ALJDEC decisions subject to certification as final

20F-263-REL · Department of Real Estate · 2020-06-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

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

SMITH, DAVID RAYMOND, holder of License No. SA688652000 (Candidate),

Petitioner.

No. 20F-263-REL

ADMINISTRATIVE LAW JUDGE DECISION

TELEPHONIC HEARING: May 7, 2020.

APPEARANCES: David Raymond Smith (Petitioner) appeared on his own behalf. Assistant Attorney General Lynette Evans represented the Arizona Department of Real Estate (Department).

ADMINISTRATIVE LAW JUDGE: Kay Abramsohn

_____________________________________________________________________

FINDINGS OF FACT

On February 5, 2020, the Department received from Petitioner a Salesperson Application Form (Application) for licensure as a real estate salesperson.

On that Application, Petitioner answered “YES” to Question #1, #2, #5, #9, and #11 regarding: a professional license having been “denied, suspended, restricted, or revoked;” administrative orders or disciplinary action taken against a license; any consent decree or suspension that prohibited or restricted him from engaging in any profession or occupation; been a party in a business against which a recovery fund payment had been charged; and, held more than 10% ownership in a business necessitating answering YES to the Application questions.

Petitioner was the qualifying party for a business entity named “David LLC” which held Registrar of Contractors’ (ROC) License CR61.233680-D (License). Following an administrative hearing in 2016, and accepting the Administrative Law Judge’s recommendation for discipline on that License, the ROC revoked the David LLC License effective May 2, 2016. Thereafter, in a separate administrative hearing process, the ROC determined that a $26,845.68 payout from the Fund would be made to a homeowner as a result of the David LLC acts or omissions that had been determined in the administrative hearing and resultant decision.

When questioned by the Department with regard to payments and the ROC Fund, Petitioner indicated that due to the suspension of his ROC license, he had greatly reduced income and had been unable to pay into the ROC Fund.

To date, the Fund has not been reimbursed for the payout.

By letter dated February 25, 2020, the Department sent Petitioner, via certified mail, a letter of Intent to Deny Application for Original Real Estate Salesperson’s License.

The Department informed Petitioner that, based on the Application, it had concluded that he did not meet the qualifications for licensure pursuant to A.R.S. §§ 32-2123, 32-2124, and 32-2153. The Department’s conclusion was based in part, but not exclusively, on the ROC revocation of the David LLC ROC License. The Department further informed Petitioner that it considered that his conduct had violated A.R.S. §§ 32-2153(B)(5) and (B)(10).

The Department received Petitioner’s appeal on March 31, 2020. Petitioner argued that the evidence presented at the ROC administrative hearing had not been considered “in a manner that showed justification and ratification of the circumstances ... “ wherein there had been a separate contract that, he indicated, had nullified the original contract.

The Department’s position is that Petitioner’s actions through the ROC matter demonstrated that Petitioner is in violation of A.R.S. §§ 32-2153(B)(5), (B)(9), and (B)(10) and, therefore, the Department appropriately determined to deny licensure as a real estate salesperson. The Department noted that Petitioner remains ineligible to obtain another ROC license until the Fund payout amount is repaid to ROC. The Department further noted its overall concerns of protecting the public.

At hearing, Petitioner argued that a witness that had been unavailable on the date of the administrative hearing in the ROC matter, would have cleared up the matter about the separate contract. Petitioner argued that he had been misjudged in that matter.

Petitioner has been self-employed, doing work as a handyman (allowable construction activity for work for less than $1,000.00 on a project). Petitioner noted that he had taken all the required courses and had been dedicated to that process, having to drive 50 miles per night of the classes in the evenings to complete the courses in January 2020.

Petitioner requested that he be given the opportunity to become a real estate salesperson, noting that he would be amenable to having conditions placed on the licensure that he begin to make payments to the ROC.

CONCLUSIONS OF LAW

The Department bears the responsibility to protect the public through its enforcement of licensing statutes. This matter lies within its jurisdiction.

Petitioner bears the burden of proof and must establish that he meets statutory qualifications for a real estate salesperson’s license 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.” A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

A.R.S. § 32-2153 provides in relevant part as follows:

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:

.....

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.

.....

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

.....

10. Violated any federal or state law, regulation or rule that ... involves forgery, theft, extortion, fraud, substantial misrepresentation, dishonest dealings 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 Arizona Legislature has charged the Department with protecting the public and consumers who deal with licensed salespersons when it issues licenses. The Department’s concern in this case is understandable. A person whose regulated license has been revoked and for which he has not made restitution must be given close scrutiny and careful consideration when he or she applies for a professional license.

The hearing record demonstrated that Petitioner was the qualifying party of a business whose ROC license was revoked and, as to that revocation and the subsequent ROC Fund payment to an injured party, Petitioner has not repaid the ROC Fund for the payout to that injured party. Those unresolved ROC administrative actions weigh heavily in a consideration for any other agency to grant licensure that deals with members of the public. An applicant has the burden of proving by a preponderance of the evidence that he or she has resolved the issues that led to the administrative actions and licensure revocations and to establish that he or she has sufficient good character and reputation to satisfy the statutory requirement for licensure as a real estate salesperson.

While the Petitioner did not deny the past ROC revocation, he argued herein that the ROC case had been mishandled and he had been misjudged, with an outcome that was not fair because a witness had been unavailable. As to that ROC matter, the Administrative Law Judge cannot conclude anything other than the time and place for any evidence and argument regarding the ROC administrative hearing and subsequent ROC actions had long-since passed.

In the matter at hand, the Administrative Law Judge concludes that Petitioner has not met his burden to demonstrate that, at this time, he meets the qualifications for licensure as a real estate salesperson. Based on the hearing record, the Administrative Law Judge concludes that the Department would not fulfill its statutory mandate by licensing Petitioner as a real estate salesperson at this time due to the 2016 ROC administrative actions and failure by Petitioner to have accepted responsibility thereof and resolve the outstanding restitution issue. Additionally, the Administrative Law Judge concludes that the hearing record lacked evidence or support of any/all the criteria for possibility of a provisional licensure.

RECOMMENDED ORDER

The Commissioner shall affirm the Department’s decision to deny Petitioner’s Application for a real estate salesperson’s license and dismiss Petitioner’s appeal.

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, June 16, 2020.

/s/ Kay Abramsohn

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate