ALJDEC decisions subject to certification as final

22F-187-REL · Department of Real Estate · 2022-10-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Real Estate License of:

DIANA MERIDA FLORES, holder of License No. SA657480000,

Respondent.

No. 22F-187-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 16, 2022 and September 14, 2022.

APPEARANCES: Attorney Cameron A. Morgan represented Respondent Diana Merida Flores (“Respondent” or “Flores”). Assistant Attorney General James Rolstead represented the Arizona Department of Real Estate (“Department”).

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

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FINDINGS OF FACT

On March 30, 2015, the Department issued real estate sales person License No. SA657480000 to Diana Merida Flores; the license is set to expire on March 31, 2023.

On June 4, 2021, Guadalupe M. Villafon (“Villafon”) contacted the Department, filing a complaint regarding a sales transaction with Flores. Villafon stated:

The realtor I hired to sell my home lied to me and forged my husband and my signatures as I never signed any documents to sell my home. I was told by my realtor that my home was worth 215,000 and that she had a cash buyer from California for 198,000 and that this would be the best offer I would get and for me to accept it. I told her that I did not want to sell my home unless I can purchase another one and she stated that it would not be an issue and not put me and my kids out of a home. However, after reviewing the escrow paperwork I realized the numbers were not making sense. She never stated it was a family member buying my property or that I would be paying out commissions and closing costs. In addition, I never signed a listing agreement or a purchase contract. This agent has stolen my home and I feel taken advantage of my inability to read legal documents. I have attached a copy of the contract that I never signed and could only think that she used a fake email address. ...

The Department assigned an Investigator, Linda Bevins, who gathered information and reviewed the matter. Villafon provided to the Department copies of the Purchase Contract, Closing statements, mortgage payoff records, credit union judgement, Quit Claim Deed, Warranty Deed, and other related documents; however, Villafon did not include any copy of a listing agreement.

The Purchase Contract names Villafon as the Seller, Manuel Flores Jr. as the Buyer, a sale price of $198.750.00 and a scheduled close of escrow on or about March 31, 2021.

The Purchase Contract names Flores as the real estate agent for both Seller and Buyer. However, the Purchase Contract does not include a written disclosure regarding Flores’ relationship to the Buyer nor does it include a written authorization for Flores’ representation of both parties.

The Purchase Contract is electronically signed, dated March 24, 2021.

Closing and settlement records (dated March 31, 2021), and other closing documents, contain Villafon’s hand-written signature on April 2, 2021.

Villafon executed a Warranty Deed on April 2, 2021, transferring ownership to Manuel Flores, Jr. on April 2, 2021.

In May 2021, the Department issued a subpoena to DocuSign regarding any Envelopes and Certificates of Completion on or about March 24, 2021 through Flores’ account and e-mail address.

In June 2021, Ms. Bevins contacted Flores and Flores’ broker, Theodore Castro, with regard to the Case No. C21-000261, investigation. Ms. Bevins requested that Flores provide certain information and documents regarding the sale transaction, specifying a request for the electronic signature records and the executed listing agreement with Villafon and her ex-husband. Villafon did not provide the electronic signature records.

After he discussed the investigation with Flores, Mr. Castro provided the Department with a response including supplemental information regarding the background and circumstances of the transaction.

Ms. Bevins noted that in Flores’ written statement, Flores’ confirmed that she prepared a Purchase Contract and submitted it to Villafon for electronic signatures; further, that she was present with Villafon and her ex-husband at the Title Company for the Quit Claim and was also present with Villafon for the Close of Escrow. In her statement, Ms. Flores indicated that Villafon was 100% aware of everything she signed.

Following its investigation, the Department offered a settlement agreement to Flores and the Department and Flores executed a Consent Order dated September 23, 2021. In the Consent Order, Flores admitted that she had failed to disclose the familial relationship with the buyer and that she had failed to obtain the written consent or the parties acknowledging that she was representing both the seller and the buyer in the transaction. Flores was assessed a $2,000.00 penalty and agreed to additional continuing education.

In September 2021, Villafon sent additional information to the Department.

The Department opened a new investigation, Case No. C21-000526. The Department’s Investigator, Brett Biesenthal, gathered information and reviewed the matter. This investigation focused on the Purchase Contract and the electronic signatures thereon.

On October 15, 2021, the Department subpoenaed Flores for the digital signature records for the Purchase Contract, as would be available through DocuSign Envelope ID #52564F12-770C-4151-8E5E-3BD019AC2B3E. The subpoena clearly reflects the Case No. C21-000526. The Department’s records demonstrate that Flores never responded.

On October 15, 2021, the Department subpoenaed DocuSign, regarding the “Certificate of Completion/History,” for DocuSign Envelope ID #52564F12-770C-4151-8E5E-3BD019AC2B3E.

On October 15, 2021, the Department also contacted Flores’ broker, Theodore Castro, with regard to the updated subpoena. When Ms. Castro responded on the 15th asking whether anything was necessary to be provided, stating “since it was settled previously,” the Department responded “Yes, the Department requests the documents outlined in the subpoena.”

Neither Flores nor Castro provided any digital signature records.

The Department received from DocuSign the Certificate of Completion regarding Envelope ID #52564F12-770C-4151-8E5E-3BD019AC2B3E. The DocuSign Certificate of Completion documents that, for this transaction, there was only one envelope originated by Flores, sent to Flores’ e-mail address, delivered to Flores’ e-mail address, and then electronically signed. The only electronic signature was that of Manuel Flores. Jr. on March 24, 2021 at 6:23 p.m.

The DocuSign records further indicate additional envelopes and signatures. DocuSign records document that, on March 25, 2021 between 01:20:53 a.m. and 01:24:06 a.m., Flores originated a further envelope, sent it to “Manuel Flores, Jr.” at her e-mail address and it was received, viewed by Manuel Flores, Jr., and “signed,” and a copy sent to Flores, whereupon it was viewed by Manuel Flores, Jr., and “signed,” and a second copy sent to Flores.

On December 17, 2021, the Department issued its Notice of Hearing and Complaint regarding the allegations and possible violations.

At hearing, the Department’s position is that grounds exist to suspend or revoke Flores’ Licensure due to the following violations now at issue in this matter:

Flores violated A.R.S. § 32-2153(A)(22) through negligence in her actions in this matter.

Flores violated A.R.S. § 32-2153(B)(5) through fraud or dishonest dealings in her actions in this matter.

Flores violated A.R.S. § 32-2153(B)(10) through her failure to respond in the course of an investigation by providing the documents required under the Department’s subpoena.

At hearing, Mr. Biesenthal testified regarding the Department’s issue with the electronic signatures of Villafon and her ex-husband on the Purchase Contract not having a legible signature identification number, which exist for all DocuSign signatures. Further, that the DocuSign Certificate of Completion only demonstrated the signature of Mr. Flores.

At hearing, Flores testified that she and Manuel Flores, Jr. went to the Villafon home on March 24, 2021. Flores testified that she connected to a hot spot, opened the contract through DocuSign, and e-mailed it to herself and that Mr. Flores signed it. Flores testified that Mr. Flores remained in the car while she went inside to obtain Villafon and Mr. Benitez signatures. Ms. Flores testified that, for each signature, she had to open the contract and, through DocuSign, send an email to herself for the document to be signed. Flores testified that she printed out a copy the next day.

Flores provided to the hearing record a copy of a listing agreement, signed by herself and Villafon on March 15, 2021.

Flores testified that she had known Villafon for 4 or 5 years, as she was a nail technician, that they had become friends and that Villafon knew Flores’ husband. Flores testified that, after Villafon’s divorce, Villafon wanted to list the home and sell it. Flores testified that, due to the poor condition of the home, Flores offered to have her husband purchase it for $198,750.00 with no inspection and no repairs required. Flores testified that at escrow, the only thing that Villafon questioned was the existing judgment and how that would be paid (either through the closing or that she would have to make payments).

Regarding not responding to the October 2021 subpoena, Flores testified that she did not think she needed to respond because the case was over with the settlement agreement. Flores stated that she read the message/subpoena and disregarded it. Flores also testified that “we” disregarded it because they thought it was closed out. Flores testified that she did not contact the Department and that her broker was going to investigate it; noting that he was responsible to supervise her. Flores also testified that she was unaware if he got a response and that they had no other conversations about the subpoena.

Regarding the DocuSign records, Flores testified that she did not know about DocuSign records and that when she tried, “later,” to pull up the DocuSign records, all they could locate was “the document and email.” Flores stated that she did not have control of the DocuSign documents.

At hearing, Villafon testified she only knew Flores about 3 years and did not know Flores’ husband. Villafon testified that neither she nor her ex-husband had initialed/signed the Purchase Contract; she indicated that, at that time, she did not have a computer. Villafon testified that she had never signed a listing agreement. Villafon testified that she had not wanted to sell the home until she found another home and that it was confusing to her to be selling the house the last week of March. Villafon stated that Flores told her it was being purchased by investors from California, as a cash offer, but Villafon had not received an “offer” from anyone; only that Flores told her it was a good offer and that was why Villafon had accepted it. Villafon testified that she had not known about the judgment and she felt Flores should be “responsible” for that.

Villafon first testified that that she did not read English; she later said that it wasn’t about “reading” the paperwork, but that when/if she read it, she might not understand the paperwork. Villafon indicated that, at the Title Company, Flores and Julio Beltran were speaking to her, explaining documents, in Spanish. Villafon stated that she had trusted Flores but now felt that Flores had not helped her in this matter because Villafon had not known about the commission.

The Department argued that the evidence of record provides grounds for revocation of Flores’ licensure based on the demonstrated violations. The Department argued that Flores ignored the Department’s investigation and that it was not credible that her broker did not tell her about the Department’s response in October of 2021 about the subpoena. The Department argued that all Flores needed to do for this investigation was supply the DocuSign documents regarding the electronic signatures.

Flores argued that Flores had not known she was being investigated again because the Department had not given her notice she was being investigated and that, given the settlement agreement, Flores appropriately believed the Villafon “complaint” issues were over and done. Flores argued that the issue of not signing the Purchase Contract is a red herring because Villafon knew she was selling the home, Villafon had signed all the sales transaction documents, and the transaction had been completed. Flores argued that the totality of the evidence demonstrated that it was a valid contract. Flores further argued that the Department did not need to subpoena DocuSign documents from Flores, and she did not need to supply them, because the Department already had them. Finally, Flores argued that the Department’s case should be dismissed.

CONCLUSIONS OF LAW

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

The Department bears the burden of proof to establish cause to discipline Respondent’s license and any factors in aggravation of any penalty to be imposed 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 as follows:

A. The commissioner may suspend or revoke a license . . . issued under this chapter if it appears that the holder . . . , within five years immediately preceding, in the performance of or attempt to perform any acts authorized by the license or by this chapter, has:

...

22. Demonstrated negligence in performing any act for which a license is required.

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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 if it appears that the holder or applicant has:

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5. been guilty of any conduct, whether of the same or a different character than specified in this section, that constitutes fraud or dishonest dealings.

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10. Failed to respond in the course of an investigation or audit by providing documents or written statements.

The hearing record established that Flores failed to respond in the course of an investigation by providing documents or written statements. The October 15, 2021 subpoena was not the same as the June 11, 2021 letter; while the June 11, 2021 letter requested electronic signature records, the October subpoena was very specific as to the DocuSign records being requested. The two requests contained different case numbers. In the event that Flores was confused about the second request, the best response would have been to respond to the Department and not have her broker “investigate.” Even if having her broker reach out was appropriate, as a licensee, Flores is responsible to assure she is in compliance with applicable laws and rules. Flores’ lack of response is a violation of A.R.S. § 32-2153(B)(10).

The hearing record established that there is no documentation that Villafon and her ex-husband signed the Purchase Contract on March 24, 2021. The DocuSign Certificate of Completion demonstrated only one opening of the contract on March 24, 2021 and one e-mail for signature; that signature was by Manuel Flores, Jr. The DocuSign Certificate provides a signature identification number for Manuel Flores, Jr. The hearing record lacks evidence of DocuSign identified signatures for Villafon or her ex-husband. The additional DocuSign information on the March 25, 2021 e-mails opened by Flores and sent to Flores’ e-mail address and the subsequent “review” and “signature” two times is inexplicable in the absence of an effort by Flores herself to correct something or create something that did not exist. In this case, Flores provided no admission or explanation of the need to access the document on March 25, 2021. Therefore, the existence of initials and signatures made by Villafon and her ex-husband on the Purchase Contract is not supported by the evidence. Flores is in violation of A.R.S. § 32-2153(A)(22) and (B)(5).

The hearing record demonstrated acts and/or conduct by Flores, as investigated in Case Number C21-000526, that were violative of A.R.S. § 32-2153(A)(22) and (B)(5) and (B)(10). The Department has established cause to discipline Flores’ real estate licensure under A.R.S. § 32-2153(A) and (B). The Administrative Law Judge concludes that, given the specific circumstances of this case, the Department should consider revocation of Flores’ licensure.

RECOMMENDED ORDER

IT IS ORDERED that Diana Merida Flores License SA657480000 be revoked.

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, October 11, 2022.

/s/ Kay Abramsohn

Administrative Law Judge

Transmitted electronically to:

Louis Dettorre, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

[email redacted]

[email redacted]

[email redacted]

Cameron A. Morgan, Esq.

[email redacted]

Counsel for Respondent

James Rolstead

Assistant Attorney General

[email redacted]

By Miranda Alvarez

Legal Secretary