COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 68483 NELSON L. HARBEITNER, ET AL. : : ACCELERATED DOCKET : PLAINTIFFS-APPELLEES : JOURNAL ENTRY : v. : AND : SUPERINTENDENT, OHIO DEPARTMENT : OPINION OF COMMERCE : : PER CURIAM DEFENDANT-APPELLANT : DATE OF ANNOUNCEMENT OF DECISION: JULY 27, 1995 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court, No. CV-268147. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiffs-Appellees: Thomas P. Bliss, Esq. 20899 Lorain Road Fairview Park, OH 44126 For Defendant-Appellant: Nancy H. Rogoff, Esq. State Office Building, 12th Floor 615 West Superior Avenue Cleveland, OH 44113-1899 -2- PER CURIAM: This cause came on to be heard upon the accelerated calendar pursuant to App.R. 11.1 and Loc.App.R. 25, the record from the Cuyahoga County Court of Common Pleas and the briefs of counsel. Superintendent, Ohio Department of Commerce, Division of Real Estate, defendant-appellant, appeals from the judgment of the trial court granting Nelson and Lynn Harbeitner's, plaintiffs- appellees', application for an order directing payment out of the real estate recovery fund pursuant to R.C. 4735.12. Defendant- appellant assigns one error for this court's review. Defendant-appellant's appeal is not well taken. I. THE FACTS Nelson and Lynn Harbeitner, plaintiffs-appellees, listed their home at 5367 Barkwood Drive, Sheffield Village, Ohio, for sale with Smythe Cramer Co., a licensed real estate broker. Smythe Cramer Co. is part of the Multiple Listing Service for the Cleveland area. Only licensed real estate brokers and licensed salespersons may be members of the Multiple Listing Service. Plaintiffs-appellees, through their listing agreement, authorized Smythe Cramer Co. to install a lock box on their home. A lock box is a small metal box which is placed on the door of a listed home in which a key to the home is placed. The purpose of a lock box is to facilitate the sale of the listed property by allowing licensed real estate brokers and licensed salespersons access to the home as agents or sub-agents of the seller. Only -3- members of the Multiple Listing Service are in possession of a key to the lock box. On November 25, 1992 Alex Santora, a licensed real estate salesperson associated with Westway Realty and a member of the Multiple Listing Service, burglarized plaintiffs-appellees' home. Santora gained access to plaintiffs-appellees' residence by use of the lock box key which Santora possessed as a result of being a licensed real estate salesperson. Santora stole numerous items of personal property belonging to plaintiffs-appellees. On November 25, 1993 Santora was arrested, charged and subsequently convicted of aggravated burglary and grand theft as a result of the break-in. Plaintiffs-appellees then filed suit against Santora in the Cuyahoga County Court of Common Pleas and were awarded a judgment against Santora in the amount of $25,643.35 for compensatory damages, $10,000.00 for additional compensatory damages for emotional distress and $25,000.00 for punitive damages plus interest. On March 31, 1994 plaintiffs-appellees filed an application for an order directing payment out of the real estate recovery fund based on the judgment obtained by plaintiffs-appellees against Alex Santora. On January 3, 1995 the trial court granted in part plaintiffs-appellees' application for an order directing payment out of the real estate recovery fund. The trial court awarded plaintiffs-appellees $25,643.35 plus costs noting that a recovery out of the real estate recovery fund is limited to those damages which are actual and direct. The trial court noted further that -4- the real estate recovery fund is not intended to pay for damages arising out of collateral causes of action such as emotional distress or punitive damages. On January 30, 1995 Superintendent, Ohio Department of Commerce, Division of Real Estate, defendant-appellant, filed a timely notice of appeal from the judgment of the trial court. II. ASSIGNMENT OF ERROR Superintendent, Ohio Department of Commerce, Division of Real Estate's, defendant-appellant's, first and only assignment of error states: THE TRIAL COURT ERRED AS A MATTER OF LAW IN FINDING THAT PLAINTIFF-APPLICANTS ARE ENTITLED TO RECOVER FROM THE REAL ESTATE RECOVERY FUND UNDER R.C. 4735.12 WHERE THE REAL ESTATE LICENSEE ENGAGED IN CRIMINAL CONDUCT AND NOT CONDUCT WHICH IS ASSOCIATED WITH AN ACT OR TRANSACTION OF A REAL ESTATE LICENSEE AS DEFINED IN R.C. 4735.01(A) AND REQUIRED UNDER R.C. 4735.12. Defendant-appellant argues through its sole assignment of error that the trial court incorrectly allowed plaintiffs- appellees to recover from the real estate recovery fund. Specifically, defendant-appellant maintains that the conduct of Alex Santora which caused plaintiffs-appellees' loss was not a real estate transaction and did not involve any type of agency but rather was criminal conduct of theft of property and not conduct which would fall within the parameters of R.C. 4735.12 for which a recovery would be warranted. R.C. 4735.12, which governs payments form the real estate recovery fund, provides in pertinent part: -5- (B) When any person, except a bonding company when it is not a principal in a real estate transaction and except a person in an action for the payment of a commission or fee for the performance of an act or transaction specified or comprehended in division (A) or (C) of section 4735.01 of the Revised Code, obtains a final judgment in any court of competent jurisdiction against any broker or salesman licensed under this chapter, on the ground of conduct that is in violation of this chapter or the rules adopted under it, that occurred after March 4, 1975, and that is associated with an act or transaction of a broker or salesman specified or comprehended in division (A) or (C) of section 4735.01 of the Revised Code, such person may file a verified application, as described in this division, in any court of common pleas for an order directing payment out of the real estate recovery fund of the portion of the judgment that remains unpaid and that represents the actual and direct loss sustained by the application. Punitive damage and interest on a judgment are not recoverable from the fund. In the discretion of the superintendent of real estate, attorney fees and court costs may be recovered from the fund, and, if the superintendent authorized the recovery of attorney fees or court costs, the order of the court of common pleas then may direct their payment from the fund. R.C. 4735.01(A) defines real estate broker as follows: (A) "Real estate broker" includes any person, partnership, association, or corporation, foreign or domestic, who for another, whether pursuant to a power of attorney or otherwise, and who for a fee, commission, or other valuable consideration, or with the intention, or in the expectation, or upon the promise of receiving or collecting a fee, commission, or other valuable consideration. R.C. 4735.01(C) defines real estate salesman as follows: (C) "Real estate salesman" means any person associated with a licensed real estate -6- broker to do or to deal in any acts or transactions set out or comprehended by the definition of a real estate broker, for compensation or otherwise. In Dent v. Van Winkle (1987), 30 Ohio St.3d 80, the Supreme Court of Ohio, in dealing with the real estate recovery fund, stated in paragraph one of the syllabus: In order to satisfy the requirements for payment from the Real Estate Recovery Fund, R.C. 4735.12, the party allegedly harmed must obtain a judgment against a broker or salesman, licensed under R.C. Chapter 4735, on the grounds of conduct that is in violation of that Chapter. Accordingly, in order to participate in the fund, an applicant must demonstrate that he has obtained a final judgment against a licensed broker or salesman arising out of conduct that is "associated with an act or transaction of a broker or salesman specified or comprehended in division (A) or (C) of section 4735.01 of the Revised Code." R.C. 4735.12(B). Yeager v. Inland Mutual Insurance Co. (June 17, 1982), Cuyahoga App. No. 43968, unreported. Conduct of a real estate broker or salesperson which would warrant suspension or revocation of his license under R.C. 4735.18 is considered conduct "in violation of" R.C. 4735, within the meaning of R.C. 4735.12(B). Krejci v. Clark (1989), 58 Ohio App.3d 76. In the present case, plaintiffs-appellees' home was burglarized by Alex Santora, a licensed real estate agent, who learned of the sale of the property by virtue of his position as a licensed real estate agent. In addition Santora gained access -7- to plaintiffs-appellees' home through the abuse of the lock box, a device with the sole purpose of facilitating the sale of plaintiffs-appellees' home. Santora would not have been in a position to abuse the lock box system unless he was a licensed real estate agent with access to the Multiple Listing Service and a key to the particular lock box in question. Clearly, Santora not only abused his position as a licensed real estate agent for personal economic gain but also abused the trust and good faith fiduciary relationship between the seller of a home and a real estate agent and/or sub-agent. Such dishonest actions by a licensed real estate agent would surely warrant suspension or revocation of his license pursuant to R.C. 4735.18 and are therefore considered conduct in violation of R.C. 4735, within the meaning of R.C. 4735.12(B). See Krejci v. Clark, supra. Accordingly, the trial court did not err in ordering that plaintiffs-appellees be permitted to recovery from the real estate recovery fund pursuant to R.C. 4375.12. Defendant- appellant's sole assignment of error is not well taken. Judgment of the trial court is affirmed. -8- It is ordered that appellees recover of appellant their costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. LEO M. SPELLACY, PRESIDING JUDGE JAMES D. SWEENEY, JUDGE DAVID T. MATIA, JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate .