96-000834 Florida Real Estate Appraisal Board vs. Beverly J. Merchant Status: Closed Recommended Order on Thursday, September 5, 1996.

Summary: Evidence was insufficient to show that Respondent committed violations charged. In cases involving administrative fines, clear and convincing evidence is required.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, FLORIDA )

REAL ESTATE APPRAISAL BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 96-0834

)

BEVERLY J. MERCHANT, )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case at Miami,

Florida, on May 1, 1996, before Michael M. Parrish, a duly designated Hearing

Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Department of Business and Professional

Regulation, Division of Real Estate

Post Office Box 1900

Orlando, Florida 32802

For Respondent: Ms. Beverly J. Merchant, pro se

Merchant Associates, Inc.

5730 Southwest 74th Street, Suite 500

South Miami, Florida 33143-5381

STATEMENT OF THE ISSUES

This is a license discipline case in which the Petitioner, by means of a

three count Administrative Complaint, seeks to take disciplinary action against

the Respondent on the basis of alleged violations of subsections (2), (14), and

(15) of Section 475.624, Florida Statutes.

PRELIMINARY STATEMENT

At the formal hearing on May 1, 1996, the Petitioner presented the

testimony of two witnesses; Mr. Jack Katsikos (a state certified general

appraiser) and Mr. Kenneth Rehm (an investigative supervisor for the

Petitioner's Division of Real Estate). The Petitioner also offered six

exhibits, all of which were received in evidence.

The Respondent testified on her own behalf and also presented the testimony

of Mr. John Blazejack (a state certified general appraiser). The Respondent

also offered seventeen exhibits, of which fourteen were received in evidence.

(Respondent's exhibits R-4, R-7, and R-14 were not received in evidence and are

included in the record as rejected exhibits.)

At the conclusion of the formal hearing the parties were allowed twenty

days from the filing of the transcript within which to file their proposed

recommended orders. The transcript of the formal hearing was filed with the

Hearing Officer on May 31, 1996. On June 20, 1996, both parties filed their

respective proposed recommended orders. The parties' proposals have been

carefully considered during the preparation of this Recommended Order. Proposed

findings of fact are specifically addressed in the appendix to this Recommended

Order.

The Respondent's proposed recommended order also incorporates a Motion For

The Payment Of Respondent's Costs. That motion is addressed in the conclusions

of law portion of this Recommended Order.

FINDINGS OF FACT

1. The Petitioner is a state government licensing and regulatory agency

charged with the responsibility and duty to prosecute Administrative Complaints

pursuant to the laws of the State of Florida, in particular Section 20.165,

Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules

promulgated pursuant thereto.

2. Respondent Beverly J. Merchant is currently a Florida state certified

general appraiser, having been issued license number 000141 in accordance with

Chapter 475, Part II, Florida Statutes.

3. The last license issued to Respondent was as a state certified general

appraiser with a home address of 548 San Esteban Avenue, Coral Gables, Florida

33146.

4. On January 14, 1994, Graimark/MIG Joint Venture and/or Crown Revenue,

Inc., ordered Respondent to perform an appraisal of Sunrise Gardens, an adult

congregate living facility (ACLF), in Miami, Florida.

5. On March 31, 1994, the Respondent completed the appraisal of the

property.

6. The Respondent's appraisal report made several references to zoning

"variances." The use of the term "variances" was reasonable under the

circumstances of the subject appraisal.

7. The Respondent's appraisal report stated that the highest and best use

of the property was not as an adult congregate living facility (ACLF), but as

some other institutional use. Under the circumstances of the subject appraisal,

the Respondent provided adequate support to indicate that under the applicable

zoning provisions "another institutional use" was probably permissible by

variance.

8. The Respondent's appraisal report included a cost approach that

utilized a cost factor for "convalescent hospital space," even though the

highest and best use was a use other than an ACLF. The use of that cost factor

was reasonable under the circumstances of the subject appraisal.

CONCLUSIONS OF LAW

9. The Division of Administrative Hearings has jurisdiction over the

subject matter of and the parties to this proceeding. Section 120.57(1),

Florida Statutes.

10. The nature of the standard of proof which must be met in a case of

this type was addressed earlier this year by the Florida Supreme Court in

Department of Banking and Finance v. Osborne Stern and Company, 21 Fla. L.

Weekly S142 (Fla. March 28, 1996). There the court first reaffirmed its

conclusion in Ferris v. Turlington, 510 So.2d 292 (Fla. 1987), that in cases

involving the revocation of a professional license the clear and convincing

evidence standard must be applied. It then went further and extended the clear

and convincing evidence standard to cases involving the imposition of

administrative fines. At page S143 the Osborne court concluded:

Unlike the denial of an applicant's registra-

tion, an administrative fine deprives the

person fined of substantial rights in property.

Administrative fines, like the ones imposed

upon respondents in this case, are generally

punitive in nature. See Santacroce v. State,

Department of Banking and Finance, 608 So.2d

134, 137 (Fla. 4th DCA 1992). Because the

imposition of administrative fines . . .,

like license revocation proceedings, are

penal in nature and implicate significant

property rights, the extension of the clear

and convincing evidence standard to justify

the imposition of such a fine is warranted.

Accordingly, we agree with the district court

that, because the Department's final order

imposing a $5,000 fine for each of the four

statutes respondents allegedly violated does

not indicate that it was based upon a clear

and convincing evidence standard, the case

must be remanded for the application of the

proper burden of proof.

Consistent with the foregoing, in a case of this nature the Petitioner must

prove its charges by clear and convincing evidence. 1/

11. The nature of clear and convincing evidence has been described as

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

We therefore hold that clear and convincing

evidence requires that the evidence must be

found to be credible; the facts to which the

witnesses testify must be distinctly remembered;

the testimony must be precise and explicit and

the witnesses must be lacking in 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 convic-

tion, without hesitancy, as to the truth of

the allegations sought to be established.

See also, Smith v. Department of Health and Rehabilitative Services, 522 So.2d

956 (Fla. 1st DCA 1988), which, at page 958, quotes with approval the above-

quoted language from Slomowitz. The Smith case also includes the following at

page 958:

'Clear and convincing evidence' is an inter-

mediate standard of proof, more than the

'preponderance of the evidence' standard used

in most civil cases, and less than the 'beyond

a reasonable doubt' standard used in criminal

cases. See State v. Graham, 240 So.2d 486

(Fla. 2d DCA 1970).

12. Section 475.624, Florida Statutes (1993), reads as follows, in

pertinent part:

The board may deny an application for regis-

tration, licensure, or certification; inves-

tigate the actions of any appraiser registered,

licensed, or certified under this section; and

may reprimand, fine, 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 registrant, licensee, or

certificateholder:

* * *

(2) Has been guilty of . . . culpable negligence,

or breach of trust in any business transaction.

. . . It is immaterial to the guilt of the

registrant, 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 registrant, licensee, or

certificateholder, or was an identified member

of the general public.

* * *

(14) Has violated any standard for the development

or communication of a real estate appraisal or other

provision of the Uniform Standards of Professional

Appraisal Practice.

(15) Has failed or refused to exercise reasonable

diligence in developing an appraisal or preparing

an appraisal report.

13. The following statutory definition appears at Section 475.611(1)(m),

Florida Statutes (1993):

(m) 'Uniform Standards of Professional Appraisal

Practice' means the most recent standards approved

and adopted by the Appraisal Standards Board of

the Appraisal Foundation.

14. The allegations of misconduct which are asserted to form the factual

basis for the three violations alleged in Counts I, II, and III of the

Administrative Complaint are set forth in subparagraphs "a" through "e" of

paragraph 6 of the Administrative Complaint. The allegations of two of those

subparagraphs (subparagraph "a" and subparagraph "c") have been voluntarily

withdrawn from the Administrative Complaint. (See page 107 of the transcript of

the hearing.) With regard to the remaining subparagraphs of paragraph 6 of the

Administrative Complaint, although there are conflicting expert opinions on some

issues, the greater weight of the persuasive evidence is to the effect that the

subject appraisal report prepared by the Respondent was reasonable under the

circumstances. Specifically, the greater weight of the persuasive evidence is

to the effect that the subject appraisal report did not suffer from the defects

alleged in subparagraphs "b," "d," and "e" of paragraph 6 of the Administrative

Complaint. Inasmuch as the evidence is insufficient to prove those defects,

there is insufficient proof of the factual basis for the three violations

charged in Counts I, II, and III of the Administrative Complaint. Accordingly,

all three counts should be dismissed.

15. The Respondent's proposed recommended order incorporates a motion

seeking payment for the costs incurred by the Respondent in the defense of this

case. The motion is premature, because the Respondent has not yet achieved the

status of "prevailing party" within the meaning of Section 57.111, Florida

Statutes. Accordingly, the motion is denied without prejudice to the future

filing of a petition seeking an award of costs pursuant to Section 57.111,

Florida Statutes. 2/

RECOMMENDATION

On the basis of all of the foregoing, it is RECOMMENDED that a Final Order

be entered in this case dismissing all charges against the Respondent.

DONE AND ENTERED this 5th day of September, 1996, at Tallahassee, Leon

County, Florida.

___________________________________

MICHAEL M. PARRISH, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 5th day of September, 1996.

ENDNOTES

1/ Even if it were to be concluded that for some reason the holding in Osborne,

supra, was not controlling in this case, the clear and convincing standard would

still be applicable here for reasons discussed in the Recommended Order in

Department of Professional Regulation, Board of Medicine v. James H. Sternberg,

M.D., DOAH Case No. 91-5044, (Recommended Order issued January 20, 1993).

2/ In this regard, attention is directed to Rule 60Q-2.035, Florida

Administrative Code, which sets forth the procedural requirements for seeking an

award of attorney's fees and/or costs under Section 57.111, Florida Statutes.

Inasmuch as the Respondent engages in business through an incorporated entity,

attention is also directed to the Final Order in Stephen S. Spector, M.D. v.

Agency For Health Care Administration, Board of Medicine, DOAH Case No. 93-7095F

(Final Order issued Nov. 30, 1994), and the cases cited therein.

APPENDIX

The following are my specific rulings on all proposed findings of fact

submitted by all parties.

Findings submitted by Petitioner:

Paragraphs 1, 2, 3, 4, and 5: Accepted, with the exception of the last

sentence of paragraph 5. The subject report is not attached and incorporated as

an exhibit to this Recommended Order.Paragraph 6: Rejected as subordinate and

unnecessary background details.

Paragraph 7: The portion of this paragraph up to the word "appraisal" is

rejected as subordinate and unnecessary background details. The portion of this

paragraph regarding Mr. Katsikos' "determination" is rejected as irrelevant

because, even though he expressed the opinion that the subject appraisal report

did not meet minimum USPAP standards, there is no clear and convincing evidence

to support that opinion. The opinion testimony of Mr. Katsikos was not found to

be very persuasive. His testimony regarding the reasons for his opinions was,

for the most part, somewhat sketchy and vague. Further, his testimony was

tainted by his admitted "personal motivation against" the Respondent based on

her earlier criticisms of one of his appraisal reports. (See transcript pages

54, 63-64.)

Paragraph 8: The first three sentences of this paragraph are rejected as

subordinate and unnecessary background details. The last sentence is rejected

as constituting an opinion which is contrary to the greater weight of the

persuasive evidence.

Paragraph 9: Rejected as constituting an opinion which is not supported by

clear and convincing evidence and which is, in any event, contrary to the

greater weight of the evidence. The use of the term "variances" in the

appraisal report was reasonable and sufficient under the circumstances.

Paragraph 10: The first two lines of this paragraph are accepted. The

remainder of this paragraph is rejected as not supported by clear and convincing

evidence and as, in any event, contrary to the greater weight of the evidence.

Paragraph 11: Rejected as irrelevant because there is nothing alleged in

the Administrative Complaint regarding any failure to address the feasibility of

the conversion.

Paragraph 12: Rejected as not supported by clear and convincing evidence

and as, in any event, contrary to the greater weight of the evidence.

Paragraph 13: Rejected as irrelevant because there is nothing alleged in

the Administrative Complaint regarding any conflict arising from the use of the

cost approach. In any event, the Respondent adequately explained why the cost

approach was included in the subject appraisal report.

Paragraphs 14 and 15: Rejected as irrelevant because there is nothing

alleged in the Administrative Complaint regarding any confusion in the appraisal

report. Also rejected because the testimony on this subject was not clear and

convincing and appeared to be tainted by the witness's admitted "personal

motivation against" the Respondent.

Paragraph 16: Rejected as subordinate and unnecessary details.

Findings submitted by Respondent:

Pages 3 through 10 of the Respondent's proposed recommended order are

captioned "Proposed Findings Of Fact." Nevertheless, those pages consist

primarily of argument and discussion regarding insufficiencies in the evidence,

and they contain very little in the way of actual proposed findings of fact.

The few factual assertions on those pages are, for the most part, very

intertwined with the arguments. The Hearing Officer has not attempted to

identify and specifically rule on each of the proposed findings included on

pages 3 through 10 of the Respondent's proposed recommended order. It appears

sufficient to note that, on the issues raised by the Administrative Complaint,

the Hearing Officer's findings of fact are, in general, in accord with the

Respondent's view of the matter, although not necessarily for the same reasons

as those argued by the Respondent.

COPIES FURNISHED:

Steven W. Johnson, Esquire

Department of Business and Professional

Regulation, Division of Real Estate

Post Office Box 1900

Orlando, Florida 32802

Ms. Beverly J. Merchant

Merchant Associates, Inc.

5730 Southwest 74th Street, Suite 500

South Miami, Florida 33143-5381

Henry M. Solares, Director

Department of Business and Professional

Regulation, Division of Real Estate

Post Office Box 1900

Orlando, Florida 32802

Lynda L. Goodgame, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.