ALJDEC

99A-021-REL · Department of Real Estate · 1999-04-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 16, 1999; 10:00 A.M.; Phoenix, Arizona APPEARANCES: Petitioner: John Anthony Fioramonti Address: 4433 East Fifth Street, Tucson, Arizona 85711 Arizona Department of Real Estate: Michael T. Denious, Esq., Assistant Attorney General ADMINISTRATIVE LAW JUDGE: George A. Schade, Jr.

This is an appeal from the denial of an application for a real estate salesperson’s license pursuant to Arizona Revised Statutes (“A.R.S.”) § 32- 2153. 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 PROCEDURAL HISTORY 1. On January 7, 1999, Mr. Fioramonti submitted to the Arizona Department of Real Estate (“Department”) an original application for a real estate salesperson’s license (the “application”). 2. On February 3, 1999, the Department notified Mr. Fioramonti of its decision to deny his application. 3. On February 16, 1999, Mr. Fioramonti timely requested an administrative hearing to appeal the Department’s decision. 4. On March 11, 1999, the Director of the Department’s Division of Administrative Actions issued a Notice of Hearing on Denial of License setting a hearing on April 16, 1999. Pursuant to A.R.S. ' 41-1092.01, the hearing was assigned to the Office of Administrative Hearings. 5. The notice alleged grounds existed for the denial of Mr. Fioramonti’s application pursuant to A.R.S. §§ 32-2153(B)(3), -(B)(5), -(B)(7), and -(B)(10). 6. On April 16, 1999, a hearing which lasted two hours was held. The Department presented seven exhibits. Although the Department had Mr. Darryl S. Churchill, its assigned investigator, available for testimony, the hearing proceeded in such a manner that Mr. Churchill did not testify. Mr. Fioramonti testified and presented seven exhibits. The Commissioner already has copies of all the exhibits submitted. MR. JOHN ANTHONY FIORAMONTI 7. Mr. Fioramonti is 47½ years old. He has been married to the same woman for 26 years, and he has two children, a boy who will be entering Arizona State University this coming Fall and a girl who is a high school freshman. Both of his children have been honor roll students. His wife has been employed as a school teacher in Tucson for over twenty years (and has been nominated three times for School Teacher of the Year). 8. Mr. Fioramonti has resided in Tucson continuously since mid-1973 (in the same house for fifteen years). He expects to continue living in Tucson for at least five more years, depending on where his two children attend university. 9. Mr. Fioramonti graduated from Illinois State University in 1973. That same year, he entered the College of Law at the University of Arizona, from which he graduated in May, 1976. As a law graduate, he earned the distinction of Highest Honors. In law school he was a member of the Law Review (he authored a case note for the Review), and he was a member of the Moot Court Board. The Administrative Law Judge takes official notice that membership in Law Review and Moot Court are high achievements in law school. 10. In 1976, Mr. Fioramonti successfully passed the Arizona State Bar examination (it appears he passed on the first try), and was admitted to practice law in Arizona. 11. Mr. Fioramonti practiced law in Tucson from October, 1976, to December 1, 1993, when the Supreme Court of Arizona suspended him from the practice of law for three years, an action more fully described below. 12. In his law practice between 1976 and 1993, Mr. Fioramonti emphasized real estate law and commercial transactions. He developed, in his words, a “strong expertise in commercial real estate.” 13. Mr. Fioramonti is currently employed as a loan officer for Gold Coast Mortgage Group in Tucson. He began this employment in October, 1998. Previously, and on an ongoing basis, he has been employed as a part-time legal assistant doing research for several attorneys in Tucson. He was also involved in real estate development. His work history is more fully described in his application. 14. On July 18, 1998, he took the Arizona real estate salesperson examination (“the examination”) and successfully passed it. 15. He completed a review course prior to taking the examination. During this review course, he learned that his application might not be approved due to his prior suspension from the practice of law. He spoke with the staff in the Tucson office of the Department. Rather than withdrawing from the review course, he chose to continue with the application process. 16. Mr. Fioramonti presented six letters of reference, previously submitted to the Department with his application, from employers (including two attorneys in Tucson), prior law clients and business associates. All the letters are positive and favorable. THE SUSPENSION FROM THE PRACTICE OF LAW 17. Paragraphs No. 2, 3, 4, 5, 6, and 7 of the Notice of Hearing on Denial of License (issued on March 11, 1999) are adopted and are incorporated by reference. 18. In the proceeding before the State Bar of Arizona (“State Bar”), Mr. Fioramonti was charged with four counts. Counts One and Two charged Mr. Fioramonti with lack of competence (Ethical Rule 1.1), representing a client without her consent (Ethical Rule 1.2), and failing to keep his client reasonably informed about the status of the case and maintain adequate communication (Ethical Rule 1.4). Count Three, charging a conflict of interest (Ethical Rule 1.7), was dismissed. Count Four charged Mr. Fioramonti with offering evidence he knew to be false (Ethical Rule 3.3), knowingly making false statements of material fact during the State Bar investigation (Ethical Rule 8.1), and representing that client interview notes taken on November 4, 1985, were contemporaneously made when he knew in fact they were not (Ethical Rules 8.4(c) and (d). The Disciplinary Commission of the Supreme Court of Arizona considered that Count Four, which “concerns [Mr. Fioramonti’s] handling of his response to the Bar complaint,” was “the most serious charge.” Department’s Exhibit Letter C, page 4. 19. The Disciplinary Commission adopted the hearing committee’s findings of fact and conclusions of law that Mr. Fioramonti had violated Ethical Rules 1.1, 1.2, 1.4, 8.1, and 8.4(c) and (d). The Commission, however, rejected the hearing committee’s recommendation that Mr. Fioramonti be disbarred and recommended that he be suspended for three years. 20. The essential allegations of Count Four were that Mr. Fioramonti had: a. Represented to the State Bar in his initial response to the Bar’s investigation that the client interview notes he had submitted to the State Bar were the original notes taken on November 4, 1985, when in fact, he had prepared the notes submitted to the State Bar in 1989, or four years after the client interview. In other words, the notes he submitted to the State Bar in 1989 were recreated, and not original, notes. b. In February, 1991, to respond to the State Bar’s continuing investigation, he tried to obtain, from other attorneys, three affidavits, and did obtain one affidavit, he knew to be false. 21. The truth and accuracy of the contents of the client interview notes Mr. Fioramonti recreated in 1989 were not in issue, but rather it was the date the notes had been created that was in issue. The contents of the recreated notes were deemed accurate. 22. Mr. Fioramonti obtained only one affidavit, which he used to try to obtain the other two affidavits. He was unable to obtain the other two affidavits because the attorneys would not sign them. Mr. Fioramonti did not use in the State Bar proceeding the single affidavit he had obtained 23. In early April, 1991, Mr. Fioramonti “came clean” or disclosed his unethical conduct to the State Bar. The Disciplinary Commission considered this action favorably. The Commission reported: “[R]espondent ‘came clean’ before the hearing. Respondent states that, upon learning that he was being charged with falsifying evidence during a Bar investigation, he panicked and acted in a manner totally out of character by attempting to obtain false affidavits. He did not, however, use those affidavits, and has testified that he never intended to use them. Respondent did not testify falsely under oath; Fresquez [note: another lawyer discipline opinion] did. Regardless of the motivation behind it, the majority of the Commission believes Respondent’s ‘coming clean’ distinguishes his conduct from Fresquez.[1]

The majority is also concerned that disbarring Respondent would send the wrong message to the members of the State Bar. There was evidence before the hearing committee to indicate that Respondent’s deception would never have been proven. By coming forward, Respondent, albeit belatedly, acknowledged the wrongful nature of his conduct, and put himself at the mercy of the disciplinary process. To disbar Respondent for the reasons in Fresquez would place no value on confessing misconduct, and would potentially encourage other respondents to maintain an unjustified adversarial position.

Other significant differences also exist between Fresquez and the instant matter. Unlike Fresquez, Respondent’s falsified notes impacted only upon Respondent; he did not involve a client in his deceit. Further, in his attempts to obtain the false affidavits, Respondent did not pressure anyone into signing, and ultimately did not use the one false affidavit he had obtained. In general, Fresquez’s deceptions involved clients and injured them; Respondent’s actions impacted only upon himself.” Department’s Exhibit Letter C, pages 7-8.

24. The Arizona Supreme Court suspended Mr. Fioramonti for three years. The Court stated in pertinent parts of its opinion: “That the acts in this case all took place during one series of events, and that the respondent enjoys a good reputation and has practiced for a long period of time with no prior disciplinary record, suggests that although egregious, respondent’s acts appear to be the aberrational result of panic. If given a second chance, we believe it is likely that respondent will be able properly to discharge his professional duties to his clients, as he has in the past.” (Emphasis added.) Department’s Exhibit Letter D, page 18, or 176 Ariz. 182, 189, 859 P.2d 1315 (1993).

25. The current balance of Mr. Fioramonti’s obligation to the State Bar for costs, originally 10,561.31, is approximately $16,000.00 (with accrued interest). Mr. Fioramonti has not made any payments on this judgment since it was imposed by the State Bar. Mr. Fioramonti testified he has not had the financial means to make payments on this obligation. MR. FIORAMONTI’S PROFESSIONAL PLANS 26. If his application is approved, Mr. Fioramonti plans to pursue a career in commercial real estate in Tucson. His interest is more in commercial, for example, apartments, than in residential real estate. 27. Prior to and after taking the real estate salesperson examination, Mr. Fioramonti spoke with several commercial real estate offices in Tucson. He would like to be employed with one in particular, but does not have a job offer or guarantee of one. 28. Mr. Fioramonti may someday apply for reinstatement to the State Bar. This is an issue of “closure” for his wife, who appears to have greatly supported him throughout these past years. The outstanding obligation to the State Bar keeps Mr. Fioramonti from applying, as he will have to satisfy this obligation before he can be considered for reinstatement. CONCLUSIONS OF LAW A.R.S. § 32-2153(B) The provisions of A.R.S. § 32-2153 pertinent to this case are: “B. The commissioner may…deny the issuance of a license…when it appears that the…applicant therefor has: *** 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.“

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. The Commissioner’s authority to approve or deny an application for a real estate salesperson’s license is discretionary. A.R.S. § 32-2153(B) (“The commissioner may…deny the issuance of a license…”) (emphasis added). 3. Being the applicant for a license, Mr. Fioramonti has the burden of proof. A.R.S. § 41-1065 (“At [the] hearing [the] applicant shall be the moving party and have the burden of proof.”). 4. The standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996), review denied (1997); Troutman v. Valley Nat. Bank of Arizona, 170 Ariz. 513, 826 P.2d 810 (App. 1992). A “preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence, ' 5 (1960). It “is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” BLACK’S LAW DICTIONARY 1182 (6th ed. 1990). 5. The evidence does not show or establish that Mr. Fioramonti has violated A.R.S. §§ 32-2153(B)(3), -(B)(5), or -(B)(10). Mr. Fioramonti’s application and the testimony and evidence presented at the hearing do not show conduct which comes within these three provisions. 6. The evidence does not show or establish that Mr. Fioramonti is not “a person of honesty, truthfulness and good character.” A.R.S. § 32- 2153(B)(7). The disposition of this appeal rests principally on this conclusion. Mr. Fioramonti is a mature adult now 47½ years old; is a highly educated individual; was an outstanding student in law school; has resided in Tucson for nearly twenty-six years; has been married to the same person for just as long; is committed to the well-being of his family; enjoys a good reputation in the community; has been a good citizen since 1993; has passed the real estate salesperson examination; wishes to remain in his community for a real estate career; has a plan for a career in real estate; and, has had professional experience in real estate law and real estate transactions. His suspension from the practice of law, the basis for the Commissioner’s denial of Mr. Fioramonti’s application, did not involve deceptions of clients or injured clients. Further, the evidence does not show or establish that Mr. Fioramonti will or may be disposed to engage in the unethical behavior for which he was suspended from the practice of law. The Commissioner has the advantage of five years to confirm the Supreme Court’s belief in 1993 that “If given a second chance, we believe it is likely that respondent will be able properly to discharge his professional duties to his clients, as he has in the past.” See, Finding of Fact No. 24. There is a very high likelihood that Mr. Fioramonti will not repeat what happened to him nearly ten years ago. There is no likelihood Mr. Fioramonti will fail to discharge his professional duties and responsibilities in the real estate profession. [2] The decision of the Arizona Court of Appeals in Wetzel v. Arizona State Real Estate Department, 151 Ariz. 330, 727 P.2d 825 (App. 1986), is distinguishable by the fact Wetzel had been disbarred, and not merely suspended, from the practice of law. Generally, disbarment is the result of more egregious acts or omissions than those associated with a suspension. Wetzel, supra; Fioramonti, supra. For example, in Wetzel, the Court of Appeals found that “Wetzel had acted dishonestly towards the court and maliciously towards other lawyers and clients.” Wetzel, supra, 151 Ariz. at 334. No such evidence was presented against Mr. Fioramonti in the proceeding before the State Bar. The evidence was to the contrary. Mr. Fioramonti should be given the opportunities to pursue a professional career in real estate and to contribute as a member of the community and of his new desired occupation. The decision to approve his application would not be a decision of compassion or kindness, but rather one based on the fact Mr. Fioramonti has earned the right to embark on the new career he has chosen. In legal argument, Assistant Attorney General Mr. Denious submitted that if a recommendation to approve the application was made, Mr. Fioramonti should be required to post a surety bond pursuant to A.R.S. § 32- 2193.02, and secondly, Mr. Fioramonti should be required to begin paying his financial obligation to the State Bar. The Commissioner’s authority to require an applicant to post a surety bond is discretionary in three specific situations. A.R.S. § 32-2193.02(A) (“[T]he commissioner may require that a…person applying for a license…post a surety bond if any of the following apply…”). None of the three situations where an applicant may be required to post a surety bond are present in this case. Moreover, the evidence does not show or establish that a surety bond is necessary, or called for as a precautionary measure, to assure professional honesty and ethical behavior. Regarding the condition of payments to the State Bar, it is questionable that the Commissioner has regulatory authority to impose a condition of payment of the State Bar’s obligation to approve an application for a license.[3] Mr. Fioramonti’s obligation to the State Bar is accruing interest, and he is aware of this fact. This obligation will not go away. It behooves Mr. Fioramonti to address this fact and this financial obligation. RECOMMENDED ORDER It is recommended that the Commissioner approve Mr. Fioramonti’s application for a real estate salesperson’s license. SUBMITTED this 27th day of April, 1999.

George A. Schade, Jr. Administrative Law Judge

The original Recommended Decision and Order of the Administrative Law Judge was mailed on April 28, 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. ----------------------- [1] When underlined, the term refers to the Arizona Supreme Court’s opinion. When the term is not underlined, the Commission is referring to Joseph E. Fresquez, the individual attorney. [2] As Benjamin Franklin said, “After crosses and losses, men grow humbler and wiser.” Mr. Fioramonti appears to be humbler and wiser due to his experience. Or as the Roman Cicero admonished centuries earlier, “To stumble twice against the same stone is a proverbial disgrace.” [3] The Department is a regulatory agency and not a collection agent for private parties.

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