ALJDEC decisions subject to certification as final

08F-2674-BOA · Board of Appraisal · 2010-03-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

CONSOLIDATED HEARING: February 16, 2010 APPEARANCES: Calvin E. Walls and Clinton E. Walls appeared personally and were represented by their attorney, Corey I. Richter, Esq. The Arizona State Board of Appraisal was represented by Assistant Attorney General Jeanne M. Gavin, Esq. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT 1. The Arizona Board of Appraisal (“Board”) is the authority for regulating and controlling the licensing and certification of real property appraisers in the State of Arizona. 2. Calvin E. Walls (“Calvin Walls”) is the holder of Certified Residential Appraiser Certificate No. 21357 issued by the Board. 3. Clinton E. Walls (“Clinton Walls”) is the holder of Certified Residential Appraiser Certificate No. 21553 issued by the Board. 4. Calvin Walls is the father of Clinton Walls. 5. Calving Walls served as his son’s supervising appraiser during Clinton Walls’ appraisal training. 6. On June 23, 2008, the Board received a Real Estate Appraiser Violation Complaint (“Complaint”) filed by Yolanda Johnson. Ms. Johnson alleged that the Walls violated A.R.S. § 32-3615 (A) and (B) as follows: “Calvin Walls had knowingly submitted fraudulant [sic] appraisal reports with son Clinton Walls to obtain experience hours done by me Yolanda Johnson in order to receive appraisal license.”[1] 7. Ms. Johnson listed the following as the basis for her Complaint: “Clinton Walls is taking credit for an [sic] appraisal experience hours he did not contribute to.” 8. By letter dated June 25, 2008, the Board’s then Executive Director, Deborah G. Pearson, advised Clinton Walls of Ms. Johnson’s Complaint and requested that he respond to it within 30 days. On June 26, 2008, Calvin Walls signed the Domestic Return Receipt for the letter sent to his son. 9. By letter dated June 25, 2008, Ms. Pearson advised Calvin Walls of Ms. Johnson’s Complaint and requested that he respond to it within 30 days. On June 26, 2008, Calvin Walls received the letter. 10. On July 1, 2008, Calvin Walls filed his response to Ms. Johnson’s Complaint with the Board. 11. On July 1, 2008, Clinton Walls filed his response to Ms. Johnson’s Complaint with the Board. 12. The Board assigned an investigator, Sarah C. Vetault, to investigate Ms. Johnson’s Complaint. Ms. Vetault has been a certified residential appraiser since 1994 and served as a member of the Board. 13. On October 23, 2008, Ms. Vetault executed a Certificate of No Conflict in the case. 14. By letter dated December 26, 2008 from Ms. Pearson, Ms. Vetault received the scope of her assignment, which was to analyze and investigate Ms. Johnson’s Complaint. 15. On March 23, 2009, Ms. Vetault submitted a confidential Investigative Report to Ms. Pearson. Ms. Vetault’s report concluded with the following Observations and Conclusions section: Both supervisor and trainee were in the office the day I was there. The trainee is now a Certified Residential Appraiser. During the four hours I was in the office I had the opportunity to listen to both appraisers handle client questions and other day-to-day appraisal issues. Based on that informal observation I have no doubt that the trainee did receive some appraisal training. How much training, when, and on which files cannot be verified based on the existing records. It is not impossible that the trainee did have all of the training experience claimed in his log, but the probability that he actually received all of the training logged is extremely low.

16. The Board’s investigation of Ms. Johnson’s Complaint resulted in the Board issuing a Complaint and Notice of Public Hearing against Calvin Walls (“Complaint 2673”). The Board designated Complaint 2673 as Docket No. 09F-2673-BOA. 17. The Board’s investigation of Ms. Johnson’s Complaint also resulted in the Board issuing a Complaint and Notice of Public Hearing against Clinton Walls (“Complaint 2674”). The Board designated Complaint 2674 as Docket No. 09F-2674-BOA. 18. The Board forwarded Board Complaints 2673 and 2674 to the Office of Administrative Hearings, an independent agency, for a consolidated evidentiary hearing. 19. At the consolidated hearing, Ms. Johnson was not called as a witness to testify. 20. Ms. Johnson and Calvin Walls had worked as appraisers at Burdick Residential Appraisal. Mr. Walls fired Ms. Johnson from Burdick Residential Appraisal. 21. The Walls introduced documentary evidence from the Pima County Consolidated Justice Court, which reflected guilty pleas by Ms. Johnson to the following criminal charges: issuing bad checks and assault-knowingly causing injury. 22. In 2003, Ms. Johnson was charged in Casa Grande Justice Court with the crimes of marijuana-transport and/or sell and marijuana violation. Court records reflect that those charges were disposed by supervening indictment. The final dispositions of those charges were not presented. 23. On May 18, 2007, Ms. Johnson entered a guilty plea to the crime of DUI Liquor/Drugs/Vapors 1st in the Tucson Municipal Court. 24. The Board’s Substantive Policy Statement # 1, which was adopted by the Board on July 21, 2005, serves as guidelines for Board Complaint Resolution, pursuant to A.A.C. R4-46-301. 25. Substantive Policy Statement # 1 provides for the use of the Board Complaint Resolution Chart (“Chart”) for resolving complaints made to the Board. The Chart contains five levels of errors or violations of standards, statutes, or rules. 26. The Appraisal Standard Board of The Appraisal Foundation promulgated guidelines entitled Uniform Standards of Professional Appraisal Practice, commonly referred to as “USPAP.” The Appraisal Foundation is authorized by the United States Congress as the source of appraisal standards and appraiser qualifications. 27. Appraisers and appraisal trainees in Arizona must comply with USPAP when performing appraisals. 28. USPAP Advisory Opinions are supplements, but they are not part of the performance standards. 29. Rebecca Loar is the Board’s regulatory compliance administrator. In her position, Ms. Loar processes complaints for the Board. 30. Ms. Loar testified that the allegations against the Walls constituted a Level V violation. 31. A Level V violation is the most serious one. The Chart provides that a Level V violation occurs in “Errors or Violations of USPAP, A.R.S. or A.A.C.” and when significant and/or willful disregard is found. 32. The Chart provides for the following resolution options for a Level V violation: • Consent Agreement • Order of Probation with Education, Mentorship and/or Practice Restrictions • Suspension • Revocation

33. Ms. Loar testified that the Board seeks the following resolution in these consolidated matters: Due to the alleged accusations, the Board is questioning whether Clinton was adequately trained and supervised by his father, Calvin. The Board wants them both to retake the AQB Approved Certified Residential Real Estate Property Appraiser National Uniform Examination that is related to the January 1, 2008 criteria within 30 days of the Board Order. If they do not pass this exam...[t]hat their license [sic] be immediately suspended until they can pass the exam.

34. The requirements for a trainee to become a certified real estate appraiser in Arizona are that the trainee must complete a minimum 2,500 hours of appraisal training experience in no less than 24 months, and pass a written examination. 35. There are no statutory, regulatory, or USPAP standards setting forth a required curriculum for an appraisal trainee’s training. 36. Clinton Walls reported completion of 2,894.5 hours of appraisal training over a period of 26 months with his father serving as his supervising appraiser. Clinton Walls documented his appraisal training in his experience log, which was submitted to the Board at the time he applied for certification originally. The Board accepted Clinton Walls’ experience log as acceptable documentation of his appraisal training. 37. USPAP Standard Rule 2-3 requires an appraiser to document in an appraisal report anyone providing the appraiser with significant assistance. 38. Roy E. Morris, III, is a certified general real estate appraiser, which is the highest level of classification in Arizona. Mr. Morris has been a USPAP instructor since the 1980s. Mr. Morris is an investigator for the Board. 39. Mr. Morris testified that the purpose of an appraisal trainee’s experience log “is to demonstrate that the applicant for licensure has had their requisite education, examination, and qualifying experience.” 40. It is uncontroverted that Calvin Walls did not disclose Clinton Walls as a significant contributor in any appraisal reports prepared by Calvin Walls during Clinton Walls’ appraisal training. 41. Calvin Walls testified that he did not rely upon Clinton Wells’ training work when performing an appraisal report. He would assign Clinton Wells tasks to be performed, and he reviewed and critiqued Clinton Wells’ practice work. However, Calvin Walls did all the research and analyses on the appraisals he performed independent of Clinton Walls’ work. 42. There is no statutory, regulatory, or performance standard requiring that a supervising appraisal disclose an appraisal trainee in an appraisal report unless the trainee provides significant contributions to the appraisal report. Further, there is no requirement that an appraisal trainee must be listed in any appraisal report as part of the trainee’s training, unless the trainee provides significant contribution to an appraisal report. 43. Mr. Morris opined that “if there is not significant contribution [by an appraisal trainee], that means no reliance, that means no experience.” 44. However, Mr. Morris answered “No” to the following question posed by the Walls’ counsel: … if a supervisor does not rely on anything from a trainee, in other words, the supervisor does – double checks everything, does it all himself and instead uses the trainee’s efforts just for training purposes, would there need to be a significant contribution note in the report?

45. With the exception of Ms. Johnson’s Complaint, Clinton Walls has not received any complaints about his appraisal practice since becoming licensed by the Board. 46. The Board has not reviewed any appraisal reports prepared by Clinton Walls. 47. The allegations contained in Ms. Johnson’s Complaint are not supported by the evidence of record. 48. But for Ms. Johnson’s unfounded Complaint, the Board most likely would never have brought these disciplinary proceedings against the Walls. 49. Any allegation by the Board not specifically addressed in the above Findings of Fact is determined to lack credible evidence to support a finding of a statutory, regulatory, or performance standard violation by either of the Walls. CONCLUSIONS OF LAW 1. The Board has jurisdiction over the Walls and the subject matters in these consolidated cases. 2. Pursuant to A.R.S § 41-1092.07 (G) (2) and A.A.C. R2-19-119(B), the Board has the burden of proof in these consolidated matters. The burden of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 3. Pursuant to A.R.S. § 32-3635, “[a] state licensed or state certified appraiser shall comply with the standards of professional appraisal practice adopted by the board.” The Board has adopted USPAP as the standards of professional appraisal practice. 4. The Administrative Law Judge concludes that the Board failed to sustain its burden of proving that Clinton Walls and Calvin Walls violated the provisions of A.R.S. § 32-3631A) (5), as charged in the Complaints and Notices of Public Hearing issued by the Board against the Walls. The above Findings of Fact support this conclusion. RECOMMENDED ORDERS Complaint 2673 The Citation and Notice of Public Hearing against Calvin E. Walls shall be dismissed on the effective date of the Order entered in Case No. 2673. Complaint 2674 The Citation and Notice of Public Hearing against Clinton E. Walls shall be dismissed on the effective date of the Order entered in Case No. 2674.

Done this day, March 8, 2010.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

J. Randy Frost, Interim Executive Director Board of Appraisal ----------------------- [1] The Board did not charge the Walls with violations of A.R.S. § 32- 3615(A) and (B).

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