ALJDEC decisions subject to certification as final

14F-DI-231-REL · Department of Real Estate · 2015-03-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 8, 2015 APPEARANCES: Mark F. Williman, Esq. for Respondent; Lynette Evans, Esq. for the Department of Real Estate ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ FINDINGS OF FACT 1. On November 5, 2014, the Arizona Department of Real Estate (“Department”) issued a Notice of Hearing and Complaint setting the above-captioned matter for hearing at 1:00 p.m. February 18, 2015, at the Office of Administrative Hearings in Phoenix, Arizona. 2. The Notice of Hearing provided that hearing was being held to determine whether grounds exist to impose a civil penalty and any other relief against Respondents Ronald Dwayne Butler, real estate broker’s license No. BR542400000, and Quality Tucson Properties, license No. SE542400000. 3. On February 10, 2015, the parties filed a “Joint Pre-Hearing Stipulation of Material Facts and Law.” That Stipulation is reproduced below. 4. The Department presented no evidence and relied solely on the Stipulation. 5. At the hearing, Mr. Butler acknowledged that the Department’s allegations are true and he presented testimony in mitigation. 6. Mr. Butler testified that he had been in a severe motorcycle accident and a creditor was able to attach funds from his trust account. After this occurred he was worried that if he replenished that account, it would again be attached. Consequently, after he issued two checks for which there were insufficient funds in his account, he made good on those checks with checks drawn on a personal account. According to Mr. Butler, he made good on the “bounced” checks within twenty-four hours and he was not aware of any clients who lost any money. 7. Mr. Butler has allowed his broker’s license to expire and he has no desire to work as a license-holder. 8. The Department requested that Mr. Butler be assessed a total civil penalty of $5000 for violations of Ariz. Rev. Stat. sections 32-2153(A)(9), (A)(16), (A)(18), (A)(22), (B)(8), and (B)(11).[1] 9. Mr. Butler argued that because he had not acted in an underhanded manner or with a “black heart,” no members of the public had lost money, and his violations related from a life altering event (the motorcycle accident), the Department’s requested penalty was too severe. THE PARTIES’ STIPULATION The Arizona Department of Real Estate (the “Department”) and Ronald Dwayne Butler and Quality Tucson Properties, Respondents, hereby submit their joint stipulation of material facts and law. The parties agree that the Administrative Law Judge may proceed with entry of the following material facts and conclusions of law in the above-captioned matter: I. FACTUAL ALLEGATIONS 1. On March 3, 2008, the Department issued original Broker’s License Number BR542400000 to Ronald Dwayne Butler (“Butler”). The license expired on March 31, 2014. 2. From March 3, 2008, through April 1, 2014, Butler was a self- employed broker, doing business as Quality Tucson Properties holder of license number SE542400000. 3. On December 27, 2013, Carlos Figueroa (“Figueroa”) submitted a complaint to the Department regarding Butler’s property management activities and the management of three properties by Butler on behalf of Figueroa. According to Figueroa’s letter: a. Butler failed to release tenant deposit upon eviction of a tenant from a property owned by Figueroa, located at 6741 W. Pebble Shore Court, Tucson, Arizona (the “Property”). b. Butler advised Figueroa that a lawsuit had been filed against the evicted tenant but provided no evidence or documentation of the lawsuit. c. Butler reported that, on December 15, 2013, a new tenant was moved into the Property and reported cleaning and landscaping expenses in excess of $700.00 to Figueroa. Figueroa noted that in May of 2013, similar expenses totaling $2,100.00 had been spent on the Property. d. Butler issued two checks to Figueroa that were written on non- sufficient funds; however Butler did later make payment on the checks to Figueroa. e. Figueroa noted that the two checks issued by Butler were not from a Property Management Trust Account (“PMTA”). 4. On January 24, 2014, Department staff attempted, by telephone and email, to contact Butler to schedule an audit of transaction records. 5. On January 28, 2014, Butler responded to Department staff by email and confirmed an appointment for an audit to be conducted on February 5, 2014. On February 4, 2014, Butler requested a postponement due to illness; however, the Department was unable to accommodate the request. 6. On February 5, 2014, Department staff arrived at Butler’s business address of record to conduct an audit and found a note on the entry door advising of Butler’s current illness. Department staff was not able to conduct the scheduled audit. 7. On February 10, 2014, the Department sent Butler letter notifying him of Figueroa’s complaint and requesting a response and documentation by February 26, 201[4]. Butler failed to respond. 8. On February 18, 2014, the Department issued a subpoena to Butler, directing him to appear for an investigational interview on March 14, 2014, with Department staff at the Department’s Phoenix offices. The subpoena also directed Butler to provide documents at the time of the investigational interview. Butler failed to appear for the March 14, 2014, investigational interview as directed by the subpoena. 9. On March 28, 2014, the Department received a letter from Mark F. Willimann, an attorney retained by Butler indicating that Butler was willing to cooperate and would appear at a time and place set by the Department. 10. On April 18, 2014, Department staff conducted an investigational interview with Butler, accompanied by Attorney Willimann. At the interview, Butler submitted a partial package of documents that were requested by Department staff. During the interview, Butler stated that: a. A creditor attached client funds being held in the PMTA after a personal injury event. Butler confirmed that Owner and Tenant funds were deposited into Butler’s business account after the PMTA was closed sometime in January of 2012. b. All property management activities had ceased and final funds were remitted to clients. 11. During the investigational interview, Butler was instructed to provide the following additional records to Department staff by April 25, 2014. a. Copies of all final accountings to owners. b. Supporting canceled check copies confirming owner receipt of funds. c. PMTA bank statement copies. 12. On April 29, 2014, Butler communicated to Department staff that he was unable to locate the PMTA bank statement records as requested. Further, Butler did not provide the additional documentation as requested by Department staff. 13. Department staff’s review of the documents provided by Butler showed the following: a. Butler failed to produce all records concerning real estate business transacted. b. Butler failed to notify the Department in writing of all trust accounts, as required by A.A.C. R4-28-303(E)(11). c. Butler provided a copy of a Property Management Agreement (“PMA”) for a property located at 18298 S. Dusk View, Green Valley, Arizona, with an expiration date of December 1, 2012. This PMA and all PMA’s provided by Butler did not include a renewal provision. Records further indicate Butler continued management of the 18298 S. Dusk View property after expiration of the written agreement, and not in compliance with A.R.S. § 32- 2173(A)(1)(b). d. Butler failed to provide any records confirming delivery of final accounting to clients. e. Butler failed to provide PMTA bank statement records. A review of Butler’s business account, through statements and canceled check copies provided by Butler, confirmed that Butler did deposit Owner and Tenant funds in the business account, commingling Owner and Tenant funds with Butler’s operating expenses. f. Canceled check copies from Butler’s business account confirmed rent income payments to property owners, including Figueroa. g. Department staff was unable to determine the status of Owner Funds and Tenant Funds. 14. Butler failed to maintain property management records as required; failed to maintain Owner and Tenant funds in a PMTA as required; failed to respond to Department requests for documentation; failed to notify the Department of a change in the PMTA as required; commingled Owner and Tenant funds with the broker’s operating funds; and failed to appear for an Investigational interview as ordered. Additionally, with specific attention to Figueroa’s complaint, Butler failed to remit, within a reasonable time, documents and monies as requested. II. FURTHER STIPULATIONS Pursuant to A.R.S. § 32-2160.01(A), the hearing will convene at the Office of Administrative Hearings as scheduled on February 18, 2015. The scope of the hearing will be limited to the allegations in the Notice of Hearing and Complaint that are contested, as well as the penalty to be imposed, including any evidence showing aggravating or mitigating factors for the assigned Administrative Law Judge’s consideration. CONCLUSIONS OF LAW 1. The Department bears the burden of persuasion. Ariz. Rev. Stat. § 41-1092.07(G)(2) and (G)(3). 2. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 3. A preponderance of the evidence 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). 4. The preponderance of the evidence shows that Mr. Butler violated Ariz. Rev. Stat. sections 32-2153(A)(9), (A)(16), (A)(18), (A)(22), (B)(8), and (B)(11). 5. Mr. Butler is subject to a civil penalty of up to $1000 for each violation of statute. Ariz. Rev. Stat. § 32-2160.01. The Department also has authority to revoke Mr. Butler’s and Quality Tucson Properties’ licenses. Ariz. Rev. Stat. sections 32- 2153(E). 6. Considering the facts and circumstances of this matter, the Administrative Law Judge concludes that Ronald Dwayne Butler’s real estate broker’s license No. BR542400000 and Quality Tucson Properties’ license No. SE542400000 should be revoked and that a $1000 civil penalty should be assessed against Mr. Butler. ORDER IT IS ORDERED that Ronald Dwayne Butler’s real estate broker’s license No. BR542400000 is revoked; IT IS FURTHER ORDERED that Quality Tucson Properties’ license No. SE542400000 is revoked; IT IS FURTHER ORDERED that Ronald Dwayne Butler must pay to the Department a civil penalty of $1000 within fifteen days of the effective date of the Order entered in this matter. 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 is five days after the date of that certification. Done this day, March 9, 2015.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate ----------------------- [1] The Department requested a single $1000 penalty for the violations of Ariz. Rev. Stat. sections 32-2153(A)(22) and (B)(8).

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