ALJDEC

99A-H1981-REL-res · Department of Real Estate · 1999-10-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 23, 1999

APPEARANCES: Respondent was represented by attorney Gregory G. McGill; Assistant Attorney General Moira McCarthy appeared on behalf of the State of Arizona, Department of Real Estate.

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

This disciplinary action brought by the Arizona Department of Real Estate (“Department”) concerns the allegation that George H. Wardner (“Licensee”) failed to disclose on his 1997-99 renewal application, that his California license had been revoked. The parties 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 revocation and a civil penalty. FINDINGS OF FACT 1. Licensee was a licensed real estate broker in California since 1986. In 1994, he moved to Arizona and wanted to make his California license inactive. (Exhibit 9.) In furtherance of this, Licensee filed a Broker Change Application (Form 204) and an Out-of-State Broker Acknowledgment (Form 235) with the California Department of Real Estate (CDRE) in January 1995. (Exhibit 10.) The instructions on Form 204 state: “If residing outside the State of California, a notarized Consent to Service of Process (RE 234) is also required.” (Emphasis in original.) Licensee did not submit Form 234. The CDRE responded with a form letter to Licensee stating that his documents had been received, but were being held until Licensee submitted Form 234, which was required before his address would be changed. (Exhibit 12.) Still, Licensee did not submit Form 234. Instead, Licensee sent a letter to the CDRE in February 1995 stating that he would not submit Form 234 because he saw no reason for it. (Exhibit 17.) 2. In May 1995, the CDRE issued an Accusation against Licensee and his California business, alleging that Licensee violated California law by unlawfully collecting advance fees that were not placed in a trust account or accounted for. (Exhibit D3.) In January 1996, the CDRE issued a Decision revoking Licensee’s California license because it found the allegations in the Accusation to be true. (Exhibits D1 and D2.) The Decision notes that Licensee failed to appear and defaulted in the matter. (Exhibit D2.) 3. Sometime in early July 1996, Licensee learned of the CDRE action and wrote to them for clarification. Later that month, the CDRE replied by letter, sending Licensee copies of the Accusation and Decision. (Exhibit U.) The CDRE noted that Licensee’s addresses maintained with them were California addresses and that the CDRE did get a request from Licensee to change his address in January 1995. However, Licensee’s address was never changed because Licensee “failed to respond to three written requests” sent to Licensee asking for the required Form 234. The CDRE further noted that the Accusation was sent by certified mail to the California addresses of record several times and that those actions constituted proper service. Finally, the CDRE informed Licensee that he could seek reinstatement after one year and enclosed a reinstatement petition. 4. On July 26, 1996, Licensee replied to the CDRE by letter. (Exhibit T.) 5. Meanwhile, Licensee had applied for and received an Arizona real estate broker’s license in January 1995. He was due to renew in January 1997, so in December 1996 he filled out and filed his renewal application. For Question 2 on the renewal application, which asks if the applicant has had any professional licenses revoked, Licensee answered “No.” (Exhibit A.) Licensee’s license was routinely renewed for the 1997-99 period. 6. Sometime in late 1997, the Department discovered Licensee’s California revocation. The Department requested that Licensee explain by letter the circumstances behind his omission of the California revocation. (Exhibit 2.) In January 1998, Licensee sent the Department a notarized letter of explanation. (Exhibit 3.) In that letter, Licensee stated: “I learned just recently. . .” of the California revocation. He also explained that he believed that he had taken the required steps to change his address with the CDRE. Not satisfied with Licensee’s response, the Department brought this disciplinary action. 7. In January 1999, Licensee filed a renewal application for 1999- 2001. (Exhibit 30.) That application is pending the outcome of this hearing. 8. Also in January 1999, the CDRE denied Licensee’s petition for reinstatement of his California license. (Exhibit S.) Acting California Real Estate Commissioner John R. Liberator noted the following: “It is apparent that [Licensee] has little or no understanding of the nature of advance fees and their proper handling. . . . [Licensee] continues to minimize the nature of the conduct which led to the disciplinary action in this matter. Therefore, [Licensee] has not demonstrated a change in attitude from that which existed at the time of the conduct in question.” (Id. at p. 2.) 9. Licensee testified at the hearing on August 23, 1999. He gave false testimony in two instances. First, Licensee testified that he learned of the California revocation in 1997. The letter that he sent to the CDRE in July 1996 (Exhibit T), however, shows that Licensee knew of the revocation in late June or early July 1996. Second, Licensee testified that he never received a copy of the California Decision revoking his license. Again, the credible evidence shows that Licensee got a copy of the California Decision with the CDRE’s letter of July 23, 1996. (Exhibit U.) This is acknowledged by Licensee in his July 26, 1996 response to the CDRE wherein he states that he has “never conducted my business in any of the ways described in the materials attached to your letter.” Licensee’s testimony at the hearing was not consistent with the actual events. 10. Licensee has made false written statements to the Department in two instances. First, in December 1996 on his renewal application (Exhibit A), Licensee denied ever having had a license revoked when he was fully aware of the California revocation, and had been familiar with it since July 1996. Second, in January 1998 in his notarized statement to the Department (Exhibit 3), Licensee stated that he had “just recently” learned of the revocation, when in fact he had known of the revocation since July 1996. 11. Licensee has submitted newspaper articles and press releases (Exhibit 24) as well as personal letters and thank you notes (Exhibit 25) as character evidence. At the hearing, this Administrative Law Judge took them under advisement so that they could be reviewed. These documents are admitted in their entirety, but are given little to no weight. The information is from the 1980’s and early 1990’s, there is nothing current. And several of them are undated. The authors of these documents are unknown to this tribunal and, therefore, lack credibility. Their relationship to Licensee or knowledge of his character is not evident. Licensee has not submitted any weighty evidence relating to character or trustworthiness. 12. As an aggravating factor, if a violation is found, the Department proved that Licensee was determined to have unlawfully acted as an unlicensed contractor in March 1997 in Prescott, Arizona. In August 1997, the Arizona Registrar of Contractors (ROC) issued a Cease & Desist Order to Licensee. (Exhibit N.) In October 1997, the ROC issued a complaint charging Licensee with violation of A.R.S. § 32-1151 for contracting without a license. (Exhibit M.) Finally, in February 1998, the ROC issued a Final Order Imposing Civil Penalty against Licensee in the amount of $1200.00. (Exhibit P.) 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. 2. The evidence shows that Licensee has violated Arizona Revised Statutes (A.R.S.) § 32-2153(B)(1), which prohibits procuring a license by filing a renewal application that is false and misleading, by failing to disclose the California license revocation on his December 1996 renewal application and by falsely claiming that he had “just recently” learned of the California revocation in January 1998. 3. The evidence shows that Licensee has violated Arizona Revised Statutes (A.R.S.) § 32-2153(B)(3), which prohibits making a substantial misrepresentation, by testifying falsely that he first learned of the California revocation in 1997 and that he had never seen the California revocation decision. 4. The evidence shows that Licensee has violated Arizona Revised Statutes (A.R.S.) § 32-2153(B)(7), which requires that licensees exhibit honesty, truthfulness, and good character. Licensee’s actions show otherwise. 5. The evidence shows that Licensee has violated Arizona Revised Statutes (A.R.S.) § 32-2153(A)(3), which prohibits violating a rule adopted by the Commissioner, by violating Arizona Administrative Code (A.A.C.) R4- 28-301(C)(3) when, upon learning of the California revocation in July 1996, he failed to notify the Department within ten days. 6. Grounds exist to suspend or revoke Licensee’s broker's license. A.R.S. § 32-2153. Grounds also exist to impose a civil penalty. A.R.S. § 32-2160.01. 7. This tribunal can find only slight evidence in mitigation. That would be Licensee’s ten year history in California without any discipline. However, there is a great deal of aggravating evidence. First, the ROC violation described in Finding of Fact 12 is a significant violation of Arizona law. Next, Licensee’s license revocation in California shows untrustworthy and illegal practices as a real estate broker. Whether Licensee agrees with it or not, the California Decision is a reliable, final order upon which the Commissioner can rely, even if Licensee may someday, as he thinks, be reinstated in California. Furthermore, the denial of reinstatement is another aggravating factor, especially since the CDRE found, as this tribunal does, that Licensee is not a person of good character. Moreover, Licensee’s repeated instances of providing false information, both under oath and in writing, warrant a severe form of discipline. 8. The appropriate discipline in this case is the most severe, to be used only as a last resort. The evidence shows, however, that Licensee cannot be trusted to follow the laws governing the practice of real estate and that he will not be honest with the Department. Revocation is the only remedy that will protect Arizona consumers. In addition, because of Licensee’s repeated falsehoods and false testimony, a civil penalty of $1000 is warranted. RECOMMENDED ORDER IT IS RECOMMENDED that the Commissioner revoke broker license SE10834900, held by George Horace Wardner, and impose a civil penalty of $1000 on George Horace Wardner for the statutory violations found above. It is recommended that the Commissioner require Mr. Wardner to pay the entire civil penalty within 30 days of the date that the Commissioner’s Order becomes effective.

Done this 15th day October 1999.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Eric A. Bryant Administrative Law Judge

Original mailed this ___ day of October 1999, to:

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

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

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826