ALJDEC decisions subject to certification as final

20F-BD002-BNK · Arizona Department of Financial Institutions · 2019-10-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 04, 2019 at 1:00 PM. APPEARANCES: No appearance(s) by or on behalf of Rebecca Stuelpnagel (“Respondent”). Assistant Attorney General Eric Schwarz appeared on behalf of the Arizona Department of Financial Institutions (“Department”) with Kelly Luteijn as a witness. Tammy Seto and Dena Benjamin observed. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Order to the Interim Director of the Department. FINDINGS OF FACT Background and Procedure 1. Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license history for License No. 21147. On September 01, 2004, the Department issued Certified Residential Appraiser License No. 21147 to Respondent.[1] Respondent’s license is currently active. The license was last updated on October 25, 2018, and is scheduled to expire on September 30, 2020.[2] 2. On November 16, 2018, the Department received a complaint against Respondent that alleged Respondent was paid in full on October 28, 2018, to appraise a residential property located in Peoria, Arizona by November 03, 2018, but failed to remit a final report or refund by November 03, 2018.[3] The complaint included proof of payment to Respondent for the appraisal at issue, as well as copies of test messages between the complainant (“Complainant”) and Respondent, whereby Complainant iterated the importance of obtaining Respondent’s appraisal in a timely manner due to a pending sale reliant upon the information contained therein, Respondent’s valuation of Complainant’s residence, and Respondent’s promise to remit a refund and complete appraisal to Complainant.[4] 3. The Department numbered the complaint #4103. 4. On November 23, 2018, the Department issued a Complaint Notification Letter to Respondent, and advised that Respondent was required to provide the Department with a written response (“Answer“) to each allegation in the complaint by December 24, 2018, and include a complete copy of her work file.[5] 5. That same day Complainant provided additional information to the Department to substantiate her complaint against Respondent. Specifically, Complainant forwarded an email she received from Respondent on November 17, 2018, whereby Respondent had provided an incomplete copy of her appraisal of Complainant’s property.[6] 6. On December 03, 2018, the Department forwarded the incomplete appraisal to Respondent and instructed her to include a response to the document in her Answer to the Department, due by December 24, 2018. 7. Respondent did not submit her Answer to the Department by December 24, 2018. 8. On January 04, 2019, the Department sent Respondent a demand for her Answer, due immediately.[7] 9. On January 07, 2019, Respondent notified the Department that she had refunded Complainant’s money, but did not provide her Answer or work file. Because Respondent had alleged that she had suffered a medical emergency, the Department granted her a thirty day extension to comply with the Department’s Complaint, due by January 25, 2019. [8] 10. Respondent did not submit her Answer to the Department by January 25, 2019. 11. On January 26, 2019, Respondent submitted her Answer to the Department, along with a copy of a refund check issued to Complainant.[9] Respondent did not provide her work file to the Department. 12. On August 09, 2019, the Department referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on October 04, 2019. Per the Notice of Hearing and Complaint issued on August 13, 2019, the issue to be determined is whether the Department has cause to discipline Respondent’s license based on the following charge(s): Charge 1: A violation of A.R.S. § 32-3635(A). Charge 2: A violation of A.R.S. § 32-3631(A)(8). Charge 3: A violation of A.R.S. § 32-3637(A). Charge 4: A violation of A.R.S. § 32-3637(B). Charge 5: A violation of A.A.C. R4-46-301(A)(3); as incorporated from USPAP 2018-2019 edition.

13. On April 10, 2019, Complainant confirmed to the Department that she had received a refund from Complainant in January 2019.[10] Hearing Evidence 14. The Department called Kelly Luteijn (“Investigator Luteijn”) as a witness and submitted eleven exhibits. The Notice of Hearing and Complaint was also admitted as its own exhibit. 15. Investigator Luteijn testified that Complainant had hired Respondent to appraise her home because Respondent had done so once prior. On no less than three occasions Respondent provided Complainant with a valuation of her property. Although Respondent was paid in full for the job, she failed to remit a final report or timely refund the money she had been paid back to Complainant. 16. Although Respondent was afforded an extension to comply with the Department’s Complaint, Respondent did not submit her work file as directed. Per Respondent, she lost possession of the file. 17. Investigator Luteijn also testified that the 2018-2019 Uniform Standards of Professional Appraisal Practice (“USPAP”), in pertinent parts, had been adopted by the Arizona Revised Statutes (“Ariz. Rev. Stat.”) and Arizona Administrative Code (“Ariz. Admin. Code”). 18. Ultimately, the Department argued that respondent committed multiple violations, which resulted in actual harm to the public, and should have her license indefinitely suspended as a result. CONCLUSIONS OF LAW 1. This matter lies within the Department’s jurisdiction pursuant to Ariz. Rev. Stat. § 32-3601 et seq. The matter was properly brought before the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq. 2. The Notice of Hearing and Complaint the Department mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter.[11] Because the Department mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Department as well.

3. The Department bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[12] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[13] 4. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[14] 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.”[15] 5. Ariz. Rev. Stat. § 32-3631(A)(8) provides, in pertinent part, that the rights of a license or certificate holder as a state- certified appraiser may be disciplined, including suspension or revocation, for willfully disregarding or violating any provisions of this chapter.[16] 6. Ariz. Rev. Stat. § 32-3635(A) provides, in pertinent part, that unprofessional conduct includes “[a] state-licensed or state- certified appraiser shall comply with the standards of professional appraisal practice.”[17] 7. Ariz. Rev. Stat. § 32-3637(A) provides that “[a] state-licensed or state-certified appraiser shall retain a work file for at least five years after preparation of the work file or at least two years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the work file, whichever period of time is greater.” 8. Ariz. Rev. Stat. § 32-3637(B) provides that “[a] state-licensed or state-certified appraiser shall (1) have custody of the appraiser's work file, and (2) make appropriate work file retention, access and retrieval arrangements with the party having custody of the work file.”[18] 9. Ariz. Admin. Code R4-46-301(A)(3)(e) provides, that upon request, Respondent shall provide the Department with a copy of his/her work file.[19] 10. An appraiser must comply with USPAP when obligated by law or regulation.[20] 11. An appraiser must prepare a work file for each appraisal assignment. A work file must be in existence prior to the issuance of any report or other communication of assignment results. A written summary of an oral report must be added to the work file within a reasonable time after the issuance of the oral report.[21] 12. An appraiser must retain the work file for a period of at least five years after preparation. An appraiser must have custody of the wort file, or make appropriate work file retention, access, and retrieval arrangements with the party having custody of the work file. This includes ensuring that a work file is stored in a medium that is retrievable by the appraiser throughout the prescribed record retention period.[22] 13. An appraiser must not willfully or knowingly violate the requirements of the record keeping rule. An appraiser who willfully or knowingly fails to comply with the obligations of the record keeping rule is in violation of the ethics rule.[23] 14. Ariz. Rev. Stat. § 32-3631(E) provides, in pertinent part, that “[i]f the superintendent determines that a state-licensed or state-certified appraiser is in violation of this chapter, the superintendent may take disciplinary or remedial action and may impose a civil penalty not to exceed three thousand dollars per complaint filed with the superintendent pursuant to this chapter.”[24] 15. “[A] statute should be explained in conjunction with other statutes to the end that they may be harmonious and consistent; . . . if statutes relate to the same subject and are thus in pari materia, they should be construed together with other related statutes as though they constituted one law.”[25] 16. In Arizona, because administrative agencies’ interpretations of the statutes that they are charged with implementing are entitled to deference,[26] ambiguities in statutes must be resolved according to the implementing agency’s interpretation.[27] 17. Here, the material facts are not in dispute. 18. The credible evidence of record reflects that Respondent took money from a client for the preparation and delivery of an appraisal report, and failed to timely remit the report or refund the client’s money. Respondent’s conduct resulted in direct harm to her client. 19. The record further reflects that Respondent failed to create and maintain a work file for the underlying assignment at issue, and further failed to provide a copy of said file to the Department upon its request. 20. Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to timely complete Complainant’s appraisal, or timely provide her Answer to the Department along with her work file. These are affirmative defenses that Respondent bears the burden to establish. Because Respondent failed to appear and provide testimony, this burden has not been sustained. Respondent’s absence is a factor in aggravation. The record shows that Respondent failed to timely complete Complainant’s appraisal and only provided a refund after complaint #4103 was filed. Although she was provided an extension, Complainant submitted her Answer late and did not provide her work file for the Department to review, and had no affirmative defense(s) for doing so. 21. Because the Department established by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 32-3631, the Department has also established cause to discipline Respondent’s Certified Residential Real Estate Appraiser license and impose a civil penalty against Respondent. RECOMMENDED ORDER Based on the forgoing, IT IS RECOMMENDED THAT Respondent Rebecca S. Stuelpnagel’s license, Certified Residential Appraiser License No. 21147, be suspended through and until September 30, 2020. IT IS FURTHER RECOMMENDED THAT thirty days after the effective date of the Final Order in this matter, Respondent pay the sum total of $1000.00 in certified funds to the Department as a civil penalty pursuant to Ariz. Rev. Stat. § 32-3631(E). 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, October 09, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Keith A. Schraad, Interim Director Arizona Department of Financial Institutions ----------------------- [1] See https://elicense.az.gov/ARDC_SearchDetail?id=a0Yt000000DT1rNEAT. [2] See Department Exhibit s 1 and 2. [3] See Department Exhibit 3. [4] Id. [5] See Department Exhibit 4. [6] See Department Exhibit 5. [7] See Department Exhibit 6. [8] Id. [9] See Department Exhibit 7. [10] See Department Exhibit 8. [11] See Ariz. Rev. Stat. §§ 41-1092.04, 41-1092.05(D), and 41-1061(A). [12] Ariz. Rev. Stat. § 41-1092.07(G)(2); Ariz. Admin. Code R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [13] See Ariz. Admin. Code R2-19-119(B)(2). [14] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [15] Black’s Law Dictionary at page 1220 (8th ed. 1999). [16] See Department Exhibit 10-C; see also Department Exhibit 10-B. [17] See Department Exhibit 10-A. [18] See Department Exhibit 10-D. [19] See Department Exhibit 11. [20] See Department Exhibit 9. [21] Id. [22] Id. [23] Id. [24] See Department Exhibit 10-C. [25] Pima County by City of Tucson v. Maya Const. Co., 158 Ariz. 151, 155, 761 P.2d 1055, 1059 (1988). [26] See, e.g., Bridgestone Retail Tire Operations v. Industrial Commission, 227 Ariz. 453, 456 ¶ 12, 258 P.3d 271, 274 (2011). [27] See, e.g., Eaton v. Arizona Health Care Cost Containment System, 206 Ariz. 430, 434 ¶ 16, 79 P.3d 1044, 1048 (2003).

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