality of the evidence, it is found that the only

plausible explanation is that the appraisals were backdated to

reflect an earlier effective date.

4 1. Mr. McDaniel vehemently denied that he ever told

Respondent to "hit a certain value with an appraisal, saying

"Absolutely not. I don't have the authority to d o that and I

would never do that." He believed that the underlined sentence

in his e - mail was part of his attempt to "explain the program,

period," and was one example to drive across the one - percent

federal requirement.

42 . Mr. Rhea, on the other hand, in his response to the

Department's complaint , stated the following :

Let's start with the orders or bids, Alachua

County was allotted 3 to 4 million dollars

to buy property across all of Alachua County

but they had to be foreclosed, bank owned or

short sa les. . . . The properties in

questioned [ sic ] are HUD or Fannie Mae owned

properties. When Fannie Mae has a property

listed before it goes on the market, they

have 3 BPO's done plus an appraisal, then

they set an asking price. Our assignment

was to inspe ct the properties, check the

repairs needed and then value the property

"as is" knowing the property is contracted

at the asking price. With 3 BPO's and

appraisal to back it up the Realtor's

contracted the house knowing this plus they

also knew the county was mandated to

purchase at that price. . . . What

Mr. Bullard did not understand and still

doesn't, the assignment for the 20

appraisals scope of work was to concur with

the work and valuation that already had been

done.

The first appraisal done did not come in at

$50,000 and then I change the value.

Mr. Bullard said the property is $50,000 and

I told him he was wrong and that did not set

well with him. . . .

* * *

About the conversation with Mr. Esrone

McDaniel's, [sic] we talk about what the

Alachua County Board of County Commissioners

was mandated to do with the money. The

properties have been contracted and he asked

me whether I could come within 1% of the

value. I told him I have a range of value

of 5% so I said I thought I could. This is

when I knew that Mr. Bullard did not get a

handle on what the assignment was all about.

The e - mail that Mr. Bullard was referring

to, stated the program requirements, which

is what Esrone and I talked about and

Mr. Bullard took it out of context stating

that I would help him out. Mr. Bullard told

me at the start that he knew what the county

wanted and come to find out, he did not have

a clue.

43 . Although Respondent indicated in his letter that the

scope of the project was "to concur with the work and valuation"

that had already been performed, this scope is not reflected in

the description contained in any of the six appraisals. To the

contrary, the appraisals on their face indicate that no

predetermined value is at issue.

44 . From the totality of the evidence, it is found that

Respondent issued the second appraisals in each case for the

purpose of confirming a predetermined value, i.e., the list

price for each of the properties, as communicated to him in

Esrone McDaniels' e - mail of April 13, 2010.

The Applicable Standards

4 5 . Property appraisers are required to adhere to the

Uniform Standards of Professional Appraisal Practice (USPAP),

which are developed by the Appraisal Standards Board of the

Appraisal Foundation.

4 6 . The U SPAP Ethics Rule is divided into four sections:

conduct, management, confidentiality, and recordkeeping. The

conduct section provides in pertinent part:

Conduct :

An appraiser must perform assignments with

impartiality, objectivity, and independence,

and without accommodation of personal

interests.

An appraiser:

Ʊ must not perform an assignment with bias;

Ʊ must not advocate the cause or interest

of any party or issue;

Ʊ must not accept an assignment that

includes the reporting of predetermined

opinions and conclusions; . . .

47 . The management section of USPAP provides in pertinent

part:

Management:

An appraiser must not accept an assignment,

or have a compensatio n arrangement for an

assignment, that is contingent on any of the

following:

1. the reporting of a predetermined result

(e.g., opinion of value);

2. a direction in assignment results that

favors the cause of the client;

3. the amount of a value opini on;

4. the attainment of a stipulated result

(e.g., that the loan closes, or taxes are

reduced); or

5. the occurrence of a subsequent event

directly related to the appraiser's opinions

and specific to the assignment's purpose.

48 . According to Mich ael Adnot, the Department's expert

witness, these USPAP standards require an appraiser to be

independent, impartial , and objective, and an appraiser cannot

advoc ate the cause of a client or pre - determine a value.

Moreover, concurrence with a prior apprais al cannot be a

condition of an assignment. If an appraiser feels pressure to

reach a certain result, he or she should not take the

assignment. Mr. Adnot's testimony is credited.

49 . Based upon the evidence presented, it is found that

Respondent devel oped and communicated the second reports for all

three properties with the intent of providing appraisal reports

that came within one percent of the selling price, i.e., a

predetermined value.

50 . The investigative costs for these three cases were as

fol lows: for Case No. 11 - 3007, costs are $1,303.50; for Case

No. 11 - 3008, costs of investigation are $1,501.50 and for Case

No. 11 - 3009, costs total $1,336.50.

CONCLUSIONS OF LAW

51 . The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties to this

action in accordance with s ections 120.569 and 120.57(1),

Florida Statutes (2011) .

5 2 . This is a proceeding to take disciplinary action

against Respondent's license to practice as a real estate

property appraiser . Because of the penal nature of these

proceedings, the Department has the burden of proving the

allegations in the Amended Admini strative Complaint s by clear

and convincing evidence. Dep't of Banking and Fin. v. Osborne

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

510 So. 2d 292 (Fla. 1987). As stated by the Supreme Court of

Florida,

Clear and convincing evide nce 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 tha t 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. 2d 797, 800 (Fl a. 4th DCA 1983) ) .

Case No. 11 - 3007

5 3 . Count One of the Amended Administrative Complaint in

Case No. 11 - 3007 charges Respondent with violating section

475.624(15), which states in pertinent part:

475.624 Discipline. -- The board may deny an

application for registration or

certification; may investigate the actions

of any appraiser registered, licensed, or

certified under this part; may reprimand or

impose an administrative fine not to exceed

$5,000 for each count or se parate 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:

* * *

(15) Has failed or refused to exercise

reasonable diligence in developing an

appraisal or preparing an appraisal report.

5 4 . The Department prove d this violation by clear and

convincing evi dence. The Department equates the failure to

remain impartial with the failure to exercise due diligence.

However, the expert testimony presented did not make that

connection, and no opinion was elicited from Mr. Adnot as to

whether Respondent failed to exercise due diligence. However,

Respondent's work papers provide no support for the condition

adjustments or descriptions made in the second report for

comparable sales 1, 2, 4 , and 5, as alleged in the Amended

Administrative Complaint. This type of adj ustment is clearly

required to be supported by work papers. Therefore, Respondent

is guilty of Count I of the Amended Administrative Complaint.

5 5 . Count Two of the Amended Administrative Complaint

charges Respondent with violating section 475.624(2), w hich

make s it a violation where a licensee,

(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 st ate, 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 misconduc t; 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.

5 6 . The Department proved that Respondent viol ated this

subsection by clear and convincing evidence. By submitting the

second report in an effort to advocate the interests of Alachua

County and by seeking to concur with valuations that had been

reached previously as opposed to reaching his own opinio n,

Respondent committed dishonest conduct and violated the breach

of trust placed on all licensed property appraisers to

communicate reports that are independent, impartial , and

objective. He also violated a duty imposed upon him by the

USPAP standards go verning all appraisals.

5 7 . Count Three of the Amended Administrative Complaint

charges Respondent with violating section 475.624(4), which

make s it a basis for discipline when a licensee " [h] as violated

any of the provisions of this part or any lawful o rder or rule

issued under the provisions of this part or chapter 455 ." The

Department contends that Respondent has violated this section by

violating section 455.227(1)(m), Florida Statutes (2009), by

employing a trick or scheme in or related to the pract ice of the

profession. However, section 475.624(4) does not provide a

basis for discipline based upon a violation of section 455.227.

It only authorizes discipline for violating rules or orders

issued under the provisions of chapter 455. 2/ Accordingl y, Count

Three should be dismissed.

5 8 . Count Four of the Amended Administrative Complaint

states the following:

29. Section 475.624(4), Florida Statutes,

subjects a real estate appraiser licensee to

discipline for violating any of the

provisions of Chapter 475 or any lawful

order or rule made or issued under the

provisions of Chapter 455 or 475.

30. Section 475.611 defines an appraisal

assignment as "an engagement for which a

person is employed or retained to act, or

could be perceived by third parties or the

public as acting, as an agent or a

disinterested third party in rendering an

unbiased analysis, opinion, review, or

conclusion relating to the nature, quality,

value, or utility of specified interests in,

or aspects of, identified real prope rty."

31. Respondent failed to follow the

definition of an appraisal assignment in one

or more of the following ways:

a. By failing to act as a

disinterested party in developing and

communicating Report 2.

b. By failing to render an unbiased

analysis , opinion, review or conclusion with

regards to Report 2.

32. Based on the foregoing, Respondent

violated Section 475.611 and, therefore,

Section 475.624(4), by failing to follow the

definition of an appraisal assignment.

5 9 . Part II of chapter 475 is filled with provisions that

impose obligations or contain prohibitions applicable to the

conduct of applicants, licensees, registrants , and

certificateholders regulated pursuant to this chapter. See , for

example, section 475.612 (restricting who may use the title

"certified real estate appraiser," and similar titl es and

limiting who may receive direct compensation for providing

valuation services); section 475.615 (setting qualifications for

registration or certification); section 475.616 (setting

examina tion requirements an applicant must meet); section

475.617 ( providing for education and experience requirements for

licensure or registration); section 475.622 (requirement to

display and disclose licensure); section 475.6221 (requirements

related to regis tered trainees); section 475.6222 (supervision

requirements for trainees); section 475.623 (requirement that

firms or business names and locations be registered); section

475.626 (criminal violations and penalties); and section 475.628

(requiring complianc e with USPAP). Section 475.611 contains no

s uch obligation or prohibition .

60 . By its terms, section 475.611 provides definitions for

terms used throughout part II of chapter 475. While these

definitions are essential for interpreting other provisions

within the chapter, such as the prohibition s in sub section s

475.624(11), (14), (15), (16), and (17), they do not, standing

alone, providing notice to a licensee of a basis for discipline.

Moreover, in disciplinary proceedings, the statutes and rules

for w hich a violation is alleged must be strictly construed in

favor of Respondent. Elmariah v. Dep't of Prof'l Reg. , 574 So.

2d 164 (Fla. 1st DCA 1990); Taylor v. Dep't of Prof'l Reg. , 534

So. 2d 782, 784 (Fla. 1st DCA 1988). Given this well - settled

requirement of statutory construction, the undersigned cannot

conclude that Respondent may be found guilty of violating a

definition. Count Four of the Amended Administrative Complaint

should be dismissed.

61 . Count Five of the Amended Administrative Complaint

charges Respondent with violating section 475.624(4) by

violating section 475.6 23, which requires each appraiser to

furnish in writing each firm or business name and address from

which she or he operates in the performance of appra isal

services. T he Department's certification of licensure for

Respondent ( Petitioner's Exhibit 1 ) indicates that " f rom

November 28, 1991 through the present [Respondent] is an active

State Certified Real Estate Appraiser trading as Rhea

Appraisa ls, Inc., . . . ." Petitioner did not prove the

allegations in Count Five by clear and convincing evidence.

62 . Finally , with respect to this Amended Administrative

Complaint, Count Six alleges that Respondent violated the

provisions of section 475.624( 4), by violating Florida

Administrative Code Rule 61J1 - 4.010(2)(b), which states:

(2) The supervising appraiser shall be

responsible for the training and direct

supervision of the appraiser trainee by:

(a) Accepting responsibility for the

appraisal report by signing and certifying

the report is in compliance with the Uniform

Standards of Professional Appraisal

Practice, as defined in Section

475.611(1)(o), F.S.;

(b) Reviewing the appraiser trainee appraisal

reports;

63 . While the failure to supervise Mr. Bullard would

present a plausible explanation for issuing the second report,

the evidence presented does not support this theory. The only

evidence presented regarding the supervision provided is that of

Mr. Bullard, who testified that su pervision was in fact

provided. Count Six was not proven by clear and convincing

evidence.

Case No. 11 - 3008

64 . Count One of the Amended Administrative Complaint

charges Respondent with failing to exercise reasonable diligence

in violation of section 4 75.624(15). Consistent with the

reasons described with respect to Count One in Case No. 11 - 3007,

the Department has proven this count by clear and convincing

evidence.

65 . Similar ly , Count Two charges Respondent with violating

section 475.624(2), by committing dishonest conduct or breach of

trust in any business transaction. Consistent with the

reasoning stated with respect to Count Two in Case No. 11 - 3007,

the Department has proven a violation of this count by clear and

convincing evidence.

66 . Count Three charges Respondent with violating section

475.624(4), by failing to follow the definition provided for an

appraisal assignment contained in section 475.611. As discussed

above, the undersigned does not believe that a definitional

section of the statute imposes an obligation or prohibits

conduct, or provides notice of conduct with which a Respondent

can be charged. Count Three is therefore not proven by clear

and convincing evid ence.

67 . Count Four charges a violation of section 475.624(4)

by violating rule 61J1 - 4.010(2)(b). However, the only evidence

regarding the supervision provided was the testimony of Corey

Bullard, who testified that appropriate supervision was given.

C ount Four is not proven by clear and convincing evidence.

Case No. 11 - 3009

68 . Count One of the Amended Administrative Complaint in

Case No. 11 - 3009 charges Respondent with violating section

475.624(15), by failing or refusing to exercise reasonable

dil igence in developing an appraisal or preparing an appraisal

report. As with the prior properties, Petitioner's expert

witness did not directly testify that Respondent failed to

exercise due diligence. However, Respondent's work papers do

not explain the need for the second report or the adjustments

made in the second report to arrive at a different opinion on

value. This failure reflects a lack of due diligence,

supporting a finding that Count One is proven by competent

substantial evidence.

69 . Count Two charges Respondent with violating section

475.624(2) by committing dishonest conduct or breach of trust in

a business transaction. For the reasons discussed with respect

to the same charge in Case No. 11 - 3007, the Department has

proven this count by c lear and convincing evidence.

70 . Count Three charges a violation of section 475.624(4)

by failing to follow the definition of appraisal assignment as

provided in section 475.611. For the reasons discussed in Case

No. 11 - 3007 with respect to the same ch arge, this Count has not

been proven by clear and convincing evidence.

71 . Finally, Count Four charges Respondent with violating

sectio n 475.624(4) by failing to review appraiser trainee

appraisal reports, in violation of rule 61J1 - 4.010. However, no

ev idence was presented regarding the amount of supervision

provided to Ms. Archer, who assisted with this appraisal.

Therefore, Count Four has not been proven by clear and

convincing evidence.

72 . In summary, the Department has proven violations of

sectio n 475.624(2) and (15), with respect to all three Amended

Administrative Complaints. All other counts in the Amended

Administrative Complaints have not been demonstrated by clear

and convincing evidence and should be dismissed.

73 . The Florida Real Estat e Appraisal Board has adopted

disciplinary guidelines establishing penalties to be imposed for

violations of chapter 475. Florida Administrative Code Rule

61J1 - 8.002, as it existed when these violations were committed,

provides that the appropriate penalt y for breach of trust

pursuant to section 475.624(2) is from a $1,000 fine to a one -

year suspension. For "dishonest dealing" under the same

subsection, the recommended penalty is revocation. For failing

or refusing to exercise reasonable diligence in dev eloping or

preparing an appraisal report, the usual penalty is a five - year

suspension to revocation and an administrative fine of $1,000.

74 . Rule 61J1 - 8.002(4)(b) provides that the Board may

consider the following aggravating or mitigating circumstances

should it choose to deviate from the guideline ranges: the

degree of harm to the consumer or public; the number of counts

in the administrative complaint; the disciplinary history of the

licensee; the status of the licensee at the time the offense was

co mmitted; and the degree of financial hardship incurred by a

licensee as a result of a fine or suspension of the license. In

this case, the Department did not prove any harm to the consumer

or public. There are two count s proven with respect to each

Amend ed Administrative Complaint: however with respect to each

case, the counts proven are based upon the same set of facts.

Respondent has no prior disciplinary history and has been

licensed over twenty years .

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 finding that Respondent violated section

475.624(2) and (15) as alleged in Case Nos . 11 - 3007, 11 - 3008,

and 11 - 3009; suspending his lic ense to practice as a certified

residential real estate appraiser for a period of 3 years,

followed by 5 years of probation ; imposing a $6,000 fine and

imposing costs in the amounts identified in finding of fact

number 49, for a total of $4,141.50 in costs .

DONE AND E NTERED this 17th day of February, 2012, in

Tallahassee, Leon County, Florida.

S

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 Administrative Hearings

this 17th day of February , 2012 .

ENDNOTES

1/ Some of the Department's exhibits, notably the appraisal

reports, had been reduced f or copying and clearly copied multiple

times. As a result, portions of these exhibits (especially

Petitioner's Exhibit 5) could only be read with the aid of a

magnifying glass and even then, with difficulty. The undersigned

has endeavored to glean from t hese exhibits the information

required for this Recommended Order. In the future, however, it

would be help ful to have full - sized exhibits for the purpose of

hearing.

2/ Compare section 475.624(1), which authorizes discipline for

conduct that violates "any provisions of this part or s.

455.227(1). . . ." However, the Department did not charge this

provision.

COPIES FURNISHED:

Jennifer Leigh Blakeman, Esquire

Departme nt of Business and

Professional Regulation

400 West Robinson Street

Orlando, Florida 32801

[e-mail]

Nancy Pico Campiglia, Esquire

Keating and Schlitt, P.A.

250 East Colonial Drive, Suite 300

Orlando, Florida 32801

[e-mail]

Juana Watkins, Director

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street

Orlando, Florida 32801

Layne Smith, General Counsel

Department of Business and

Profes sional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Fl or ida 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.