ALJDEC

98A-H1969-REL · Department of Real Estate · 1999-02-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 1, 1999; 9:30 A.M.; Phoenix, Arizona APPEARANCES: Arizona Department of Real Estate: Michael T. Denious, Esq., Assistant Attorney General Respondent: Radford T. Pinckard ADMINISTRATIVE LAW JUDGE: George A. Schade, Jr.

Based upon the evidence presented at the hearing, Administrative Law Judge George A. Schade, Jr. submits this Recommended Decision and Order to the Commissioner of the Arizona Department of Real Estate (“Commissioner”). FINDINGS OF FACT 1. On December 7, 1998, the Director of the Division of Administrative Actions, of the Arizona Department of Real Estate (“Department”), issued a Notice of Hearing and Complaint, setting a hearing on February 1, 1999. Pursuant to Arizona Revised Statutes (“A.R.S.”) ' 41-1092.01, the hearing was assigned to the Office of Administrative Hearings. 2. The Department’s Complaint alleged two counts. 3. On February 1, 1999, a hearing was held. The Department presented twelve exhibits, and Mr. Pickard testified. Official notice was taken of the Department’s Notice of Hearing and Complaint. 4. Mr. Pinckard agreed to the factual allegations and legal conclusions contained in Paragraphs No. 1, 2, 3, 4, 10, 11, 12, 13, 14, 15 (as amended), 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, and 27 of the Department’s Notice of Hearing and Complaint. Paragraph No. 15 was amended to state as follows: “Pinckard did not return Holloway’s $500 earnest money deposit, despite one telephone message left by Holloway asking that Pinckard return the check to her.”

Paragraphs No. 1 through 4 state the factual allegations of Count I, and Paragraphs 10 through 20 state the factual allegations of Count II. All of the paragraphs agreed to by Mr. Pinckard are adopted and are incorporated by reference. 5. Mr. Pinckard did not personally receive a copy of the Final Judgment (Department’s Exhibit C) entered on February 18, 1998, until August, 1998, because, as he testified, in February, 1998, he was not living in the house to which the copy of the proposed judgment was mailed, and his former wife did not give him his accumulated mail until August, 1998. He and his former wife were going through a marital dissolution at that time, and he had moved from his residence to a local motel. 6. A copy of the proposed Final Judgment was mailed to him on January 30, 1998, to his former residence at 3726 East Salinas, Phoenix, Arizona 85044. There is no evidence showing that the judgment should have been mailed to an address different from this one. 7. On his application to renew his real estate salesperson’s license, filed on February 27, 1998, Mr. Pinckard stated that his mailing address was 3726 East Salinas, Phoenix, Arizona 85044. 8. Mr. Pinckard retained an attorney to represent him in the matter which led to the February 18, 1998, judgment, but he did not remember when the attorney had ceased representing him. 9. When Mr. Pinckard filed his application to renew his real estate salesperson’s license on February 27, 1998, he knew he was being investigated by the Office of the Attorney General, and he had been served the complaint. He did not, however, know that a Final Judgment had been entered on February 18, 1998. 10. After receiving the copy of the judgment in August, 1998, Mr. Pinckard did not inform the Department of the judgment. 11. Mr. Pinckard has not informed his designated broker or his immediate supervisor (his branch’s Office Manager) of the exact nature and contents of the February 18, 1998, Final Judgment. 12. Mr. Pinckard was credibly repentant of his actions regarding the $500.00 earnest money check received from Ms. Katie B. Holloway. He kept these funds and used them for “Christmas shopping.” 13. Mr. Pinckard has repaid his designated broker the $500.00 which the broker paid to Ms. Holloway in July, 1998. 14. Mr. Pinckard’s defense to his actions regarding Ms. Holloway’s $500.00 earnest money check was that he was going through a difficult and trying time in his life, namely, a marital dissolution and an investigation by the Office of the Attorney General. He testified he regretted his actions and omissions during that time. CONCLUSIONS OF LAW A.R.S. § 32-2153 The provisions of A.R.S. § 32-2153 pertinent to this case are: “A. The commissioner may suspend or revoke a license, deny the issuance of a license or deny the renewal or the right of renewal of a license issued under the provisions of this chapter if it appears that the holder or applicant, within five years immediately preceding, in the performance of or attempt to perform any acts authorized by the license or by this chapter, has: *** 3. Disregarded or violated any of the provisions of this chapter or any rules adopted by the commissioner. *** 9. Failed, within a reasonable time, to account for or to remit any monies, to surrender to the rightful owner any documents or other valuable property coming into the licensee's possession which belong to others, or to issue an appraisal report on real property or cemetery property in which the licensee has an interest, unless the nature and extent of the interest are fully disclosed in the report. *** 16. Commingled the money or other property of the licensee's principal or client with the licensee's own or converted that money or property to the licensee or another.

B. The commissioner may suspend or revoke a license, deny the issuance of a license or deny the renewal or the right of renewal of a license issued under the provisions of this chapter when it appears that the holder or applicant therefor has:

1. Procured or attempted to procure a license under the provisions of this chapter for himself or another by fraud, misrepresentation or deceit, or by filing an original or renewal application which is false or misleading. *** 3. Made any substantial misrepresentation. *** 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. *** 7. Not shown that the holder or applicant is a person of honesty, truthfulness and good character. *** 10. Violated any federal or state law, regulation or rule that relates to real estate or securities or that involves forgery, theft, extortion, fraud, substantial misrepresentation, dishonest dealings or violence against another person 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.”

A.R.S. § 32-2151.01(D) states “All licensees shall promptly place all cash, checks or other items of value received as payment in connection with a real estate transaction in the care of the designated broker.” A.R.S. § 32-2160.01(A) states in pertinent part: “Any…salesperson who is subject to the jurisdiction of the department and who has violated any provision of this chapter or any rule or order adopted or issued by the commissioner…may be assessed a civil penalty by the commissioner, after a hearing, in an amount not to exceed one thousand dollars for each infraction.”

Rule R4-28-1101(A), Ariz. Admin. Code, states in pertinent part, “A licensee owes a fiduciary duty to his client and shall protect and promote the interests of the client.” CONCLUSIONS OF LAW 1. The Commissioner has authority to enter an appropriate order in this matter. A.R.S. §§ 32-2107 and 32-2153. 2. Mr. Pinckard holds a real estate salesperson’s license and did so during 1998. 3. Mr. Pinckard did not answer truthfully Question No. 5 on his application for renewal of real estate salesperson’s license which was filed on February 27, 1998. This failure was a “substantial misrepresentation” on his application, which would be violations of A.R.S. §§ 32-2153(B)(1) (“procure a license…by…misrepresentation”) and 32- 2153(B)(3). But he was not aware of the entry of the Final Judgment some nine days earlier. This issue is resolved in favor of Mr. Pinckard, but it is a close disposition. Although Mr. Pinckard testified he was not residing at 3726 East Salinas, Phoenix, Arizona 85044, in February, 1998, he gave this address as his mailing address on his application for a license renewal. The application he completed provided the same address to where the copy of the proposed judgment had been mailed some four weeks earlier. More credibility is given to his testimony at the hearing that in February, 1998, he was going through a difficult period in his life, accounting for his lack of knowledge of the judgment's entry. 4. Mr. Pinckard has been guilty of conduct which constitutes “dishonest dealings.” The Final Judgment entered on February 18, 1998, found that Mr. Pinckard had committed violations of both the Arizona Consumer Fraud Act, A.R.S. § 44-1521, et seq., and the Arizona Pyramid Promotional Schemes Act, A.R.S. § 44-1731, et seq. This conduct constitutes a violation of A.R.S. § 32-2153(B)(5). 5. Mr. Pinckard violated A.R.S. § 32-2151.01(D) by failing to “promptly place” in “the care of [his] designated broker” the $500.00 earnest money check which he received from Ms. Holloway for the purpose of completing a real estate transaction. This failure also constitutes violations of A.R.S. § 32-2153(A)(3) and Rule R4-28-1101(A), Ariz. Admin. Code. 6. Mr. Pinckard’s failure “to account for or to remit” to Ms. Holloway, “within a reasonable time,” her $500.00 earnest money check constitutes violations of A.R.S. § 32-2153(A)(9) and Rule R4-28-1101(A), Ariz. Admin. Code. 7. Mr. Pinckard’s unlawful retention and use of Ms. Holloway’s $500.00 earnest money check for his personal purposes constitutes a violation of A.R.S. § 32-2153(A)(16). 8. Mr. Pinckard’s actions and omissions regarding the handling of Ms. Holloway’s $500.00 earnest money check constitute a violation of A.R.S. § 32-2153(B)(10). 9. The totality of the evidence does not establish that Mr. Pinckard is a person without “honesty, truthfulness and good character.” A.R.S. § 32- 2153(B)(7). 10. Grounds exist for the assessment of a civil penalty in the total amount of $1,000.00 for the violations of A.R.S. §§ 32-2151.01(D) and 32- 2153(A)(3), -(A)(9), -(A)16), -(B)(5), and -(B)(10). A.R.S. § 32- 2160.01(A). RECOMMENDED ORDER It is recommended that the Commissioner suspend Mr. Pinckard’s real estate salesperson’s license for a period of two years and assess him a civil penalty in the amount of $1,000.00. SUBMITTED this 4th day of February, 1999.

George A. Schade, Jr. Administrative Law Judge

The original Recommended Decision and Order of the Administrative Law Judge was mailed on February 4, 1999, for distribution to the parties, to:

Jerry A. Holt Real Estate Commissioner Arizona Department of Real Estate 2910 North 44th Street, Suite 100 Phoenix, Arizona 85018

George A. Schade, Jr. -----------------------

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