ALJDEC decisions subject to certification as final

20F-AAA1920001-ADH · Arizona State Department of Housing · 2020-03-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Korel Roberge,

Appellant,

vs.

Arizona Department of Housing,

Appellee.

No. 20F-AAA1920001-ADH

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 24, 2020 at 1:30 PM.

APPEARANCES: Korel Roberge (“Appellant”) appeared on her own behalf. Assistant Attorney General Valerie Marciano, Esq., appeared on behalf of the Arizona Department of Housing (“Department”) with Esperanza Padilla and Donna Grant as witnesses. William Roberge, Tara Brunetti, and Kerin MacWilliams 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 Director of the Department.

FINDINGS OF FACT

Background and Procedure

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of E.T. Consultants Inc., doing business as Valley of the Sun Home Sales (“Valley of the Sun”), License No. 5875 as reflected on the Department’s public website and Valley of the Sun’s public website on February 24, 2020. On October 26, 1989, the Department issued a D-8 class license to Valley of the Sun. The license has been renewed through October 25, 2020. Kerin MacWilliams is listed on the license as its Qualifying Party. The business address of record for the license is 2550 S. Ellsworth Rd., Mesa, AZ 85209.

Valley of the Sun is a subsidiary of Thesman Communities (“Thesman”), a real estate development company which has operated in Arizona since 1991. Thesman, a nationwide developer, has 6 resort communities in Arizona, including Las Palmas Grand (“LPG”), a 55+ luxury retirement community located in Mesa. Valley of the Sun serves as the dealer for LPG.

On or about April 09, 2019, the Department received a 16-page consumer complaint from Appellant against Valley of the Sun, LPG, and LPG salesperson Michael Shelton (“Salesperson Shelton”). The complaint was numbered Complaint 2019-040 by the Department. Appellant attached a copy of her purchase agreement, resident application, a thread of emails, and a business card to her complaint. The complaint alleged the following, in pertinent part(s):

On February 28, 2019, Appellant signed an “Offer to Purchase” agreement for $108,300.00 with LPG and paid a $5,000.00 deposit. Salesperson Shelton used license number S17992 on the contract. License number S17992 is not registered to Salesperson Shelton.

On March 06, 2019, Salesperson provided Appellant with a “Residential Application,” which requested financial and demographic declarations regarding unearned income, banking information, debt, employment history, and tax information.

On March 07, 2019, Appellant returned a semi-completed and redacted application to LPG. Appellant did not complete the application because she “determined that there were too many rules, regulations and requirements.”

On March 12, 2019, Appellant was conditionally pre-approved for a mortgage to finance the LPG property. Later that day, Appellant notified Salesperson Shelton and LPG Community Manager Karen Hokenson (“Manager Hokenson”) that she would not proceed with the underlying purchase. Appellant also cancelled her mortgage loan application.

On March 16, 2019, Appellant submitted a written request to her escrow company, Stewart Title, for a refund of her $5,000.00 earnest money deposit.

On April 04, 2019, LPG and the sellers of the underlying property (“Sellers”) instructed Stewart Title to close escrow. As a result, $5,000.00 was distributed to Sellers.

On April 10, 2019, the Department provided LPG with a copy of Appellant’s complaint.

On April 15, 2019, the Department provided Appellant with LPG’s reply to her complaint.

On May 20, 2019, Department Investigation Manager Donna Grant (“Investigator Grant”) conducted a complaint verification that resulted in a Verified Complaint & Sign-Off Form (“Verification”). Verification was based on review of documents that were provided by Appellant, Valley of the Sun, LPG and Salesperson Shelton.

On May 21, 2019, the Verification was mailed to Appellant and LPG.

On June 18, 2019, Appellant submitted a Notice of Appeal to the Department for Verification items 1a, 1b, 1c, 1cii, 1civ, 1d, and 1e.

On January 13, 2020, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on February 24, 2020. Per the Notice of Hearing, the issue to be determined was whether the Department took appropriate action in issuing its Verification regarding Appellant’s complaint against Valley of the Sun, LPG and Salesperson Shelton.

Hearing Evidence

The Department called Esperanza Padilla, Complaint Manager and Investigator Grant as witnesses, and submitted 8 exhibits marked A-H into the record. Appellant testified on her own behalf. The Notice of Hearing was also admitted into the record as its own exhibit.

Department’s Case-in-Chief

The Department has limited jurisdiction to regulate its licensees and public housing in the State of Arizona. The Department does not have any authority over mobile home parks or real estate title companies.

On February 28, 2019, Appellant signed an Offer to Purchase and Acceptance agreement (“Contract”) for the purchase of a manufactured home located in the LPG community, whereby Appellant tendered a $5,000.00 earnest money deposit into escrow. Per the Contract, Appellant agreed to purchase a home located at 2550 S. Ellsworth Road, Lot 410, Mesa, AZ 85209 for the sum total of $108,000.00.

On March 01, 2019, the Contract was signed by the sellers (“Sellers”).

Terms of the Contract dictated that if Appellant did not complete the purchase as specified, the $5,000.00 deposit would be forfeited.

Contract terms also specify that as the buyer, Appellant was aware that she had to “independently apply for approval and be accepted as a tenant to the community in which the home is located in order to occupy the home in that location.” Thus, purchasing a home in LPG from Valley of the Sun and applying for residency at LPG were mutually exclusive transactions; one was not dependent or contingent on the other.

On March 08, 2019, Appellant paid to have the home professionally inspected, which took place that afternoon.

Because Appellant refused to provide LPG with necessary documentation to approve her tenancy application, as was required of all applicants, Appellant was not approved to live in the community.

Appellant’s tenancy application did not impact or invalidate her Contract. Appellant’s $5,000.00 earnest money deposit was forfeited after the escrow deadline passed, per the terms of the Contract.

Subsequently, Appellant filed an 8-item complaint with the Department.

After reviewing Appellant’s complaint, The Department verified complaint items 1d, as a Violation of Statute, and 1e, as Verified Without Statutory Authority. Specifically, the Department determined that Salesperson Shelton, a licensed salesperson for Valley of the Sun, was employed by LPG, a licensed branch of Valley of the Sun, whose correct license number is S16751, not S17992 as listed on the Contract. The Department also determined that it did not have any authority whatsoever to compel Stewart Title to refund Appellant’s $5,000.00 earnest money deposit.

On June 18, 2019, Appellant submitted her appeal to the Department’s Verification.

Appellant’s Case-in-Chief

At the onset of testimony, Appellant clarified that she only desired to appeal Verification items 1d and 1e. Appellant withdrew her appeal of Verification items 1a, 1b, 1c, 1cii, and 1civ.

Appellant testified that she was not given the Mobile Home Park Residential Landlord and Tenant Act summary, LPG Rules and Regulations, LPG Architectural Standards and Controls, LPG Statements of Policy, or the LPG Lease Agreement at the time she was given the LPG Resident Application by Salesperson Shelton. Appellant argued that Salesperson Shelton acted in concert with LPG to intentionally withhold information that may have affected her decision to sign the Contract.

Appellant argued that although she signed the Contract, she was unaware that she had to independently apply and be accepted for tenancy by LPG. Appellant saw the language in her Contract, but because the “c” in “community” was not capitalized, she believed the process would be informal and involve her neighbors.

Per Appellant, she refused to complete the LPG Resident Application because she considered the requested information to be “personal and confidential and unnecessary to provide” to LPG, as she had not been required to provide such information to her current resort community when she first applied there. Appellant admitted she crossed out information she refused to disclose on the Resident Application and signed and submitted the document on March 06, 2019.

Closing Arguments

Ultimately, the Department argued that it had taken administrative disciplinary action against Salesperson Shelton, LPG, and Valley of the Sun for the license number discrepancy on Appellant’s Contract, so the issue was moot. The Department also argued that Salesperson Shelton’s incorrect license number on Appellant’s Contract did not invalidate the legally binding agreement between Appellant and Sellers. The Department further argued that it had no legal authority to compel Appellant’s title company to return her deposit, therefore the Tribunal could not enforce Appellant’s request.

Appellant argued that Salesperson Sheldon’s incorrect license number use invalidated her Contract, as he had no legal authority to sign the document, which should automatically warrant a return of her $5,000.00 deposit.

CONCLUSIONS OF LAW

This matter lies within the Department’s jurisdiction, and was properly brought before OAH.

The purpose of the Department’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible licensees.

The Department does not own or build housing, instead it manages federally funded programs for housing qualified partners who apply for funding. The Department also provides first time home buying assistance, eviction prevention assistance, foreclosure assistance, and homelessness assistance.

Appellant bears the burden of proof to establish that Department’s Verification was issued incorrectly or unlawfully by a preponderance of the evidence. The Department must establish affirmative defenses by the same evidentiary standard.

“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.”

Ariz. Rev. Stat. § 41-4004(A)(9) authorizes the Department to verify written complaints filed within one year of purchase or installation, whichever is later, from consumers alleging violation(s) by any dealer, broker, salesperson, installer, or manufacturer. The Department is reasonably presumed to have certain expertise, experience, and knowledge with respect to those matters the law provides it authority to inspect, because verification upon inspection is a threshold determination by the inspector which then allows the Department to issue an appropriate order to the alleged violator identified in the complaint pursuant to Ariz. Rev. Stat. § 41-4004(A)(10).

Here, the material facts are not in dispute.

It is undisputed that Appellant had a valid Contract with Valley the Sun, License No. 5875, to purchase a manufactured home located in LPG’s community; one of Valley of the Sun’s licensed branch properties. It is also undisputed that Appellant placed a $5,000.00 deposit in escrow with Stewart Title Company towards the purchase of the home. It is further undisputed that Salesperson Shelton listed an incorrect license number on Appellant’s Contract with Sellers. It is undisputed that Appellant withdrew from the Contract on March 12, 2019, and filed a complaint with the Department on April 09, 2019.

In the case at bar, the Tribunal is tasked with determining whether the Department’s May 21, 2019 Verification was correctly and lawfully issued. The undersigned Administrative Law Judge concludes that it was.

The credible evidence of record reflects that the Department took disciplinary action against Salesperson Shelton for failing to put the correct license number on Appellant’s Contract, but the typographical error did not invalidate the Contract. Moreover, the record reflects that, regardless of whether Appellant is owed a refund of her $5,000.00 deposit from Stewart Title, the Department has no authority to issue such an Order.

Appellant did not refer to any related statutes, or offer any binding legal authority that, would compel the Tribunal to grant her appeal of Verification items 1d and/or 1e.

Because Appellant did not sustain her burden of proof in this matter by a preponderance of the evidence, it follows that her appeal must be dismissed.

RECOMMENDED ORDER

IT IS RECOMMENDED that Complaint 2019-040 be dismissed.

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 days from the date of that certification.

Done this day, March 09, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Carol Ditmore, Director

Arizona Department of Housing