ALJDEC decisions subject to certification as final

07F-2250-BOA · Board of Appraisal · 2007-04-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 11, 2007 at 1:30 p.m. APPEARANCES: The Arizona Board of Appraisal appeared through Elizabeth A. Campbell, Esq., Assistant Attorney General; Respondent Certified Real Estate Appraiser Anthony S. Catapano appeared through Tina M. Ezzell, Esq., Sacks Tierney, P.A. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The parties presented evidence and made argument. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order to the Arizona State Board of Appraisal (“the Board”). FINDINGS OF FACT Background and Procedure 1. The Board is the state agency authorized pursuant to Arizona Revised Statute (“A.R.S.”) § 32-3601 et seq. to promulgate rules, found in the Arizona Administrative Code (“A.A.C.”) at R4-46-101 et seq., to regulate and control the licensing and certification of real property appraisers in the State of Arizona. 2. On October 27, 2006, pursuant to A.R.S. § 32-3612, the Board issued Certified Residential Appraisal Certificate No. 21450 to Respondent Mr. Catapano, which permits him to perform certain real property appraisals and appraisal reviews in the State of Arizona. 3. On January 19, 2007, the Board issued the Complaint and Notice of Hearing in this matter, which charged Mr. Catapano with violations of A.R.S. § 32-3631(A)(1), (2), (5), and (8). On that same date, the Board issued an order summarily suspending Mr. Catapano’s Certificate No. 21450 pursuant to A.R.S. § 41- 1092.11(B) and A.A.C. R4-46-301(E). 4. After one continuance at Mr. Catapano’s request, an administrative hearing was held on April 11, 2005. The Board presented the testimony of Stephanie Pepper, Mr. Catapano’s former mentor, and Deborah G. Pearson, its Executive Director, and had admitted into evidence six exhibits. Mr. Catapano testified on his own behalf and had admitted into evidence four exhibits. Additional Evidence Licensing Requirements 5. The legislature has created three license classifications for real estate appraisers in A.R.S. § 32-3612: 1. State certified general real estate appraisers consisting of those persons meeting the requirements for certification relating to the appraisal or appraisal review of all types of real property.

2. State certified residential real estate appraisers consisting of those persons meeting the requirements for certification relating to the appraisal or appraisal review of one to four residential units without regard to value or complexity.

3. State licensed real estate appraisers consisting of those persons meeting the requirements for licensing relating to appraisal or appraisal review of noncomplex one to four residential units having a value les than two hundred fifty thousand dollars.

6. The Board through administrative regulation has limited the scope of a licensed appraiser’s practice under A.R.S. § 32-3612(3) and required that he meet the following requirements: LICENSED RESIDENTIAL APPRAISER CLASSIFICATION

The licensed residential appraiser classification applies to the appraisal or appraisal review of noncomplex one to four residential units having a value of less than one million dollars and complex one to four residential units having a value of less than two hundred fifty thousand dollars. “Complex one to four residential units” mean property that is atypical for the marketplace. Atypical factors may include architectural style, age of improvements, size of improve-ments, size of lot, neighborhood land use, potential environ-mental hazard liability, leasehold interests, limited readily available comparable sales data or other unusual factors.

Education:

qualifying course hours, including a 15-hour National USPAP course (the mandatory course effective 1/1/03). Distance education courses started before May 3, 2005, will not be accepted. Qualifying education courses taken through distance education MAY NOT EXCEED 75% OF THE REQUIRED 90 HOURS. A 15- hour National USPAP course taken through distance education WILL NOT BE ACCEPTED.

Experience:

2000 hours in not less than 18 months. Refer to A.R.S. § 32- 3615(A)(1) and (2) to ensure that the experience falls within the time frame prescribed by law.

Examination:

An examination for the licensed residential appraiser classification that covers the subject matter set forth in the National Uniform Examination Content Outline. The education and experience must be completed and the application must be approved by the Board before the examination may be taken.

[Emphases in original (capitalized) and added (italicized).] See also A.A.C. R4-46-201(A). 7. The Board through administrative regulation has limited the scope of a certified residential appraiser’s practice under A.R.S. § 32-3612(2) and required that he meet the following requirements: CERTIFIED RESIDENTIAL APPRAISER CLASSIFICATION

The certified residential appraiser classification applies to the appraisal or appraisal review of one to four residential units without regard to value or complexity.

Education:

120 qualifying course hours, including a 15-hour National USPAP course (the mandatory course effective 1/1/03). Distance education courses started before May 3, 2005, will not be accepted. Qualifying education courses taken through distance education MAY NOT EXCEED 75% OF THE REQUIRED 120 HOURS. A 15- hour National USPAP course taken through distance education WILL NOT BE ACCEPTED.

Experience:

2500 hours in not less than 24 months. Not less than two completed reports must be multi-family. Refer to A.R.S. § 32- 3615(A)(1) and (2) to ensure that the experience falls within the time frame prescribed by law.

Examination:

An examination for the certified residential appraiser classification that covers the subject matter set forth in the National Uniform Examination Content Outline. The education and experience must be completed and the application must be approved by the Board before the examination may be taken.

[Emphases in original (capitalized) and added (italicized).] See also A.A.C. R4-46-201(A). 8. Ms. Pearson testified that, to count toward the requisite experience to become a licensed appraiser, a trainee must work with a supervising appraiser. 9. Ms. Pearson testified that, if an applicant for certified residential appraiser classification has been licensed less than 10 years, he only needs to file a supplemental experience log showing 500 hours’ experience in addition to the 2000 hours that he needed to show to be licensed. 10. Ms. Pearson admitted on cross-examination that there is nothing on the Board’s website that would help a person who was interested in becoming a licensed appraiser find a supervisor. However, at the time that Mr. Catapano became licensed, the Board’s regulations did not require that a trainee’s supervisor be in the same location as the trainee. The Board has since amended its regulation to make such a requirement, effective January 1, 2007. The supervisor is not required to accompany the trainee on inspections for appraisals. 11. Ms. Pearson admitted that the regulations also have been amended to require that a supervising appraiser have at least four years of experience. The Board’s Licensure and Certification of Mr. Catapano 12. On March 3, 2006, the Board received Mr. Catapano’s Application for State Licensed Residential Real Estate Appraiser. Mr. Catapano attached to the application an experience log that showed that he had performed approximately 120 appraisals under Ms. Pepper’s supervision between August 2004 and February 2006, for a total of 2043 hours. Ms. Pepper has initialed each claimed appraisal. 13. On March 28, 2007, Mr. Catapano furnished two of the appraisal reports that the Board requested for review. He informed the board that he had discovered he made a mistake in his log as to the third appraisal report, which “turned out to be a 2055 [drive-by] report.” 14. On March 31, 2006, the Board informed Mr. Catapano that his application was administratively incomplete because “the experience log you submitted with your application is not accurate.” 15. On April 5, 2006, Mr. Catapano provided the Board with a corrected experience log, which omitted the 2055 appraisal report. The corrected log still claimed hours of experience between August 2004 and April 2005, for a total of 2043 hours. 16. Based on the application and experience log, the Board issued an appraisal license to Mr. Catapano under A.R.S. § 32-3612(A)(3). 17. On September 1, 2006, the Board received Mr. Catapano’s Application for State Certified Residential Real Estate Appraiser. Mr. Catapano attached to the application an experience log showing he had performed appraisals between April and August 2006, for which he claimed a total of 532 hours. 18. As noted above, on October 27, 2006, based on the application and experience log that Mr. Catapano submitted, the Board granted Mr. Catapano state certified residential real estate appraiser classification under A.R.S. § 32-3612(A)(2). The Complaint and Investigation 19. On September 26, 2006, the Board received a complaint from Julie Friess, a licensed appraiser in Sedona, in relevant part as follows: There is an appraiser who is appraising who just got his license and there is no way he could have apprenticed for 18 months. I appraised his home on March 15th, 2005 and at this time he asked me how I like appraising. I talked for a while with him but told him I wasn’t taking on any new trainees at that time. He called again a month later to see if the situation changed and I said I still wasn’t taking any new trainees. Then I didn’t hear his name again until I did an appraisal recently that came in short of the inflated sales price. The realtor and the lender told me they had “just the guy who would do the job right”. It turns out that some how not only did this guy get someone to train him, he managed to get his license in less than a year. He was licensed on May 11th, 2006, which is literally and physically impossible. Then he took my appraisal report, made erroneous changes to my report, inflated the value to make the lender and the realtor happy, and brought the sales price in. Is this what is going to happen to our profession? Untrained, uneducated people committing fraud are going to shape our market and ruin our careers? Isn’t there something that can be done about this? His name is Steve Catapano. I am telling you I appraised his house at 140 Bristlecone Pines, Sedona, AZ 86336 on March 15, 2005, and it is barely 18 months NOW and he has been licensed for months now. I will stand before the board and say so just to stop this fraud and lying from continuing.

20. The Board commenced an investigation into Mr. Catapano’s qualifications for licensure and certification and forwarded Ms. Freiss’ complaint to Mr. Catapano for a response. 21. On November 30, 2006, Mr. Catapano responded to Ms. Freiss’ complaint, in relevant part as follows: Let me state that in my appraisals, I never alter my conclusions to satisfy any party. I approach each new assignment as an independent task, regardless of whether I have knowledge of prior determinations. I do my own research, analysis and reach my own opinion of value. I’ve never had a client refute my conclusions or data used.

I spent 26 years in sales and management of software companies. My interest in the appraisal profession started when I took a real estate course after moving back to Arizona (I attended ASU in the early ‘70s). That was in September, 2003. For the next year I spoke to appraisers to get a better understanding of the work regimen and challenges. The biggest challenge seemed to be getting someone to take you on as an apprentice. Some that I spoke with already had an apprentice; others didn’t want to “train a competitor”. In the summer of 2004, I started doing practice appraisals on my own and continued to call appraisers from Prescott to Flagstaff to find a “mentor”. In January, 2005 I attended the basic appraisal class and continued doing my own appraisals. Finally after 5 months of calling, Stephanie Pepper’s appraisal business had grown to the point where she was ready to bring on an apprentice. She and I had grown to the point where she was ready to bring on an apprentice. She and I had previously spoken, but her business was too new at that time to warrant my help.

I felt fortunate to have someone to work with, but it became apparent to me over time that Stephanie was experiencing emotional instability. Luckily, I worked almost completely independent of her (from my home) and only periodically met face to face. Her emotional swings were starting to have a disruptive effect on her professional and private life. When she took her medication, everything was stable. When she didn’t, it was like the sky was falling. She would make statements like, “I hate this business and I’m going to quit”, then it would be “I love appraising”. Finally the increasing mood swings and self-destructive thinking hit a high in the winter of 2006. She was struggling with the management of her business, her volatile relationship with her boyfriend, and confusion over her personal direction. With coaching from her brother-in-law, she announced that she needed to simplify her life and unencumber herself of responsibilities. So, she let her office assistant go and asked me to look for a new mentor. I then proceeded to make the round of calls again to no avail.

Now her feelings of desperation were affecting me. I had lost my full time employment months before, was borrowing from an equity line to augment the income from appraising and now couldn’t find anyone to take me on. We discussed the options and determined a flawed course of action which we have come to regret.

We decided that I could increase my experience by reviewing previous work files and developing practice appraisals that would provide the additional work hours needed for my license application. This in and of itself was not a problem; I had been doing it all along. The inaccuracy came from entering them into my experience log, in the timeframe in which they originally occurred versus when I did them. I would have better served by just including in my experience log the practice appraisals I had done on my own, prior to my relationship with Stephanie. These weren’t included, because in my opinion (after working with an experienced appraiser) they were not thorough enough.

I know this was wrong and accept responsibility for my actions. I feel remorse over what’s been done and want to express my respect for the appraisal profession and desire to continue becoming the best appraiser possible.

Since applying for my license, I have taken the courses listed below to continue building my knowledge and have also accumulated over 1000 additional work hours. I’ve never had a complaint nor had my work refused by a client or lender. I’ve developed a consistent business by providing professional, thorough, and timely service. Attached are several letters from clients and one from a fellow appraiser. These attest to my character and work habits. I’ve also included the requested reports, but was unable to secure a copy of the workfiles from Stephanie Pepper.

22. On December 1, 2006, Ms. Pepper responded to Ms. Freiss’ complaint allegations, in relevant part as follows: I am the appraiser with whom Steve Catapano worked as an apprentice. It is my understanding that a complaint has been issued against him challenging the hours he worked for application for his license. I am ashamed to say that in fact Steve added hours to his log that he did not work for which I signed off.

None of you know me, but this is not my usual nature and I hope I will be given the opportunity to explain the difficulties that Steve and I were facing at the time was made this bad decision.

This is a burden I have been carrying with me since the moment I allowed the log to leave my hands. In the end, there is no good excuse and the very act made has made my situation even worse. I hope I will be able to present to the Board the circumstances that led to my poor judgment. I want to face the consequences and endeavor to put this behind me.

Additional Hearing Evidence 23. Mr. Catapano and Ms. Pepper testified consistently with their correspondence to the Board regarding the complaint. 24. Ms. Pepper testified that she has been self-employed as an appraiser for 2½ or 3 years. She has worked in the appraisal field for 4½ years. She works out of her home in Lake Montezuma, approximately 45 minutes from Sedona, where Mr. Catapano lives. 25. Mr. Catapano testified at the hearing that he has been employed for 30 years in computer software sales. Five years before the hearing, he moved to Sedona, Arizona and obtained a real estate salesperson’s license. He has been living in the same house for five years. 26. Mr. Catapano testified that he liked looking at and evaluating real property as a real estate professional. He is analytical by nature. 27. During the mid-2004, a local appraiser was Mr. Catapano’s tennis buddy. Although the tennis buddy was not interested in taking on an apprentice, he recommended the practice of appraisal as a profession. 28. Mr. Catapano took a one-day course in appraisal of real estate. Mr. Catapano started practicing appraising real property by appraising friends’ homes and started looking into getting licensed as an appraiser. 29. During the summer or fall of 2004, Mr. Catapano started looking for a supervisor, which he knew he would need from the websites of the Board and the national appraisal organization. He felt that his mentor should be in the same geographical area because much of appraisal practice is a comparative view of properties. A supervisor therefore should have familiarity with the same market that he planned to enter. 30. Mr. Catapano went to the Board’s website and printed out the name of every licensed appraiser within one hour of his home, from Prescott to Flagstaff. He contacted every one of these appraisers, either by telephone or e-mail. Not one was interested in mentoring him. The ones who were interested in mentoring already had a trainee or had just completed the required supervisory period for a trainee. 31. Ms. Pepper testified that she first met Mr. Catapano when he called her to see if she was interested in mentoring a trainee. She and Mr. Catapano talked for a long time. She liked his attitude. But she had just obtained her own license and felt that it was not the time to take on a trainee. 32. Mr. Catapano testified that Ms. Stephanie Pepper was the only one who “raised her hand” and expressed an interest in mentoring him. But she told him that it was “not the right time” for her to take on an apprentice. 33. Mr. Catapano testified that he was surprised by licensed appraisers’ lack of interest in mentoring a trainee because his research had not warned him of this difficulty. The Board does not provide any literature or guidance about what someone who wants to enter the profession should do if he cannot find a mentor in the right geographic area. 34. Mr. Catapano considered expanding his area to include all the licensed appraisers practicing within two hours of his home. But he did not believe that a regular two-hour commute was reasonable. He also did not feel that appraisers who practiced so far away would be knowledgeable about the local area in which he planned to practice. 35. Mr. Catapano explained that, since he has been licensed, he only performs appraisals in markets with which he is familiar. If someone requests an appraisal of a property in Flagstaff, Mr. Catapano refers the request to someone who is familiar with the Flagstaff area. 36. Mr. Catapano testified that there are between 12 and 20 licensed appraisers in the Sedona area. He contacted at least 100 appraisers within a one-hour radius. 37. Ms. Pepper testified that there were more than 20 and less than 50, possibly 30 appraisers in the Verde Valley area. 38. Mr. Catapano testified that he finally met Ms. Pepper in person when she came out to appraise his home for a refinance on April 5 or 6, 2005. Once they met in person, Ms. Pepper agreed to become his mentor. He started training immediately. 39. Ms. Pepper testified that she agreed to mentor Mr. Catapano when she appraised his house on April 5, 2005. He reminded her of their earlier conversation. She agreed to take him on as a trainee. 40. Ms. Pepper testified that it was “her nature to teach.” She wanted Mr. Catapano to start his apprenticeship immediately. She wanted him to come to her home, from which she works, so that she could work with him one-on-one and provide the training that she had not gotten during her apprenticeship. 41. Ms. Pepper testified that Mr. Catapano had not provided any assistance on any appraisals that she performed before April 6 or 7, 2005. 42. Mr. Catapano testified that, from “day one,” Ms. Pepper displayed “emotional ups and downs” in mentoring his apprenticeship. He put up with her volatility because there was no one else to mentor him. By February 2006, it had become a “daily issue” whether Ms. Pepper could continue to mentor him. 43. Ms. Pepper testified that “it was a horrible time” in her life when she was mentoring Mr. Catapano. She was experiencing bouts of depression and taking medication. A trainee needs “lots of supervised hours” to be licensed, but she had to let Mr. Catapano go to take care of her own needs. 44. Mr. Catapano testified that, in February 2006, Ms. Pepper finally advised him to find another mentor. He knew she was serious and started broadening his search and calling other appraisers on a daily basis. Julie Friess was among the licensed appraisers that he called. But he did not find anyone willing to take on an apprentice. 45. Ms. Pepper testified that she signed off on hours that Mr. Catapano had not worked under her supervision because “it is hard to find a mentor.” If a licensed appraiser has a lot of business, she has not time for an apprentice. If she is not busy, she has no money. If she signed off on experience that Mr. Catapano did not acquire in his apprenticeship with her, he could get licensed earlier. 46. Ms. Pepper testified that, when she finally told Mr. Catapano, “You have to go,” the two decided to create an experience log that would allow Mr. Catapano to go out of his own. 47. Mr. Catapano testified that Ms. Pepper had provided him copies of appraisals she had performed, dating back to August 2004, which he looked over, studied, and independently evaluated. The hours he had claimed on the experience log were accurate. 48. Mr. Catapano testified that he performed every single appraisal report claimed on the experience log on his own. He did not claim that the report was done for an owner or lender. He did provide the Board with a sample of an appraisal report done in a practice environment. 49. Mr. Catapano admitted that he left the date of the appraisal reports that Ms. Pepper had performed before taking him on as an apprentice to make her “more comfortable.” The total number of hours claimed on his experience log before he started his apprenticeship with Ms. Pepper was 476. 50. Mr. Catapano admitted that he did not start his actual apprenticeship with Ms. Pepper until April 2005. The time between August 2004 and April 2005 was necessary to claim the 18 months’ experience that the Board required for licensure. 51. Ms. Pepper admitted on cross-examination that she had determined to accept the Board’s consent agreement, under which she agreed that her license would be suspended for a month as a penalty for her role in helping Mr. Catapano become licensed without meeting the Board’s requirements for supervised experience. 52. Ms. Pepper testified that she had helped Mr. Catapano because it was so difficult to be an apprentice. It was stressful and financially burdensome once undertaken. During Mr. Catapano’s apprenticeship with her, both he and his wife had lost their jobs. She wanted to help, but was going though a difficult time in her personal life. 53. Mr. Catapano testified that he has spent thousands of dollars on becoming a certified appraiser. He did not work during his apprenticeship and has paid Multiple Listing Service dues and spent between $5,000 and $10,000 on software to perform appraisals. An apprentice appraiser makes very little money. Additional Evidence of Mr. Catapano’s Qualifications 54. Ms. Pepper testified that she found nothing wrong with Mr. Catapano’s appraisals. She learned new things together with him during his apprenticeship. She did not receive any complaints about any appraisals that Mr. Catapano had worked on with her, his professionalism, or his demeanor. To her knowledge, he has never harmed a member of the public. 55. Mr. Catapano testified that no one has ever complained about an appraisal he prepared. His customers, including lenders, have been “shocked” at his thoroughness and the amount of time that he spends at properties that he is appraising. He always timely returns telephone calls, even if he has determined not to accept the appraisal assignment. He always provides the service within the amount of time promised. 56. Mr. Catapano testified that, as of the date of his summary suspension, he had logged 3017 hours performing appraisals, much more than the 2500 hours required to become a certified residential appraiser. 57. Mr. Catapano denied having any intent to injure anyone when he submitted the experience log in support of his initial application for a real estate appraiser’s license. 58. Mr. Catapano had admitted into evidence six letters of reference, in relevant part as follows: 1. Julian Wrubel of Artisan Mortgage has been a mortgage professional in Sedona for more than five years. None of the appraisers that he has worked with in the Verde Valley “has ever lived up to the word professional until Steve Catapano.” Mr. Catapano “has consistently been in communication, on time with his appraisals, forthright in his experience and honest in his business.” Mr. Wrubel added: “If making errors on appraisals, not showing up on time for a job, not completing a job on time, insulting real estate agents and clients and then making excuses for it are a prerequisite for professionalism, then the appraiser in question who complained about Steve Catapano is at the pinnacle of what the board of appraisers is looking for.” 2. Robert C. Morse of Realty Experts, Inc., a real estate agent and investor in the Verde Valley, has known Mr. Catapano for three years through his appraisal practice. Mr. Morse has found Mr. Catapano’s work to meet “exacting specifications” and Mr. Catapano to be “practical, functional and reliable.” Mr. Morse has found other appraisers’ work to be “wordy” or to include mistakes, causing lenders to send appraisals back for correction. In one case, Mr. Morse “had to try to find the roofer who was no longer in the area to obtain a workmanship warranty because of the verbiage on the appraisal.” Mr. Morse has had no similar issues with Mr. Catapano’s appraisal reports. Mr. Catapano is “accurate and straight forward on his assessments of the property and I have not had to go back to him for corrections.” Mr. Catapano’s “quality and professionalism [are] excellent.” 3. Wayne McGuffin of Kemper Mortgage in Tempe, Arizona has “engaged Steve Catapano/Catapano Appraisals on a number of occasions and have found him to be prompt, reasonable and professional. His knowledge is excellent and his conclusions of value are sound.” 4. Charles Deal has been a mortgage broker for over 30 years in Sedona and Scottsdale. Over the years, Mr. Deal has utilized the services of numerous appraisers. Over the past year, he has engaged Mr. Catapano on a number of assignments and found his work to be “accurate and comprehensive.” In one case, because Mr. Deal owned the property, the underwriter required two appraisals. Mr. Catapano “did an excellent job of supporting his findings and showed that he knows the market.” For these reasons, Mr. Catapano has become Mr. Deal’s “preferred appraiser in Sedona and the surrounding area.” 5. Steve Higgins of Artisan Mortgage in Sedona has utilized Mr. Catapano’s appraisal services “since he was working as an apprentice at Pepper Appraisals.” Mr. Higgins moved from Phoenix to Sedona 18 months earlier and became the co-branch manager at Artisan Mortgage. For the purchase of his home in Sedona, Mr. Higgins attempted to call Julie Friess, “but she never returned my calls and after for attempts I stopped calling.” After Mr. Higgins moved to Sedona, he needed another appraisal and called Ms. Friess again. When he reached her after four calls, she said “she could try to get to my Request, and it would probably be 2-3 weeks to be realistic. Realistically speaking, this ended her chances with me as a client.” In contrast, Mr. Higgins finds Mr. Catapano to be “one of the most professional, thorough and detailed appraisers I have ever known.” Mr. Higgins has dealt with dozens of appraisers and “[o]nly John Colman of McKinnon Appraisals and Steve Catapano ever met my stringent requirements for quality, cost, thoroughness, flexibility and timeliness.” Mr. Higgins believes that Ms. Friess “made the complaint because she faces the significant loss of business since Steve has become a key appraiser in our market.” Mr. Higgins then cited complaints that an underwriter had made about one of Ms. Friess’ appraisal reports. 6. Alex Nebelsky, an appraiser with Appraisal Network, has known Mr. Catapano “as a friend, tennis partner and now as a fellow appraiser for over 4 years.” Mr. Nebelsky has worked with Mr. Catapano on several appraisal assignments, “some of which were high-end properties.” Mr. Nebelsky described Mr. Catapano as “a true professional and an appraiser who has the interests of all those in the real estate and appraisal industry in the best regard.” Mr. Catapano is “a fair, thorough and responsible individual and as his appraisal experience and knowledge continues to grow he will be a valuable member to our profession.” Mr. Catapano testified that Mr. Wrubel, Mr. Morse, Mr. McGuffin, Mr. Deal, Mr. Higgins, and Mr. Nebelsky all knew that he had claimed experience outside his apprenticeship with Ms. Pepper to become licensed.

CONCLUSIONS OF LAW

The Arizona legislature created the Board to prescribe and enforce standards of professional appraisal practice.[1] The Arizona legislature charged the Board with investigating complaints against licensed appraisers and, if violations of applicable statute, regulation, or standard are established, disciplining appraisers’ certification.[2] The Board bears the burden of proof and must establish cause to penalize Mr. Catapano’s certified residential appraiser classification under application statute and regulation by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[5] The Board in this case asked that, as a result of Mr. Catapano’s admitted misrepresentations in obtaining licensure, his classification as a certified residential appraiser be revoked. Mr. Catapano argued for a lesser sanction, in light of the quality of his work, commitment to the appraisal profession, and his inability to obtain a mentor in the Sedona area when he decided to enter the profession. “For those who are qualified, the practice of a profession is a right, not just a privilege.”[6] “[T]here is inherent in our democratic system the right to compete freely on an equal basis for the material goods of existence and . . . the right is protected by the due process and equal protection clauses of the Fourteenth Amendment.”[7] But “it is well established that the right to pursue a profession is subject to the paramount right of the state under its police powers to regulate business and professions in order to protect the public health, morals and welfare.”[8] The state can require high standards for the practice of a profession “so long as such standards have a rational connection to an [applicant’s] fitness and are not invidiously discriminatory.”[9] The Board’s requirement of a certain term of apprenticeship and of a certain number of hours spent preparing appraisal reports under the supervision of a mentor is rationally connected to preparation for independent practice as a licensed appraiser. Even if no licensed appraisers in the Sedona area were able or willing to take on an apprentice when Mr. Catapano decided to enter the profession, it does not appear that his rights were violated. Although the legislature has authorized the Board to apply to the appropriate federal agency for a temporary waiver of state certification or licensing requirements if there is a scarcity of state certified or licensed appraisers,[10] no rule or regulation allows the Board to waive the apprenticeship requirements for licensure if no mentors are available at the time the applicant wishes to enter the profession.[11] The Board established that Mr. Catapano knowingly submitted an experience log that included appraisals that had been prepared before he entered his apprenticeship with Ms. Pepper and that the misrepresentations on the experience log allowed Mr. Pepper to be licensed. The Board has therefore borne its burden to establish cause to penalize Mr. Catapano’s certified real estate appraiser classification under A.R.S. § 32-3631(A)(1), (2), and (8).[12] Because the Board has not established that Mr. Catapano actually injured anyone or acted with the intent to injure anyone, it has not established cause to penalize his certified real estate appraiser classification under A.R.S. § 32-3631(A)(5).[13] With respect to the appropriate penalty, Mr. Catapano argued for a lesser sanction than revocation, especially in light of the Board’s one-month suspension of Ms. Pepper’s license for her role in helping Mr. Catapano evade the Board’s licensing requirements. Although there is no evidence that Mr. Catapano’s independent appraisal reports after licensure were anything but competent and professional, he has admitted that he never met the standards for licensure in the first place because he had not worked 2000 hours over eighteen months under the supervision of a mentoring appraiser. His career as a certified appraiser was founded on a lie. No statute or regulation allows self instruction to be substituted for the required apprenticeship. Because Mr. Catapano never qualified to receive a license, his subsequent experience does not allow him to retain his licensed or certified classification. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Board revoke Mr. Catapano’s Certified Residential Appraiser Classification No. 21450. Done this day, April 17, 2007.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of April, 2007, to:

Arizona Board of Appraisal Deborah G. Pearson, Executive Director 1400 W. Washington St., Suite 360 Phoenix, AZ 85007

By ___________________________ ----------------------- [1] A.R.S. § 32-3605(A)(1).

[2] A.R.S. § 32-3631(A)(2) and (6); see also A.A.C. R4-46-301 and R4-46-302 (concerning formal hearing procedures, investigations, and penalties).

[3] See A.R.S. § 41-1092.07(G)(1); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952).

[4] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

[5] Black’s Law Dictionary at page 1220 (8th ed. 1999).

[6] Schillerstrom v. Arizona Board of Chiropractic Examiners, 180 Ariz. 468, 471, 885 P.2d 156, 159 (App. 1994) (citation omitted).

[7] Application of Levine, 97 Ariz. 88, 91, 397 P.2d 205, 207 (1964) (citing Schware v. Board of Bar Examiners, 353 U.S. 232, 77 S. Ct. 752, 1 L.Ed.2d 796).

[8] Cohen v. Arizona Board of Psychologist Examiners, 121 Ariz. 6, 10, 588 P.2d 299, 303 (1978) (citing Arizona State Board of Dental Examiners v. Hyder, 114 Ariz. 544, 546, 562 P.2d 717, 719 (1977)).

[9] Neuwirth v. Louisiana Board of Dentistry, 845 F.2d 553, 559 (5th Cir. 1988).

[10] See A.R.S. § 32-3626.

[11] See A.A.C. R4-46-201(F) (“Notwithstanding the criteria incorporated by reference in subsection (A), there is no Trainee Real Property Appraiser Classification.”).

[12] This statute provides that the Board may revoke, suspend, or otherwise discipline the holder of a license if, after investigation, the Board determines that the holder has committed any of the following acts or omissions:

1. Procuring or attempting to procure a license or certificate pursuant to this chapter by knowingly making a false statement, submitting false information, refusing to provide complete information in response to a question in an application for a license certification or committing an form of fraud or misrepresentation.

2. Failing to meet the minimum qualifications established by this chapter. . . . .

8. Willfully disregarding or violating any of the provisions of this chapter or the rules of the board for the administration and enforcement of this chapter.

[13] This statute provides that the Board may revoke, suspend, or otherwise discipline the holder of a license if, after investigation, the Board determines that the holder has committed “[a]n act or omission involving dishonesty, fraud or misrepresentation with the intent to substantially benefit the license or certificate holder or another person or with the intent to substantially injure another person.”

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826