ALJDEC decisions subject to certification as final

19F-059-REL-RES · Department of Real Estate · 2019-09-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 22, 2019 with post-hearing submissions; hearing record concluded as of August 18, 2019. APPEARANCES: Respondent David l. Fisher, Jr., appeared on his own behalf. Assistant Attorney General Deian Ousounov represented the Arizona Department of Real Estate. ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn _____________________________________________________________________ FINDINGS OF FACT On January 17, 2008, the Arizona Department of Real Estate (Department) issued Real Estate Broker License No. BR515477000 to David L. Fisher, Jr. (Respondent). The current licensure expires on January 31, 2020. On January 17, 2008, the Arizona Department of Real Estate (Department) issued entity License No. LC625689000 to Fisher Realty L.L.C. (Firm). The current licensure expires on January 31, 2020. The Firm was incorporated in Arizona on December 5, 2007. Respondent is Firm’s Statutory Agent, Manager, and Member; Shannon N. Fisher is also listed as Firm’s Manager and Member. Respondent is the designated broker for Firm. Fisher Family Investments L.L.C. was incorporated on July 27, 2006. Respondent is the company’s Statutory Agent, Manager, and Member; Shannon N. Fisher is also listed as the company’s Manager and Member. On February 12, 2018, Devon Judge (Buyer) signed a purchase contract for property located at 335 W. Montecito (Property). Property was being sold by Fisher Family Investments, L.L.C. (Seller1) and Vintage FBO David Snow IRA (Seller2). Respondent was listed as the Sellers’ Agent and Firm was listed as the brokerage. On March 13, 2018, Property was transferred by warranty deed to Buyer. The Seller’s Property Disclosure Statement (SPDS), dated February 26, 2018, indicated the home had been vacant for ten months, that there was a new roof in 2017 (with no leaks before), that the heating/cooling system had been redone in February 2018, that there was “all new” electrical service in 2017, and that permits had not been required. Additionally, the SPDS noted there had been “extensive remodel including all new drywall, electrical, kitchen, bathroom” and a new water heater and all new built-in appliances. On June 5, 2018, the Department received a complaint from Buyer regarding alleging contracting deficiencies or contracting law violations at Property.[1] Buyer alleged that certain contracting work had been done at Property without permits and/or by unlicensed contractors. On June 27, 2018, the Department received a second complaint from Buyer, further alleging that Respondent had not disclosed that he was a partner in the selling of Property by Seller1 and Seller2.[2] On July 11, 2018, the Department notified Respondent of Buyer’s complaint, “alleging you failed to disclose information that materially related to the property (it was remodeled by unlicensed personnel and did not meet code).” The Department noted that Respondent’s responsive written statement should be signed and should include copies of any and all documents related to the transaction. That letter was returned by the postal services, that address/premises indicated to be vacant and the letter unable to be forwarded. On July 17, 2018, the Department reached out to Respondent by email.[3] The Department noted some specific questions as to certain information, requesting Respondent to address those particular items no later than July 26, 2018. On that same day, Respondent replied to the email as follows:[4] I will be writing a formal response. However, Mr. Judge had been harassing me about his issue for months and has threatened to “do everything he can to hurt me.” This all comes down to a request for $10,000 after close of escrow because he felt the wall was not built to code. They had ample time to inspect the wall during the inspection period, and the wall was only built to make this specific buyer happy. I do not see how a transaction in which I was a Seller has anything to do with my real estate license.

On that same day, the Department’s investigator replied as follows:[5] Thank you, I look forward to your response. Please be sure to address each of the items in my original email to you in that response. I am not interested in the construction issues, those fall under the Registrar of Contractors. I am interested in disclosure questions, including, but not limited to, did you disclose in writing that you are a licensee participating as a [principal] in the transaction and did you fully disclose all information about the house remodel.

The Department contacted the City of Phoenix (City) regarding permits for the construction activity.[6] The Department indicated that it had located a permit for the wall/fence and asked about other permits. The City responded, indicating that it appeared the internal work had been permitted and, subsequently, provided copies of some permits.[7] The Department did not receive a written “response” from Respondent regarding the issues involved by July 26, 2018. On July 31, 2018, the Department again reached out to Respondent by email in this regard.[8] The Department noted that, although Respondent had indicated he was going to respond, the Department had not received any response and reminded Respondent that the law allowed only 14 days for a written response. The Department provided a new deadline of August 3, 2018. Receiving no response by August 3, 2018, the Department again reached out on August 8, 2018 for the third time by email and provided a final due date of August 16, 2018 by which a response was due, and indicating that a failure to respond would result in the matter being recommended for discipline.[9] The Department did not receive a written “response” from Respondent by August 16, 2018 regarding the issues involved and the matter moved forward for consideration for discipline. On March 4, 2019, the Department issued its Notice of Hearing and Complaint (Notice) to Respondent at a known address. The Notice was returned by the postal service as undeliverable and unable to forward.[10] The Department reached out by email to Respondent notifying him of the returned mail.[11] Respondent replied to the email regarding the Notice being returned to the Department, and indicated that he was providing a copy of the “response” that he had sent to the Department on July 17, 2018. Respondent further noted that he was “in communications with my email provider to recover the sent email so [he could] show the date stamps.”[12]

The hearing record on requisite permits is unclear. The City first indicated to the Department that the work was permitted and that the wall passed inspection; at hearing, the Department indicated that the work was not permitted.[13] The permits the Department received from the City do not appear to be permits associated with stated improvements. Respondent indicated that permits were not required for the specific internal remodeling work (and a carport enclosure), and that the Firm had hired licensed contractors with the exception of the wall/fence contractor (which Respondent had not known at the time was not licensed for wall/masonry work).[14] As to the block wall/fence, Respondent noted that the wall/fence had not been a part of the contract for Property. The hearing record demonstrated that neither the purchase contract nor any Addendum disclosed Respondent to be a part owner of Property. At hearing, Respondent indicated that it had been disclosed on the MLS posting and that Buyer and his agent knew Respondent was part-owner because he had told them he was. However, at hearing, Respondent acknowledged that it should have been a part of the paperwork and that he should have written an Addendum in this regard. The hearing record contains no documentary evidence that any contracting work performed inside Property was unlicensed work or was not built “to code.”[15] Neither party presented any invoices or contracts for remodeling work performed inside Property; therefore, there is no evidence that Respondent failed to disclose repairs that had been made to Property. The June 1, 2018 Registrar message to Buyer’s father was in regard to the block wall/fence issue and not the internal remodeling. The information provided post-hearing fails to demonstrate that Respondent timely responded to the Department’s July 17, 2018 notice. At hearing, Respondent initially indicated that his email provider could not give him the information.[16] While he may have prepared a response, and may have sent it to himself (from which he proffers that he resent it to the Department on July 28, 2018), the email address for the Department is incorrect on that document and it would have bounced back to Respondent. Finally, in Closing, Respondent noted “[i]t is possible that the [initial] response that I worked hard to deliver within a few hours of being requested was not received. The Department did not deliver a 2nd request, so I thought I had done everything requested of me.” Respondent mentioned at hearing, and post-hearing, that the Attorney General’s office had investigated the matter and found nothing wrong or dismissed it. However, there is no documentation in the hearing record of any complaint to the Attorney General or any dismissal thereof. The Department’s positions are that Respondent failed to disclose his relationship to Property, i.e., that he was part owner of Property, failed to disclose some information “materially related to the property (it was remodeled by unlicensed personnel and did not meet code),” and failed to respond to the Department as required by real estate law. The Department argues that the matter calls for discipline in the form of a 6-month suspension, a 2-year provisional license, $3,000.00 civil penalty, and 15 hours classroom education above the renewal requirement. Respondent’s positions are that they used licensed contractors and permits were not needed for the remodeling work performed inside the home, and that the “all new” electrical comment had described replacing outlets and wiring therein but not altering or moving the existing electrical or circuit box. Regarding the wall/fence, Respondent readily indicated that he had not known that company was not a licensed contractor. Respondent argued that discipline of a suspension or provisional license would be too harsh given his good nearly 20-year record and considering the circumstances, but agreed that a penalty/fine and additional education hours would be appropriate.[17] In Closing, Respondent maintained that he was innocent of all allegations “other than forgetting to write an addendum.”[18] CONCLUSIONS OF LAW Pursuant to A.R.S. Title 32, Chapter 20, the Commissioner has jurisdiction over Respondent and the subject matter in this case. The Arizona legislature has charged the Department with protecting the public and consumers who deal with licensed salespersons when it issues licenses. Pursuant to A.R.S. §32-2153, the Commissioner has authority to deny, suspend, or revoke the real estate license of a broker or salesperson. Pursuant to A.R.S. §32-2160.01, the Commissioner has authority to assess a civil penalty up to $1,000.00 per violation of the real estate laws and rules. Pursuant to A.R.S. § 41-1092.07(G)(2) and A.A.C. R2-19-119(B), the Department 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). The evidence of record established that Respondent failed to appropriately disclose his partial ownership of Property in relation to the sale of Property, in violation of A.R.S. § 32-2153(A)(1) and A.A.C. R4-28- 1101(E)(1). The evidence of record established that Respondent failed to respond to the Department in the course of an investigation by failing to provide requested documents or written statements, in violation of A.R.S. § 32- 2153(B)(11). Although there was evidence that mail sent to Respondent at the broker license address of record was returned, the hearing record does not contain evidence regarding notification to the Department of a new address. Therefore, it cannot be determined whether there was a violation of A.A.C. R4-28-301(E) and/or A.A.C. R4-28-303(D). The evidence of record established that Respondent disregarded or violated rules adopted by the Commissioner, in violation of A.R.S. § 32-2153(A)(3).

The hearing record fails to establish a violation of A.R.S. § 32- 2153(A)(4), A.R.S. § 32-2153(B)(3), or A.A.C. R4-28-1101(B)(3). In totality, the evidence of record established that grounds exist to discipline Petitioner’s broker’s license pursuant to A.R.S. § 32-2153. In multiple instances, in the event of failure to respond to the Department, a reasonable conclusion that may be drawn is that the licensee cannot be regulated and revocation is called for. However, in this case, the Department requests that suspension, rather than a revocation, be considered. Based on the specific circumstances, the Administrative Law Judge concludes that a period of suspension of twenty (20) days is appropriate with no succeeding period of a provisional license. However, as with any suspension, any further demonstration of violations of real estate laws and/or rules should be disciplined more harshly, including a consideration of revocation. Based on the specific circumstances, the Administrative Law Judge concludes that a $3,000.00 civil penalty is excessive, but that a $1,000.00 civil penalty is appropriate. Based on the specific circumstances, the Administrative Law Judge concludes that no less than ten (10) hours of classroom education in addition to the renewal requirements is appropriate. RECOMMENDED ORDER Based upon the foregoing, IT IS RECOMMENDED that upon the effective date of the Final Order entered in this matter the Commissioner of the Department suspend Respondent David L. Fisher, Jr.’s Real Estate Broker’s License No. BR515477000 for a period of twenty (20) days with no succeeding period of a provisional license. IT IS FURTHER RECOMMENDED that within thirty (30) days of the effective date of the above Final Order entered in this matter, Respondent shall pay to the Department a civil penalty in the amount of $1,000.00, and such payment shall be made by cashier’s check or money order made payable to the Department. IT IS FURTHER RECOMMENDED that within six (6) months of the effective date of the above Final Order entered in this matter, Respondent shall complete no less than ten (10) hours of classroom education in addition to the renewal requirements.[19] IT IS FURTHER RECOMMENDED in the event that Respondent fails to pay the penalty or complete the disciplinary education hours, the Department take action to impose further discipline upon proper notice to Respondent.

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 five days from the date of the certification. Done this day, September 10, 2019.

/s/ Kay A. Abramsohn Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: APPEARANCES: ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

Done this day, September 10, 2019.

/s/ Kay A. Abramsohn Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate

----------------------- [1] See Exhibit 6. Alleged contracting deficiencies or violations of the contracting statutes are handled through the Arizona Registrar of Contractors (Registrar). Buyer later provided a June 1, 2018 letter from the Registrar, indicating that the Registrar had sent a warning letter to Respondent regarding contracting without a license. See Exhibit 13. [2] See Exhibit 7. This document appears to have been sent by Buyer’s father, as it states that a wall was finished two weeks “after my son took possession.” At hearing, Respondent indicated that Buyer’s father took an active role in the contracting issues. [3] See Exhibit 15. [4] Id. [5] Id. [6] See Exhibit 16. [7] Id. However, other than the permit for a wall/fence, the other permits appear to be for work performed in the past and unrelated to this transaction. [8] See Exhibit 18. “Email” is highlighted herein, because Respondent asserts in his post-hearing that he was only contacted by mail after the initial email; this document proves otherwise. [9] See Exhibit 19. “Email” is highlighted herein, because Respondent asserts in his post-hearing that he was only contacted by mail after the initial email; this document proves otherwise. [10] See Exhibit 20. [11] Id. [12] Such information was not provided to the Department or to the hearing record. [13] The Registrar has jurisdiction to determine whether permits were required or whether there were other violations of the contracting laws. A June 1, 2018 letter from the Registrar indicated that, after their investigation, the Registrar only issued a warning letter for contracting without a license. See Exhibit 13. [14] The City permit for the wall/fence was not issued until June of 2018. See Exhibit 17. [15] As the complaint Buyer’s father made to the Registrar appears to have pertained only to the block wall/fence, there is no indication that an alleged workmanship violation or code violation was investigated by the Registrar. [16] Respondent later indicated that this document was recovered, having paid for computer recovery a second time, from a laptop that had been used during the time frame in question “only after a computer expert was hired to retrieve the files.” However, Respondent also stated post-hearing that he had printed it out, “signed it,” and scanned it into the email; while no other provided copies prior to hearing contained a signature, the final “copy” provided to the hearing record post-hearing was “signed.” [17] In Closing, Respondent argued that the punishment requested by the Department would “financially bankrupt” him, and he “would lose everything.” [18] For some unknown reason, Respondent’s Closing statement contains the electronic signature of counsel for the Department. [19] In the event that more time is needed for completion of the additional classroom hours due to the unavailability of classes within the stated 6- month period, Respondent shall request an extension of the 6- month period demonstrating when the next available classes would be held.

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826