ALJDEC decisions subject to certification as final

13F-DI-264-REL · Department of Real Estate · 2014-03-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 18, 2014 APPEARANCES: Respondent Gerardo Valenzuela appeared on his own behalf. Assistant Attorney General Liane C. Kido represented the Arizona Department of Real Estate. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ FINDINGS OF FACT 1. The Arizona Department of Real Estate (the “Department”) is the duly constituted authority for licensing and regulating the practice of real estate in the State of Arizona. 2. On December 28, 2006, the Department issued real estate salesperson’s license number SA581001000 to Gerardo Valenzuela (“Mr. Valenzuela”). See Exhibit 1. That license will expire on December 31, 2014. Id. Wendy Greenwood, Senior Investigator for the Department, testified that Mr. Valenzuela’s license has been inactive since October 2013. 3. At all times material to this matter, Mr. Valenzuela was employed as a salesperson for Premier One Realty, L.L.C. (“Premier”), holder of entity license number LC530274000. Joseph Gutierrez (“Mr. Gutierrez”), holder of license number BR529028000, was the Designated Broker for Premier. 4. On January 31, 2013, the Department received a written complaint about Mr. Valenzuela from Mr. Gutierrez. See Exhibit 2. Mr. Gutierrez stated that a client, Alex Aguirre (“Mr. Aguirre”), had contacted him on January 28, 2013, regarding “retainer fees” that Mr. Valenzuela had charged in connection with a short sale listing. Id. at 2. Mr. Gutierrez explained to Mr. Aguirre that Premier does not charge retainer fees for the negotiation of a short sale. Id. 5. Mr. Aguirre informed Mr. Gutierrez that he paid to Mr. Valenzuela a total of $500.00 in two separate payments. Id. Mr. Aguirre provided copies of the two canceled checks to Mr. Gutierrez. Id. and see Exhibits 4 and 5. The memo line of the first check dated November 9, 2012, states, “1/2 payment Retainer Fee.” See Exhibit 4. The memo line of the second check dated November 30, 2012, states, “Final pmt for help.” See Exhibit 5. 6. Mr. Aguirre also informed Mr. Gutierrez that he was still in communication with Mr. Valenzuela regarding the sale of his property. Because Mr. Valenzuela’s license had expired on December 31, 2012, Mr. Aguirre and Mr. Gutierrez agreed that Mr. Valenzuela should not be acting as a licensee.[1] See Exhibit 2 at 2. 7. On January 7, 2013, Mr. Gutierrez sent Mr. Aguirre a letter notifying him that Mr. Valenzuela was no longer employed by Premier. Id. Mr. Aguirre did not receive the letter because it was addressed to his home and Mr. Aguirre receives mail exclusively at his post office box. Id. 8. On October 11, 2012, Mr. Gutierrez had sent Mr. Valenzuela an email regarding his upcoming license renewal. Id. On December 28, 2012, Mr. Gutierrez met with Mr. Valenzuela to advise him of his obligation to notify clients of his inability to represent them if he did not renew his license, and that his clients must be transferred to the Designated Broker. Id. 9. On February 22, 2013, the Department sent Mr. Valenzuela a notice regarding the complaint and request for a response to the complaint. Mr. Valenzuela requested an extension to submit a response, and on April 11, 2013, the Department received Mr. Valenzuela’s response. See Exhibit 6. In his response, Mr. Valenzuela acknowledged charging the Aguirres a retainer fee of $500.00. Id. Mr. Valenzuela stated in his response that he advised the Aguirres that the reason he was charging a retainer fee was “due to the house being so far and we might not get an offer because it is outside the city limits . . . and in case this doesn’t ever get an [sic] offers and 4 months pass by all I have made is 500 dollars.” Id. Mr. Valenzuela stated that he returned the $500.00 to the Aguirres, “[e]ven though I thought I was worth that and a bunch more.” Id. at 2. 10. Mr. Valenzuela’s response also stated that he looked at page two of the Listing Agreement and it shows that he can charge a retainer fee. Id. Mr. Gutierrez provided to the Department a copy of the Listing Agreement. See Exhibit 3. On page 2, under “Terms and Conditions” line 51, it states, “Non-Refundable Retainer Fee,” and the space on line 52 for the amount charged is blank. Id. at 2. The Listing Agreement does not contain a file number, the Designated Broker’s or designee’s initials, or a date. Id. at 8. 11. Regarding the expiration of his license, Mr. Valenzuela stated that he thought he had a grace period in which to renew his license and expressed confusion as to when to pay fees to the Department, NAR (National Association of Realtors), AAR (Arizona Association of Realtors), and MLS (Multiple Listing Service). See Exhibit 6 at 2. 12. Mr. Valenzuela testified that he considered the retainer fee part of his commission, not compensation, but takes responsibility for his misunderstanding and testified that he did not charge the Aguirres a retainer fee maliciously. Mr. Valenzuela also testified that he refunded the $500.00 retainer fee to the Aguirres. Mr. Valenzuela explained that this was the first instance of him having charged a retainer fee and that he was also fined by Premier. 13. Mr. Valenzuela further testified that he was confused as to the renewal of his license because the Department had changed the renewal period from four years to two years. 14. Mr. Valenzuela is employed at Truly Nolan Pest Control. Mr. Valenzuela submitted into evidence several certificates evidencing his exemplary work with that company and letters of reference from his Director and peers at that company. See Exhibits A, B, and C. 15. Mr. Valenzuela testified that he has five children to support and does not want to lose his license. Mr. Valenzuela requested an Order requiring him to attend additional continuing education classes and to obtain a mentor, and requested a “reasonable” civil penalty with a payment plan. CONCLUSIONS OF LAW 1. Pursuant to A.R.S. Title 32, Chapter 20, the Department has the authority and duty to regulate all persons engaged in the business of, or acting in the capacity of, a real estate broker or salesperson, and to enforce all statutes, rules, and regulations relating to real estate. Because this matter is disciplinary in nature, the Department bears the burden of proof. The standard of proof on all issues is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” MORRIS K. UDALL, Arizona Law of Evidence § 5 (1960). It is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990). 3. Mr. Valenzuela conducted unlawful license activity by performing acts requiring a license under A.R.S. § 32-2122 when he did not hold a current and active license from January 1, 2013, until January 31, 2013, in violation of A.A.C. R4-28-306(A)(1). 4. Pursuant to A.R.S. § 32-2153(A)(7), the Commissioner may suspend or revoke a license if the licensee “[a]ccepted compensation as a licensee for the performance of any of the acts specified in this chapter from any person other than the licensed broker to whom the licensee is licensed, the licensed professional corporation of which the licensee is an officer and shareholder or the licensed professional limited liability company of which the licensee is a member or manager.” Mr. Valenzuela accepted compensation personally in the form of retainer fees from the Aguirres, thereby violating A.R.S. § 32-2153(A)(7). 5. Pursuant to A.R.S. § 32-2153(A)(10), the Commissioner may suspend or revoke a license if the licensee “[p]aid or received any rebate, profit, compensation or commission in violation of this chapter.” In this case, Mr. Valenzuela personally received compensation in the form of retainer fees from the Aguirres. Therefore, the preponderance of the evidence establishes that Mr. Valenzuela violated A.R.S. § 32-2153(A)(10). 6. Pursuant to A.R.S. §32-2153(A)(22), the Commissioner may suspend or revoke a license if the licensee demonstrates “negligence in performing any act for which a license is required.” Mr. Valenzuela was conducting real estate activities when his license had expired and he had the Aguirres pay him a retainer fee directly and personally. Therefore, the preponderance of the evidence establishes that Mr. Valenzuela violated A.R.S. § 32- 2153(A)(22). 7. Pursuant to A.R.S. §32-2153(B)(8), the Commissioner may suspend or revoke a license if the licensee demonstrated “incompetence to perform any duty or requirement of a licensee under or arising from this chapter. For the purposes of this paragraph, "incompetence" means a lack of basic knowledge or skill appropriate to the type of license the person holds or a failure to appreciate the probable consequences of the licensee's action or inaction.” Mr. Valenzuela demonstrated incompetence when he had the Aguirres pay retainer fees to him personally and directly, when he engaged in real estate activities when his license was expired, and when he acknowledged his confusion regarding the license renewal process notwithstanding the fact that he had been licensed since 2006, and his Designated Broker advised him when it was time to renew his license. 8. At hearing, the Department withdrew its allegation regarding Mr. Valenzuela’s violation of A.R.S. §32-2153(B)(7). 9. The Commissioner of the Department has the authority to suspend or revoke Mr. Valenzuela’s license, or issue a letter of concern, or issue a provisional license to Mr. Valenzuela pursuant to A.R.S. § 32-2153(A)(3), based on the above-found violations of the provisions of Title 32, Chapter of the Arizona Revised Statutes. Also, pursuant to A.R.S. § 32-2160.01, the Department may impose a civil penalty not to exceed $1,000.00 per violation for each violation of Title 32, Chapter 20. 10. The Administrative Law Judge concludes that the Department met its burden of proving by a preponderance of the evidence that grounds exist to discipline Mr. Valenzuela’s real estate salesperson’s license. The Administrative Law Judge concludes based upon the above-found violations of law that the appropriate discipline in this matter is the revocation of Mr. Valenzuela’s real estate salesperson’s license. ORDER On the effective date of the Order entered in this matter, Mr. Valenzuela’s real estate salesperson’s license shall be revoked. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five (5) days from the date of that certification.

Done this day, March 4, 2014.

/s/ Sondra J. Vanella Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate ----------------------- [1] Mr. Valenzuela renewed his license on January 31, 2013, within one year from the date of its expiration.

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