The Florida Bar v. Jose Carlos Marrero , 157 So. 3d 1020 ( 2015 )

Supreme Court of Florida
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No. SC11-1780
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THE FLORIDA BAR,
Complainant,
vs.
JOSE CARLOS MARRERO,
Respondent.
[January 15, 2015]
PER CURIAM.
Having considered the report of the referee and briefs of the parties, the
Court disapproves the referee’s recommendations that Respondent Jose Carlos
Marrero did not violate the Rules Regulating the Florida Bar.1 As discussed
below, the Court finds Respondent guilty of three violations of Rule Regulating the
Florida Bar 4-8.4(c) (misconduct involving dishonesty, fraud, deceit, or
misrepresentation) and one violation of Rule Regulating the Florida Bar 5-1.1(b)
1. We have jurisdiction. See art. V, § 15, Fla. Const.
(money or other property entrusted to an attorney for a specific purpose is held in
trust and must be applied only to that purpose). The case is hereby referred back to
the referee to hold a hearing to consider the appropriate sanction. At the hearing,
the parties may present arguments regarding aggravating and mitigating factors.
Further, the referee is directed to determine the amount of costs to award The
Florida Bar, which is the prevailing party. See R. Regulating Fla. Bar 3-7.6(q) (3)
(when the Bar is successful, in whole or in part, the Bar’s costs may be assessed
against the respondent).
I. BACKGROUND
The Florida Bar alleged that Respondent violated the Rules Regulating the
Florida Bar by his conduct when serving as an escrow agent for a loan provided by
Ms. Gonzalez, and when processing a related loan from Countrywide Bank. As
the referee found in its report, Respondent and Mr. Pedrosa were officers of
Weston Professional Title Group, Inc. Respondent was the President and
registered agent of Weston. Pedrosa was a mortgage broker. Occasionally,
Pedrosa made business arrangements with Ms. Gonzalez. She would make cash
loans, through Pedrosa, to his clients.
The evidence demonstrates that on December 13, 2005, Respondent
accepted a $200,000 check from Gonzalez that was to be used for a loan. She
provided the check through an arrangement she made with Pedrosa. Although
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Respondent did not negotiate the agreement with Gonzalez, he knew the funds
were for a loan to borrowers Gutierrez and Marrero. Gonzalez testified that
Pedrosa informed her the funds were to be used for a second mortgage.
Bank statements show that Respondent deposited the $200,000 cashier’s
check into his escrow account on December 15, 2005, and he disbursed the entirety
of the loan funds by wire transfer to the borrowers the next day, on December 16,
2005. He did not require the borrowers to sign any agreements at the time. The
funds were provided to Gutierrez and Marrero before the note and mortgage were
prepared or signed. In fact, the mortgage and note were not created until three
weeks after the funds were disbursed. Respondent did not draft the “second
mortgage” and promissory note until January 10, 2006, which was 25 days after he
gave the borrowers the entire $200,000. This conduct did not protect the interests
of lender Gonzalez. As Respondent was a fiduciary responsible for the funds and
to all involved parties, these deliberate acts are not negligence. He intentionally
disbursed the funds the day after receiving them from Gonzalez, without having
the borrowers sign any documents at that time. He performed these actions
deliberately and knowingly.
Furthermore, in the “second mortgage” Respondent listed the property at
issue as collateral for the loan. However, when the mortgage and note were
executed on January 11, 2006, and witnessed by Respondent, the borrowers had no
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ownership interest in the property that was listed as collateral. The borrowers did
not purchase the property until six days later on January 17, 2006.
Although Gonzalez received the loan closing documents on January 11,
2006, Respondent did not record the Gonzalez mortgage until six months later.
The deed of mortgage, which Respondent prepared, was executed by Gutierrez and
Marrero on January 11, 2006, but was not recorded until June 22, 2006. Thus,
Gonzalez did not have a recorded interest in the property until six months after
Respondent gave the borrowers the $200,000. At no time during these events did
Respondent inform Gonzalez that the funds were being used by the borrowers to
purchase the house. Gonzalez had been told that the funds were to be used to make
repairs on a house that the borrowers already owned; her loan was to serve as a
second mortgage.
Borrowers Gutierrez and Marrero did not own the property until January 17,
2006, which is the date a loan was settled between lender Countrywide Bank and
the borrowers. It is significant that the mortgage loan application executed by
Marrero to obtain the Countrywide Bank loan failed to disclose the $200,000 loan
from Gonzalez as a liability. In addition, because Respondent delayed for many
months before recording the $200,000 Gonzalez loan, his actions prevented the
loan from being found by any title search performed for the Countrywide Bank
closing on January 17, 2006. Further, the compliance form failed to disclose the
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$200,000 loan from Gonzalez. The title insurance loan policy, which Respondent
signed, also failed to list the Gonzalez loan. Similarly, the Owner’s Policy of Title
Insurance did not reflect the $200,000 loan. Respondent’s title company closed the
loan and Respondent signed the policy.
Eventually, after purchasing the property, the borrowers stopped making
payments on the Gonzalez loan. Gonzalez’s efforts to recover her funds were
unsuccessful.
II. ANALYSIS
The Court has repeatedly stated that the referee’s factual findings must be
sufficient under the applicable rules to support the recommendations as to guilt.
See Fla. Bar v. Shoureas, 913 So. 2d 554, 557-58 (Fla. 2005). Here, the referee
recommended that Respondent be found not guilty of any rule violations; we
conclude that the facts do not support the referee’s recommendation.
First, based upon these facts, the Court finds that Respondent violated rule
4-8.4(c) by drafting, executing, and witnessing a mortgage loan document
containing the misrepresentation that the borrowers had the legal authority to
encumber the property. Respondent’s acts were deliberate and prove the element
of intent necessary to find a violation of rule 4-8.4(c).2 Respondent created
2. Before the referee, Respondent argued that he is unable to understand a
HUD-1 and, therefore, he did not have the necessary intent to violate rule 4-8.4(c).
The referee agreed with Respondent’s assertion. The Court disapproves the
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documents that others would rely upon, and the documents falsely represented that
the borrowers could offer the property at issue as collateral. See Fla. Bar v.
Watson, 76 So. 3d 915 (Fla. 2011) (attorney’s drafting and signing of letters on his
firm letterhead addressed to investors indicating that the investors had invested
money in client’s development project, when attorney knew they had not invested
their money and that others would rely on these fraudulent letters, was dishonest
conduct in violation of rule 4-8.4(c)).
referee’s finding. First, the facts do not support this finding. Respondent was the
President and Managing Partner of a title agency, and the primary area of practice
at his law firm was real estate transactions. Further, evidence in the record
indicates that during this period his business performed between 100 and 120
closings per month, earning between $1500 and $4000 per closing. Also,
Respondent admitted attending closings to provide legal advice.
This argument has been made by other respondents, without success. See
Fla. Bar v. Brown, 905 So. 2d 76 (Fla. 2005) (the respondent was found guilty of
violating rule 4-8.4(c), after claiming that he did not have the necessary intent
because he allegedly did not read the business agreement pledging a $420,000
certificate of deposit as security before he executed the agreement). A respondent
cannot avoid a finding that he acted intentionally by claiming he was ignorant of
the documents he signed or filed. Here, Respondent drafted and executed
documents related to the Gonzalez loan. He took and deposited Gonzalez’s
$200,000 check. Respondent disbursed those funds to the borrowers. His agency,
for which he signed checks and documents, provided the title insurance policies
that he issued to lender Countrywide Bank and to the borrowers. Also,
Respondent’s agency was the closing agent for the Countrywide Bank loan. The
evidence shows that Respondent was personally involved in numerous aspects of
his business. The referee is unsupported in finding that Respondent cannot
understand the documents that are crucial to his business and thereby lacked intent
to engage in dishonest conduct.
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Second, the Court finds Respondent guilty of another violation of rule 4-
8.4(c) due to his deliberate omissions and knowing failures to report important
information to lender Gonzalez. An attorney serving as an escrow agent has a
fiduciary duty to exercise reasonable skill and ordinary diligence in holding and
delivering possession of the escrowed property. See Fla. Bar v. Hines, 39 So. 3d
1196, 1200 (Fla. 2010). As the Court stated in Florida Bar v. Joy, 679 So. 2d
1165, 1167 (Fla. 1996), an attorney serving as an escrow agent has a duty to act in
the benefit of the parties to the transaction. In Joy, 679 So. 2d at 1167, the Court
noted United American Bank of Central Florida, Inc. v. Seligman, 599 So. 2d
1014, 1016 (Fla. 5th DCA 1992), which provided:
Regardless of the escrow agent’s other relationships or duties to the
principal parties (lawyers often hold funds in escrow where their client
is one principal and some other non-client is another principal party)
when principal parties agree upon an escrow agent, by undertaking to
act as such, the escrow agent establishes a new legal relationship to the
principal parties and by an expressed agreement or by agreement
implied in law, agrees to certain basic inherent matters. The
relationship established is that of principal and agent and involves the
escrow agent being an agent of, and owing a fiduciary duty to, all of
the principal parties. In the absence of an express agreement, written
or oral, the law will imply from the circumstances of the escrow that
the agent has undertaken a legal obligation (1) to know the provisions
and conditions of the principal agreement concerning the escrowed
property, and (2) to exercise reasonable skill and ordinary diligence in
holding and delivering possession of the escrowed property (i.e., to
disburse the escrowed funds) in strict accordance with the principals’
agreement.
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Therefore, Respondent had a duty to inform Gonzalez that the funds she
provided were not being used in accord with her agreement in providing the loan.
As the Court stated in Hines, 39 So. 3d at 1200, “Hines’ role in the transaction was
as a title attorney, a closing agent, and an escrow agent. She was providing legal
services and, as closing and escrow agent, owed a fiduciary duty to all of the
principal parties involved.” Although Respondent did not negotiate the initial
agreement with Gonzalez, he was serving as the escrow agent and was supposedly
maintaining possession of her funds; therefore, he had a duty to inform Gonzalez
when he realized that the transaction was not in accord with her agreement. He
should have informed Gonzalez that the borrowers were not going to use her funds
for a second mortgage because they did not own the property at the time they
received her funds. Also, Respondent should have told her that the borrowers used
her funds to purchase the property. Further, he should have informed Gonzalez
when he was delaying in recording her loan and recording her interest in the
property. Respondent accepted the $200,000 and was in a fiduciary role—he had a
responsibility to disclose pertinent information to Gonzalez, but he deliberately and
knowingly decided not to inform her of these significant facts.
Third, pursuant to those same fiduciary responsibilities, Respondent violated
rule 4-8.4(c) with regard to Countrywide Bank. Respondent knew of the Gonzalez
loan prior to the Countrywide Bank closing because he personally drafted the
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documents for the Gonzalez loan. Despite this knowledge, he did not disclose the
$200,000 loan on the list of encumbrances in the title insurance policy that he
issued to lender Countrywide Bank. Further, he did not inform Countrywide Bank
that the down payment on the property was the money that the borrowers received
from Gonzalez. His failures to be truthful created the appearance that the
borrowers had invested their own funds into the property. In addition, by not
recording the Gonzalez mortgage until well after the Countrywide Bank closing,
Countrywide Bank was prevented from discovering the existence of the Gonzalez
loan before the closing. The Gonzalez loan would constitute an encumbrance
against the property. Respondent has an obligation to be truthful and forthright in
his representations. He had an ethical obligation to include that mortgage on the
list of encumbrances existing against the property. Based upon these facts, which
show that Respondent engaged in a pattern of knowing decisions and deliberate
acts, the Court finds him guilty of a third violation of rule 4-8.4(c). He was not
truthful in his representations to Countrywide Bank and omitted material
information.
Fourth, the Court finds that the evidence demonstrates Respondent violated
rule 5-1.1(b). The rule plainly states that “[m]oney or other property entrusted to
an attorney for a specific purpose . . . is held in trust and must be applied only to
that purpose.” In Hines, 39 So. 3d at 1200 (quoting Joy, 679 So. 2d at 1167), the
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Court stated that “absent an express agreement, the law implies from the
circumstances that an escrow agent undertakes ‘a legal obligation (1) to know the
provisions and conditions of the principal agreement concerning the escrowed
property, and (2) to exercise reasonable skill and ordinary diligence in holding and
delivering possession of the escrowed property (i.e., to disburse the escrowed
funds) in strict accordance with the principals’ agreement.’” (Emphasis added.)
Therefore, rule 5-1.1(b) requires an attorney to apply money held in trust for a
specific purpose to only be applied for that purpose, and case law (Hines and Joy)
require an attorney serving as an escrow agent to exercise reasonable skill and
ordinary diligence in delivering possession of the escrowed property. Thus, a
lawyer receiving funds from a third party and depositing the funds into his escrow
account has a duty to exercise reasonable diligence to determine for what purpose
that third party had provided the funds, before disbursing the funds. Respondent
violated these requirements. Gonzalez believed her funds were being used as a
second mortgage by people who already owned the property. She provided the
loan for them to make improvements to their property; she did not know that the
borrowers did not own the property. Based on Gonzalez’s past business practices
with Pedrosa, she expected the funds would not be provided to the borrowers until
the proper documents had been prepared and signed. Therefore, it is clear
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Respondent did not apply the funds that Gonzalez had entrusted to him, for the
specific purposes she had given him the funds.
Although Respondent asserts that Pedrosa negotiated the agreement with
Gonzalez, Respondent had an affirmative legal obligation to know the provisions
and conditions of the principal agreement concerning the escrowed property and to
dispense the funds in accordance with those terms and agreement. Hines, 39 So.
2d at 1200. Respondent could not rely solely on Pedrosa’s description of the
agreement. The comment to rule 5-1.1 states, “A lawyer must hold property of
others with the care required of a professional fiduciary.” In Florida Bar v. Ward,
599 So. 2d 650, 652 (Fla. 1992), the Court addressed this responsibility, stating
that lawyers have a unique fiduciary duty, individually and as a profession:
“Never is an individual’s trust in attorneys more evident, or more at risk, than
when he places funds or property into the hands of his attorney.” Respondent did
not fulfill his responsibilities as an escrow agent with regard to Gonzalez’s funds.
He did not exercise the necessary care and discretion. Instead, the day after he
deposited Gonzalez’s funds, he disbursed the entire loan to the borrowers and did
not have them execute any documents to make them responsible for the money.
Also, when he disbursed the funds, the borrowers did not own the property.
Further, as Respondent was active in the Countrywide Bank loan and closing, he
knew the money was used by the borrowers to purchase the property. The record
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shows that the funds were not disbursed for the purpose for which they were
entrusted and that Respondent is guilty of violating rule 5-1.1(b).
III. CONCLUSION
Accordingly, the Court finds Respondent guilty of three violations of rule 4-
8.4(c) and one violation of rule 5-1.1(b). The case is referred back to the referee to
hold a hearing to consider the appropriate sanction. The referee shall consider
evidence, make findings of fact regarding possible aggravating and mitigating
factors, and submit an Amended Report of Referee to the Court recommending a
disciplinary sanction. In addition, the referee shall determine the amount of costs
to award The Florida Bar as the prevailing party. The referee shall file the
Amended Report with the Court within ninety days of the date of this opinion.
It is so ordered.
LABARGA, C.J., and PARIENTE, LEWIS, QUINCE, CANADY, POLSTON,
and PERRY, JJ., concur.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
Original Proceeding – The Florida Bar
John F. Harkness, Jr., Executive Director, The Florida Bar, Tallahassee, Florida;
Adria E. Quintela, Staff Counsel, The Florida Bar, Sunrise, Florida; and Jennifer
R. Falcone, Bar Counsel, The Florida Bar, Miami, Florida,
for Complainant
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Richard Benjamin Marx of the Law Offices of Richard B. Marx & Associates,
Miami, Florida,
for Respondent
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