ALJDEC

98A-H1947-REL · Department of Real Estate · 1999-02-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 21, 1999

APPEARANCES: No one appeared on behalf of Respondent; Assistant Attorney General Moira McCarthy appeared on behalf of the State of Arizona.

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

This disciplinary action brought by the Arizona Department of Real Estate (“Department”) concerns allegations that Lee Jane Hunter (“Licensee”) was negligent and failed to perform professional duties while practicing as a real estate salesperson. As noted above, Licensee did not appear at the hearing to put forth any evidence in defense of the allegations; therefore, the State’s evidence is uncontested. The State presented evidence and testimony at the hearing and, based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding violations and recommending imposition of a civil penalty. FINDINGS OF FACT Notice of Hearing 1. Licensee’s last known address on record with the Department is a Phoenix address on Dunlap Avenue. (Exhibit L.) The Department mailed correspondence to that address in April 1998 that was returned by the post office marked “Attempted: Not Known.” (Id.) During the investigation of this case, Licensee told the Department’s Investigator in November 1998 that she had a new address in Glendale, Arizona, on Olive Street. The Department mailed, by certified mail, the Notice of Hearing and Complaint for this case to the Olive address in December 1998. (Id.) That mail was forwarded by the post office to a Phoenix address on Pinchot Avenue and delivery was attempted on December 11, 16, and 26, 1998. (Id.) The notice was returned marked “Unclaimed.” (Id.) Allegations 2. Licensee was issued a real estate salesperson’s license in 1993. During the period at issue in this matter, she was employed as a salesperson by Nu-Way Realty. Licensee’s license expired on September 30, 1997. 3. In October 1995, Licensee was the agent for Regis and Kassandra Johnson, who became interested in buying a house from Steven and Pam Kobernick. On October 25, 1995, the Johnsons and Kobernicks came to the following lease/purchase agreement. The Johnson’s would buy the home for $67,000.00, with escrow to close on March 10, 1996. The Johnson’s would immediately make a $700.00 earnest money deposit and would make a down payment at close of escrow, then assume the existing loan. Furthermore, beginning November 10, 1995, the Johnson’s would rent the home for $700.00 a month until close of escrow. The parties signed both a rental agreement and a purchase contract containing those terms. (Exhibits A and B.) The Johnson’s tendered a personal check for $700.00, which Licensee was to put in escrow. 4. Later that day (or the next day), the Johnson’s told Licensee that their checkbook had been stolen and that they were closing the account and would need to replace the check they had written. They asked Licensee to hold the check until they replaced it. Licensee agreed. 5. Licensee put the check and signed agreements into a filing cabinet and forgot them. She did not tell the Kobernicks or their agent about it, nor did she tell her designated broker anything about the transaction. In fact, her designated broker did not know of the existence of the transaction until several months later. 6. At about the same time that the Johnson’s asked Licensee to hold the check, the Kobernicks agreed to let the Johnson’s move in earlier than November 10, 1995. They agreed that the lease would run from November 1, 1995, to March 1, 1996. Licensee failed to amend the rental agreement to reflect that change. 7. During the next few months, the Kobernicks had trouble collecting rent from the Johnsons. On January 10, 1996, they contacted Nu-Way Realty to get some help. Michael Cardwell, a broker at Nu-Way, could not find any record of the transaction and contacted Licensee. The documents were still in the filing cabinet; Licensee gave them to Cardwell. He immediately deposited the check into Nu-Way’s trust account. The check was returned for insufficient funds. 8. Cardwell instructed Licensee to contact the Johnsons, get the $700.00 replaced, and help the Kobernicks get rent that was past due. Licensee obtained new checks from the Johnsons, one to replace the missing escrow funds and one for past rent; however, these checks also bounced. 9. Nu-Way issued $700.00 to the Kobernicks out of its own funds. Licensee obtained certified funds from the Johnsons for the rent due the Kobernicks. Cardwell also prepared an addendum to the agreements that incorporated all the changes the Kobernicks and Johnsons had agreed to, which all parties signed. 10. In February 1996, the Kobernicks instructed Nu-Way to begin the eviction process for failure to pay rent. In March 1996, the Johnsons left the premises. CONCLUSIONS OF LAW 1. The State bears the burden of showing, by a preponderance of the evidence, that a licensee has violated the statutes regulating the licensee’s practice. Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). The State has met its burden. Notice of Hearing 2. The record shows that Licensee received sufficient service of notice of the hearing, as required by A.R.S. § 41-1092.04. The statute requires only that notice be deposited in the mail by certified mail to the last known address of a licensee; it does not require actual notice. Violations 3. Even though Licensee’s license expired in 1997 and the time for late renewal has lapsed, the Commissioner retains jurisdiction to take action against Licensee pursuant to A.R.S. § 32-2153(D). 4. Licensee has violated A.R.S. § 32-2153(A)(22), by negligently performing her duties as a salesperson. 5. Licensee has also violated A.R.S. § 32-2153(A)(3), by failing to comply with A.R.S. § 32-2151.01(D), which requires all licensees to give over to their designated broker all cash and checks received as payment. 6. Moreover, by failing to immediately give the documents and check to her broker, or to do so within a few days, and by failing to make the broker aware of the transaction, Licensee has violated A.R.S. §§ 32- 215(A)(9) (failure to account for or remit monies) and 32-2153(A)(3) (violation of a statute or rule), namely Arizona Administrative Code (A.A.C.) R4-28-1101(A) (failure to deal fairly with all parties to a transaction) and A.A.C. R4-28-1101(C) (failure to perform expeditiously). 7. Pursuant to A.R.S. §§ 32-2153(D)(3) and 32-2160.01(A), the Commissioner has authority to impose a civil penalty of up to $1,000.00 for each violation. Although these violations are not willful, they represent a serious failure by Licensee. The Assistant Attorney General has recommended civil penalties in the amount of $2,000.00 and this Administrative Law Judge recommends the same.

. . .

. . . RECOMMENDED ORDER IT IS RECOMMENDED that the Commissioner impose civil penalties of $2000 on Lee Jane Hunter for the four statutory violations found above. It is recommended that the Commissioner require Ms. Hunter to pay the entire civil penalty within 30 days of the date that the Commissioner’s Order becomes effective.

Done this 12th day of February, 1999.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Eric A. Bryant Administrative Law Judge

Original mailed this ___ day of February 1999, to:

Mr. Jerry Holt, Commissioner ATTN: Bonnie Hollon Arizona Department of Real Estate 2910 North 44th Street, Suite 100 Phoenix, AZ 85018

By ___________________________ -----------------------

Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826