ALJDEC decisions subject to certification as final

20F-239-REL · Department of Real Estate · 2020-06-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Original Real Estate Salesperson License of:

GACK, CHRISTOPHER, holder of License No. SA688763000 (Candidate),

Petitioner.

No. 20F-239-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 03, 2020 at 1:00 PM.

APPEARANCES: Lynette Evans, Esq., appeared telephonically on behalf of the Arizona Department of Real Estate (“Department”) with Linda Bevins as a witness. Christopher Gack (“Petitioner”) appeared telephonically on his own behalf. Holly Wan observed.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Commissioner of the Department.

FINDINGS OF FACT

Background and Procedure

On or about December 22, 2019, Petitioner filled out an application to be licensed as a real estate salesperson with the Department. On January 22, 2020, the Department received Petitioner’s application.

Petitioner answered “yes” to the following questions on the application:

(2) “Has the Applicant/Is the Applicant . . . Had/Have an administrative order and/or ANY other disciplinary action taken against ANY license issued to them by any local, state, or federal regulatory agency including the Arizona Department of Real Estate?”

(4) “Has the Applicant/Is the Applicant . . . Voluntarily surrendered ANY professional or occupational license during the course of an investigation or disciplinary proceeding?”

(Emphasis in original.)

Petitioner attached a written explanation of his “yes” answers to his application where he detailed the following:

Petitioner was fined twice by the Minnesota Department of Commerce (“MDC”) during his employment with Farmers Insurance Group (“Farmers”), where he was employed as a licensed resident insurance producer. Petitioner alleged that the investigations and fines he was subjected to were the result of “targeting” by Petitioner’s colleagues and a rival competitor.

The first fine was the result of an investigation initiated by Farmers, involving a claim Petitioner filed that included an “old invoice” and information deemed “questionable” or otherwise “inputted incorrectly” by Petitioner, which had been escalated to the MDC. Petitioner did not specify the amount of the fine he was assessed, but did note that he elected to surrender his license due to the time period of the suspension that was also a part of the disciplinary action he received. Petitioner also alleged that he surrendered his license because Farmers would not let him expand his practice into Arizona.

The second fine was the result of a “marketing drawing” Petitioner held. Petitioner did not specify the amount of the fine he was assessed, but did note that he signed a “disclosure” agreement as part of the disciplinary action he received.

On January 28, 2020, the Department issued an Intent to Deny Application letter to Petitioner.

On February 03, 2020, the Department received a timely appeal letter from Petitioner.

On February 05, 2020, the Department referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. On February 11, 2020, a Notice of Hearing was issued citing the issue for hearing as whether grounds existed to affirm the Department’s intent to deny Petitioner’s application for a real estate salesperson’s license pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-2153(B)(7) and (B)(10).

Hearing Evidence

The Department called Linda Bevins (“Investigator Bevins”) as a witness and submitted 6 exhibits. Petitioner testified on his own behalf. The Notice of Hearing was also admitted into the record as its own exhibit. The substantive facts are as follows:

In order for an applicant for a real estate salesperson’s license to be approved for licensure, the applicant must be professionally and morally qualified. Because licensees engage in public dealings, earnest money, and contracts, they have to possess good moral character and be truthful.

Answering “yes” to any of the questions on the Board’s real estate salesperson application is not an automatic disqualification for licensure, but may, where appropriate, trigger an investigation by the Board. As it did in Petitioner’s case.

In documents obtained by the Board during its investigation, the following information was discovered:

On April 21, 2015, a Civil Penalty and Agreement letter was issued to Petitioner by MDC. MDC notified Petitioner that it determined Petitioner had “conducted a promotional advertising program in which the promotional prize was in excess of $25.00” in violation of Minn. Stat. § 72A.08 (2014).The letter memorialized Petitioners settlement with MDC whereby Petitioner agreed to pay a $250.00 civil penalty. Petitioner’s signature signified his agreement that the violation(s) took place as described, that Petitioner knowingly and voluntarily waived his right to an administrative hearing, and Petitioner had been advised of his right to legal counsel or waived that right.

On June 07, 2019, Petitioner entered into a Consent Order with MDC whereby Petitioner acquiesced to allegations that (i) Petitioner failed to report an address change to the Commissioner within ten days of the change, in violation of Minn. Stat. § 60K.38, subd. 6 (2018); (ii) Petitioner knowingly submitted an altered and falsified document in furtherance of a renter’s insurance claim, in violation of Minn. Stat. § 60A.951, subd. 4 (2018); and (iii) Petitioner knowingly submitted false information on numerous insurance applications, in violation of Minn. Stat. § 60K.43, subd. 1(5), (8) (2018). By signing the Consent Order Petitioner expressly, knowingly, and voluntarily waived his right(s) to counsel and an administrative hearing. Petitioner was assessed a $1,500.00 civil penalty. Petitioner’s resident insurance producer license was retroactively revoked, effective February 21, 2019.

The Department’s primary concerns, when determining whether to grant Petitioner’s request for a real estate salespersons license, were Petitioner’s admitted and repeated statutory violations which mirror conduct outlined in Ariz. Rev. Stat. §§ 32-2153(B)(7) and (B)(10). The Department opined, based on Petitioner’s prior conduct, that it would be difficult, if not impossible, for the Department to regulate Petitioner and his actions.

Petitioner was neither advised by the Department of any perceived inconsistencies in his real estate salesperson’s license application, nor was he afforded an opportunity to provide additional information to the Department.

Closing Arguments

In closing, the Board argued that Petitioner did not meet the qualifications for licensure, and asked the Tribunal to uphold it denial of Petitioner’s application.

In closing, Petitioner argued that he was only seeking a provisional license, and should be afforded an opportunity to prove himself worthy to the Department of earning unencumbered licensure at the end of his monitoring period.

CONCLUSIONS OF LAW

Because at all times relevant to this matter Petitioner was subject to the provisions of Title 32, Chapter 20, Ariz. Rev. Stat., the Commissioner of the Department has jurisdiction over Petitioner and the subject matter in this case.

The case was properly brought before the Office of Administrative Hearings for adjudication pursuant to Title 2, Chapter 19, Article 1, of the Arizona Administrative Code (“Ariz. Admin. Code”).

Pursuant to Ariz. Rev. Stat. § 41-1092.07(G)(2) and Ariz. Admin. Code R2-19-119(B), Petitioner bears the burden of proof in this matter to establish that he is rehabilitated and meets statutory qualifications for a real estate salesperson’s license. The standard of proof is by a preponderance of the evidence.

A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

Ariz. Rev. Stat. § 32-2153(B) provides, in pertinent parts, as follows:

The commissioner may deny the issuance of a license under this chapter if it appears that the holder or applicant has:

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

* * *

(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.

The legislature has charged the Department with protecting the public and consumers who deal with licensed salespersons when it issues licenses. Therefore, Department has discretion to deny the issuance of a license under Ariz. Rev. Stat. § 32-2153(B) as a real estate salesperson’s license is a privilege, not a right.

The issue in this case is, in light of Petitioner’s violations of Minn. Stat. §§ 72A.08 (2014), 60A.951, subd. 4 (2018); 60K.38, subd. 6 (2018); and 60K.43, subd. 1(5), (8) (2018) which occurred as recently as one year ago, whether Petitioner can be trusted at this time to be responsible in his dealings with his clients and members of the public if the Department grants him a real estate salesperson’s license.

The time period required for a license applicant to establish rehabilitation is commensurate with the period of misconduct and the severity of the offense(s).

The definition of what constitutes good character, or a lack thereof, is not codified by the legislature. United States Supreme Court Justice Frankfurter noted, “No doubt satisfaction of the requirement of moral character involves an exercise of delicate judgment on the part of those who reach a conclusion.”

The material facts in this matter are not in dispute.

The credible evidence of record establishes a violation of Ariz. Rev. Stat. § 32-2153(B)(10), as Petitioner expressly, knowingly, and voluntarily signed the 2015 Civil Penalty and Agreement as well as the 2019 Consent Order. Because the record also evinces Petitioner’s inability or unwillingness to objectively perceive and recount the truth, a violation of Ariz. Rev. Stat. § 32-2153(B)(7) has also been established.

Therefore, the only remaining issue to address is whether Petitioner offered sufficient evidence to overcome the Board’s evidence and establish his qualifications for a real estate salesperson license. Here, Petitioner did not provide letters of recommendation or evidence of offers of employment as a real estate salesperson, as factors in mitigation of Petitioner’s application, to the Department. Although he argued to the contrary, Petitioner did, in fact, admit to all of MDC’s statutory violations, which are mirrored in local Arizona statutes. Moreover, Petitioner provided no binding authority or statute under which the tribunal or Department would be bound to accept and approve his application for licensure at this time.

After closely scrutinizing the evidentiary record, the undersigned Administrative Law Judge concludes that Petitioner has not sustained his burden of proof in this matter by a preponderance of the evidence. Grounds exist for the Department to deny issuance of a real estate salesperson license to Petitioner in accordance with Ariz. Rev. Stat. §§ 32-2153(B)(7) and (B)(10), as it is unclear whether Petitioner may be regulated by the Department at this time.

RECOMMENDED ORDER

Based upon the foregoing,

IT IS RECOMMENDED that Petitioner’s appeal be denied.

IT IS FURTHER RECOMMENDED that the Commissioner affirm the Department’s determination to deny Petitioner’s application for a Real Estate Salesperson License pursuant to Ariz. Rev. Stat. § 32-2153(B).

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, June 23, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate