ALJDEC decisions subject to certification as final

18F-DI-044-REL · Department of Real Estate · 2017-11-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Application for Real Estate Salesperson License of:

CARAWAY, CHARLES, holder of license number SA627088000 (Candidate),

Petitioner.

No. 18F-DI-044-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 18, 2017

APPEARANCES: Ronald Washington, Attorney for Petitioner; Charles Caraway, Complainant; Lynette Evans, Attorney for the Arizona Department of Real Estate; Cheryl Terpening and Jim Ledwith, witnesses; Patricia Ruiz-Caraway, observer

ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang

_____________________________________________________________________

After appealing the proposed denial of his application for a real estate salesperson’s license, Charles Caraway established that he should be granted a provisional license to include supervision by Cheryl Turpening. If the Arizona Department of Real Estate should find that additional provisions should be required, it is recommended that they be established through negotiation with Mr. Caraway, Ms. Turpening, and the Department.

FINDINGS OF FACT

Charles Caraway (“Petitioner”) applied for a real estate salesperson’s license through the Arizona Department of Real Estate (“Department”). The Department denied Petitioner’s application on August 18, 2017 on the grounds that Petitioner does not meet the qualifications for licensure under A.R.S. §§ 32-2123, 32-2124, and 32-2153. According to the Intent to Deny letter, this conclusion was based on his legal history. Petitioner appealed and the matter was set for hearing at the Arizona Office of Administrative Hearings, an independent hearings agency.

The Notice of Hearing in this matter summarized Petitioner’s legal history as follows:

a. On February 14, 1985, Caraway pleaded guilty to and was convicted of Possession of Marijuana and Sale of Marijuana, both class C felonies, in the Eighteenth Judicial District, District Court, Sedgwick County, Kansas, case number 84CRI007. On March 13, 1985, Caraway was sentenced to three years of supervised probation, restitution, fines and fees.

b. On September 29, 2009, Caraway was convicted of Attempted Possession of Drug Paraphernalia, a Class 6 Felony, Wellton Justice Court, Pima County, Arizona, case number J1403CR200901311. Caraway was sentenced to pay a fine. On July 28, 2017, the Court granted Caraway's Application to Set Aside Judgment and ordered that Caraway's accusation and complaint be dismissed and that Caraway be released from all penalties and disabilities resulting from the conviction.

c. On September 26, 2013, Caraway pleaded guilty to and was convicted of Animal-Dog Running at Large and Animal-Vicious and Destructive, both misdemeanors, Tucson City Court, case number CR-9125272. A Disposition/Violation Letter from Tucson City Court dated July 26, 2017 reflects that the case is closed.

d. On October 23, 2013, Caraway pleaded guilty to and was convicted of Driving with a Suspended/Revoked/Cancelled License, a misdemeanor, and two counts of Drug Paraphernalia Violation, both class 6 felonies, Tucson City Court, case number CR-II109540. A Disposition/Violation Letter from Tucson City Court dated July 26, 2017 reflects that the case is closed.

e. On March 7, 2014, Caraway pleaded guilty to and was convicted of Endangerment, a class 6 felony, and Driving While Under the Influence of Liquor, Drugs, Vapor Releasing Substances or any Combination, a misdemeanor, Pima County Superior Court, case number CR20134685-001. Caraway was sentenced to three years of probation, community service, fines and fees. He was discharged from probation on October 4, 2016.

At the hearing, the Department’s Attorney corrected the above information, stating that Petitioner’s 3 convictions for Drug Paraphernalia Violations were actually misdemeanors, not felonies. Therefore, Petitioner’s criminal record consists of two class C felonies arising from the same incident in 1985, as well as 1 felony and 7 misdemeanors arising out of 4 incidents that occurred between 2009 and 2014. The felony was that of Endangerment while driving a car. Two misdemeanors arose from Petitioner’s dog escaping his yard when he was not home. And the remaining misdemeanors concerned the possession of marijuana paraphernalia and one conviction driving under the influence of alcohol and marijuana. Petitioner has experienced no further criminal arrests since the last one in March 2014.

At the hearing, Petitioner offered the testimony of Cheryl Terpening, a licensed broker who wishes to hire Petitioner, train him, and oversee his professional development at the brokerage where she is the designated broker, Arizona Eagle Realty. She is a real estate instructor, a contracts writing instructor, a code of ethics instructor, and the creator of continuing real estate education courses that the Department has approved. She has served on committees for the Tucson Association of Realtors; she was a co-chair for the forums committee, she serves on the community and membership outreach committee, and she serves on the risk committee. She is also the Arizona Association of Realtors’ mediator and she serves on the professional standards committee. She is also Vice President of the Multiple Listing Service of Southern Arizona.

Ms. Terpening met Petitioner through his wife and has known him for about 7 years. When Petitioner took a real estate class with her, he impressed her with his passion for studying and his professionalism in respecting her position as the instructor even though he knew her socially. She said that she has interviewed Petitioner and discussed the importance of ethics to her. She was generally aware of his legal history and said she that has experience with another applicant with a criminal background who she had rejected because he did not take his criminal history seriously. However, she said, she is impressed with the seriousness with which Petitioner has approached his license application and the concern that he showed when some of his convictions were mischaracterized as felonies. She said that she is familiar with the kinds of conditions that may be attached to provisional licensing and she would be willing to oversee Petitioner and hire him if he received a provisional license. She testified that, while Petitioner may have an arrest record for driving violations, her brokerage has a strong policy of discouraging sales people from driving clients due to safety and insurance considerations. She also stated that her brokerage has only 8 agents and she has no desire to become a large company. She said she has put together a 90 day jump start program to train her agents, place them in classes, train them on the office documents and computer programs and begin working under her close supervision. She said that she has told Petitioner that if he obtains a provisional license, he will be “attached at her hip” the first 90 days. She said that after the first 90 days, she will have another meeting to determine how the sales person is doing and if their expectations have been met.

Petitioner offered into evidence 6 letters of recommendation from people who have known him through his probation, his church, the veterans’ hospital where he volunteered, and from his long history as a boxing coach. They all support his goal of being a licensed real estate salesman.

Petitioner testified that he is in transition at this point of his life. He said he was a personal trainer in the past and hopes to use some of the skills he learned there in the future. He said he has toyed with the idea of getting a real estate license in the past but was not committed to it at the time and did not have a mentor to help him until he met Ms. Terpening. He told about the incidents that led to his legal history. He pointed out that none of his legal problems involved dishonesty or fraud. Although he was unsure of why his legal records showed a failure to appear, he made it clear that all of his legal issues have been resolved. He noted that some of his troubles arose from a situation in which his ex-wife did not report to the State of California that he had custody of their children, causing the State of California to automatically suspend his driver’s license on the grounds that he was not paying child support. This made his overall legal record appear worse than it perhaps should have. He stated that he no longer smokes marijuana. He remembered missing a court date and having to have it re-set but was unsure about the reason for another warrant for failure to appear at a court date that was found in this record.

Department Investigator Jim Ledwith testified that criminal convictions must be reported to the Department so that it may make informed decisions about the qualifications of all applicants for real estate licensure. He characterized Petitioner’s legal history as showing a pattern of behavior over a period of years that indicates that he has poor character and disregard for the rule of law. He noted that Petitioner had more than one conviction for driving under the influence of alcohol or a controlled substance and possession of marijuana paraphernalia, indicating a pattern of behavior that reflects on Petitioner’s character. He stated that when Petitioner submitted the explanation of his legal history, he stated that, after learning that his license was suspended, Petitioner stated that he needed to keep driving, which reflected an attitude that was of concern to the Department. He acknowledged that there was less concern that Petitioner’s legal history reflected any issues with his honesty and truthfulness. Mr. Ledwith did not dispute that there are some rare cases in which real estate licensees have been able to obtain or retain their licenses despite misdemeanor convictions of driving under the influence or misdemeanor drug possession charges.

CONCLUSIONS OF LAW

The Commissioner has jurisdiction over Petitioner and the subject matter in this case.

Pursuant to A.R.S. § 41-1092.07(G)(2) and A.A.C. R2-19-119(B), Petitioner has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. See A.A.C. R2-19-119(A).

A.R.S. § 32-2153 provides as follows:

32-2153. Grounds for denial, suspension or revocation of licenses; letters of concern; provisional license; retention of jurisdiction by commissioner; definitions

A. The commissioner may suspend or revoke a license, deny the issuance of a license, issue a letter of concern to a licensee, issue a provisional license or deny the renewal or the right of renewal of a license issued under this chapter if it appears that the holder or applicant, within five years immediately preceding, in the performance of or attempt to perform any acts authorized by the license or by this chapter, has:

1. Pursued a course of misrepresentation or made false promises, either directly or through others, whether acting in the role of a licensee or a principal in a transaction.

2. Acted for more than one party in a transaction without the knowledge or consent of all parties to the transaction.

3. Disregarded or violated any of the provisions of this chapter or any rules adopted by the commissioner.

4. Knowingly authorized, directed, connived at or aided in the publication, advertisement, distribution or circulation of any material false or misleading statement or representation concerning the licensee's business or any land, cemetery property, subdivision or membership campground or camping contract offered for sale in this or any other state.

5. Knowingly used the term "real estate broker", "cemetery broker" or "membership camping broker" without legal right to do so.

6. Employed any unlicensed salesperson or unlicensed associate broker.

7. Accepted 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.

8. Represented or attempted to represent a broker other than the broker to whom the salesperson or associate broker is licensed.

9. Failed, within a reasonable time, to account for or to remit any monies, to surrender to the rightful owner any documents or other valuable property coming into the licensee's possession and that belongs to others, or to issue an appraisal report on real property or cemetery property in which the licensee has an interest, unless the nature and extent of the interest are fully disclosed in the report.

10. Paid or received any rebate, profit, compensation or commission in violation of this chapter.

11. Induced any party to a contract to break the contract for the purpose of substituting a new contract with the same or a different principal, if the substitution is motivated by the personal gain of the licensee.

12. Placed a sign on any property offering it for sale or for rent without the written authority of the owner or the owner's authorized agent.

13. Solicited, either directly or indirectly, prospects for the sale, lease or use of real property, cemetery property or membership camping contracts through a promotion of a speculative nature involving a game of chance or risk or through conducting lotteries or contests that are not specifically authorized under this chapter.

14. Failed to pay to the commissioner the renewal fee as specified in this chapter promptly and before the time specified.

15. Failed to keep an escrow or trust account or other record of funds deposited with the licensee relating to a real estate transaction.

16. Commingled the money or other property of the licensee's principal or client with the licensee's own or converted that money or property to the licensee or another.

17. Failed or refused upon demand to produce any document, contract, book, record, information, compilation or report that is in the licensee's possession or that the licensee is required by law to maintain concerning any real estate, cemetery or membership camping business, services, activities or transactions involving or conducted by the licensee for inspection by the commissioner or the commissioner's representative.

18. Failed to maintain a complete record of each transaction which comes within this chapter.

19. Violated the federal fair housing law, the Arizona civil rights law or any local ordinance of a similar nature.

20. Tendered to a buyer a wood infestation report in connection with the transfer of residential real property or an interest in residential real property knowing that wood infestation exists or that the wood infestation report was inaccurate or false as of the date of the tender or that an inspection was not done in conjunction with the preparation of the wood infestation report.

21. As a licensed broker, failed to exercise reasonable supervision over the activities of salespersons, associate brokers or others under the broker's employ or failed to exercise reasonable supervision and control over the activities for which a license is required of a corporation, limited liability company or partnership on behalf of which the broker acts as designated broker under section 32-2125.

22. Demonstrated negligence in performing any act for which a license is required.

23. Sold or leased a property to a buyer or lessee that was not the property represented to the buyer or lessee.

24. Violated any condition or term of a commissioner's order.

25. Signed the name of another person on any document or form without the express written consent of the person.

26. As a licensed school, failed to exercise reasonable supervision over the activities for which a license is required for an owner, director, administrator or instructor in the school's employ.

B. The commissioner may suspend or revoke a license, deny the issuance of a license, issue a letter of concern to a licensee, issue a provisional license or deny the renewal or the right of renewal of a license issued under this chapter when it appears that the holder or applicant has:

1. Procured or attempted to procure a license under this chapter for the holder or applicant or another by fraud, misrepresentation or deceit, or by filing an original or renewal application which is false or misleading.

2. Been convicted in a court of competent jurisdiction in this or any other state of a felony or of any crime of forgery, theft, extortion, conspiracy to defraud, a crime of moral turpitude or any other like offense.

3. Made any substantial misrepresentation.

4. Made any false promises of a character likely to influence, persuade or induce.

5. Been guilty of any conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealings.

6. Engaged in the business of a real estate, cemetery or membership camping broker or real estate, cemetery or membership camping salesperson without holding a license as prescribed in this chapter.

7. Not shown that the holder or applicant is a person of honesty, truthfulness and good character.

8. 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.

9. Violated the terms of any criminal or administrative order, decree or sentence.

10. Violated any federal or state law, regulation or rule that relates to real estate or securities or that involves forgery, theft, extortion, fraud, substantial misrepresentation, dishonest dealings or violence against another person or failure to deal fairly with any party to a transaction that materially and adversely affected the transaction. This paragraph applies equally to violations of which the licensee was convicted in any lawful federal or state tribunal and to any admissions made in any settlement agreement by the licensee to violations.

11. Failed to respond in the course of an investigation or audit by providing documents or written statements.

C. A judgment based on a court's finding or stipulation of fraud by a licensee following a trial on the merits or a criminal conviction of a licensee that results in a payment from the real estate recovery fund is prima facie evidence of a violation and grounds for discipline under this section.

D. The commissioner may deny, suspend or revoke the issuance of a license upon application by a corporation, a limited liability company or a partnership if it appears that an owner, officer, director, member, manager, partner, stockholder owning ten per cent or more of the stock in the corporation or limited liability company or person exercising control of the entity is a current or former licensee whose license as a broker or a salesperson has been denied, suspended or revoked.

E. The lapsing or suspension of a license by operation of law or by order or decision of the commissioner or a court of law or the voluntary surrender of a license by a licensee shall not deprive the commissioner of jurisdiction to do any of the following:

1. Proceed with any investigation of or action or disciplinary proceeding against the licensee.

2. Render a decision suspending or revoking the license, or denying the renewal or right of renewal of the license.

3. Assess a civil penalty pursuant to section 32-2160.01.

F. For the purposes of this section:

1. "Letter of concern" means an advisory letter to notify a licensee that, while the conduct or evidence does not warrant other disciplinary action, the commissioner believes that the licensee should modify or eliminate certain practices and that continuation of the activities may result in further disciplinary action against the licensee.

2. "Provisional license" means a license that the department issues and that allows a licensee to practice subject to either a consent order as prescribed in section 32-2153.01 or the commissioner's terms, conditions and restrictions.

[Emphasis added.]

In this case, it was undisputed that Petitioner’s legal history involved a felony in 1985, when he was a young man, followed by a long period during which he had no involvement with the law. Then, beginning in 2009 and continuing until early 2014, Petitioner experienced a period of about 5 years when his behavior appears to have decompensated to the point that he was smoking marijuana illegally, unable to comply with or resolve an issue with his driver’s license, drove while drinking at least once, and had a dog he was unable to control. Although Petitioner had two incidents in which he was charged with violations concerning the possession or attempted possession of drug paraphernalia, he has only one conviction for driving under the influence and it was a misdemeanor. This does not indicate that he had an ongoing problem with using controlled substances and driving. However, had his course of behavior continued, Petitioner would not currently present as capable and prepared to enter a demanding field such as real estate licensure. Nevertheless, his illegal activities appear to have stopped then and he has remained without new charges or arrests for about 3 and a half years. He has also attended classes and obtained a job offer and an offer of supervision from Cheryl Terpening, whose qualifications and history as a broker makes her interest in him a rare opportunity for anyone.

The evidence at hearing established that Ms. Turpening is very organized in her approach to training her sales people and a willingness to give Petitioner the type of oversight that would set him up in an organized practice with procedures and policies that make sloppy record-keeping and unethical practices easier to avoid. Petitioner has shown that he can meet Ms. Turpening’s expectations. While the Department may at times prefer to see a longer period of law-abiding behavior from its applicants who have criminal histories, Petitioner’s legal problems were of a limited duration, which indicates that he was experiencing challenges in his life that he was unprepared for at that time, but which have passed. It should also be noted that his conviction history does not show a repeated pattern of driving under the influence that would indicate alcoholism or a behavioral problem of a more intractable type. Therefore, the need for a longer period of recovery was not established to be necessary in this case, especially when any remaining concerns that the Department has may be addressed in the terms of a probationary license, such as a prohibition against driving with clients in his car.

Based on the foregoing considerations, it is recommended that Petitioner be afforded the opportunity to receive a probationary license with Cheryl Turpening to act as his supervising broker. If the Department is not prepared to issue Petitioner a provisional license solely with the supervision of Ms. Turpening, it is recommended that additional conditions be negotiated with Petioner, Ms. Turpening, and the Department.

RECOMMENDED ORDER

Based on the foregoing considerations, it is hereby recommended that Petitioner’s appeal be granted insofar as a provisional license shall be issued to Petitioner with Cheryl Turpening to act as his supervising broker.

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 shall be the date of the certification.

Done this day, November 3, 2017.

/s/ Dorinda M. Lang

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate