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ARELLO Latest Court Decisions 2013-2014 ARELLO Law and Regulation Committee September, 2014.

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Presentation on theme: "ARELLO Latest Court Decisions 2013-2014 ARELLO Law and Regulation Committee September, 2014."— Presentation transcript:

1 ARELLO Latest Court Decisions ARELLO Law and Regulation Committee September, 2014

2 LAW & REGULATION COMMITTEE & VOLUNTEERS Sincerest Thanks: Gene Allison Chris Booth Julie Cropp Terry Duggan Herb Freeman Mike Gamblin Kenneth Gill Ulani Gulstone Kevin Hypes Daniel Kehew Robert Kinniebrew Trevor Koot Jeanette Langford Greg Lemon Kerri Lewis Charlie Moody Tom Pool David Raphael Steve Sargenti Nikki Senter James Therrien Janet Thoren Allen Trammell Kim Wells Briefing Cases

3 ADMINISTRATIVE LAW Ohio Div. of Real Estate v. Knight Citation: 2013-Ohio-2896 Court: Court of Appeals of Ohio, 8th Appellate District – Page 3 – Columbus, Ohio December 13, 2010

4 ADMINISTRATIVE LAW Ohio Div. of Real Estate v. Knight – Page 3 –

5 ADMINISTRATIVE LAW Ohio Div. of Real Estate v. Knight Complaint Process: 1. Complaint Filed 2. Division Investigates 3. Charges Filed / Notice of Hearing 4. Hearing (before Hearing Examiner 12/13/10) 5. Recommended Decision (1/27/11) 6. Commission Meeting (4/6/11) 7. Commission Adopts/Modifies/Rejects (4/6/11) – Page 3 –

6 ADMINISTRATIVE LAW Ohio Div. of Real Estate v. Knight Hearing examiner found 10 violations and recommended revocation. Before the Ohio Real Estate Commission: Knight submitted evidence. No hearing or testimony. Commission adopted recommended order. – Page 3 –

7 ADMINISTRATIVE LAW Ohio Div. of Real Estate v. Knight Judicial Review: Division initially filed incomplete record partial transcript due to inaudible recording Division files supplement to complete record complete transcript additional correspondence submitted by Knight before the Commission meeting Court: Division improperly bootstrapped evidence about Eral to Knight & remanded. – Page 3 –

8 ADMINISTRATIVE LAW Ohio Div. of Real Estate v. Knight Ohio Court of Appeals reversed the Common Pleas Court. Incomplete record prejudiced licensee Delay in completing transcript not prejudicial Failure to include documents submitted by Knight harmed her case before C.P. Court. Only evidence Knight submitted Court remanded and instructed C.P. Court to enter judgment against the Division – Page 3 –

9 ADMINISTRATIVE LAW Oni v. Tenn. Dep’t of Health Citation: 2013 Tenn. App. LEXIS WL Court: Court of Appeals of Tennessee, Nashville – Page 3 –

10 ADMINISTRATIVE LAW Oni v. Tenn. Dep’t of Health 2003 Oct Aug Nov Mar Oni charged with burglary, theft, and battery in Georgia -Oni indicates no criminal charges on NY renewal -Oni accepted reprimand in lieu of formal discipline in Tennessee and agreed to pay $3,000 fine and $ costs -Oni indicates no reprimand on NY renewal -Oni’s NY license revoked for failing to report criminal charges and reprimand – Page 3 –

11 ADMINISTRATIVE LAW Oni v. Tenn. Dep’t of Health January 2012 Tennessee Order: Oni found in violation of prior reprimand to to his failure to pay remaining $ balance Oni found in violation of Tennessee law because he was disciplined in New York Oni required to pay $ costs remaining from 2007 reprimand. – Page 3 –

12 ADMINISTRATIVE LAW Oni v. Tenn. Dep’t of Health January 2012 Tennessee Order: – Page 3 – Oni revoked based on New York revocation.

13 ADMINISTRATIVE LAW Oni v. Tenn. Dep’t of Health Judicial Review: – Page 3 – Affirmed Board decision requiring payment of 2007 costs Reversed Board decision revoking TN medical license “By simply mirroring the New York Board’s choice of discipline, the Board rendered an arbitrary or capricious decision.”

14 BROKERAGE PRACTICE Tang v. Zhang Citation: 2013 BCCA 52 Court: Court of Appeal for British Columbia – Page 18 – Vancouver, British Columbia

15 BROKERAGE PRACTICE Tang v. Zhang Issue: Buyer’s Forfeiture of $100,000 Deposit on $2,030,000 Vancouver Home. – Page 18 – “amount paid by the Buyer will be absolutely forfeited to the seller in accordance with the Real Estate Services Act, on account of damages”

16 BROKERAGE PRACTICE Tang v. Zhang Williamson Pacific Developments v. Johns, (1997) 35 B.C.L.R. (3d) 180. $45,000 deposit “nonrefundable” “deposit on account of purchase” forfeited “on account of damages” Court: no power in equity to relieve buyers’ forfeiture Agosti v. Winter, 2009 BCCA 490. $10,000 deposit “amount paid by the Buyer will be absolutely forfeited to the seller in accordance with the Real Estate Services Act, on account of damages” Court: sellers do not have unconditional right to payment of deposit – Page 18 –

17 BROKERAGE PRACTICE Tang v. Zhang Court of Appeal for British Columbia: noted deposit language identical to Agosti reconciled Williamson & Agosti overruled Agosti reversed trial court judgment for buyers – Page 18 –

18 BROKERAGE PRACTICE Tang v. Zhang General Principles With Respect to Deposits: Whether a buyer’s deposit is forfeited is a matter of contractual intent. A true deposit is intended to motivate the parties to carry through on their bargains and generally forfeited by the buyer when the buyer defaults. A deposit is an exception to the general rule that a contractual amount subject to forfeiture is an unlawful penalty. A deposit forfeited “on account of damages” does not mean the deposit is lost only if damages are shown. – Page 18 –

19 BROKERAGE PRACTICE Westgate Smoky Mts. v. Phillips Citation: 2013 Tenn. LEXIS 1014, Unemployment Ins. Rep. (CCH) P8438. Court: Supreme Court of Tennessee – Page 18 –

20 BROKERAGE PRACTICE Westgate Smoky Mts. v. Phillips – Page 18 – Westgate Smoky Mountain Resort Gatlinburg, TN

21 BROKERAGE PRACTICE Westgate Smoky Mts. v. Phillips Procedural History 11/ /2009 3/ / / /2013 -Vukich-Daw terminated -Department of Labor: Vukich-Daw = employee. -timeshare salesperson not a “real estate agent” -Labor Appeals Tribunal: Vukich-Daw = employee -Board of Review: Vukich-Daw = employee -Chancery Court: Vukich-Daw = not an employee -timeshare salesperson is “real estate agent” -Court of Appeals: Vukich-Daw = employee -timeshare salesperson not a “real estate agent” -Supreme Court: Vukich-Daw = not an employee -timeshare salesperson is “real estate agent” – Page 18 –

22 BROKERAGE PRACTICE Westgate Smoky Mts. v. Phillips Statutory Timeline Tennessee Real Estate Broker License Act (REBLA) licensure of real estate “brokers” and “affiliate brokers” -REBLA amended to add time-share transactions to activities performed by brokers and affiliate brokers -Time-Share Act created time-share “sales agents” time-share “sales agents” were required to be under supervision of a broker and subject to REBLA & TREC -Employment Security Law excludes “qualified real estate agent” -REBLA amended to add time-share “salespersons” “salespersons” under supervision of broker – Page 18 –

23 BROKERAGE PRACTICE Westgate Smoky Mts. v. Phillips Criteria: 1.Qualified real estate agent – legislative history shows intent to treat timeshare salesperson as “qualified real estate agent” – timeshare salesperson licensed by TREC 2.Paid on commission 3.Services performed under written contract – Page 18 –

24 CONTRACTS Conley v. Guerrero Citation: 2014 N.J. Super. Unpub. LEXIS 709 Court: Superior Court of New Jersey, Chancery Division, Somerset County NOTE: Issue involves facsimile messages and electronic mail, not regular mail as reported. – Page 20 –

25 CONTRACTS Conley v. Guerrero – Page 20 – The Cedars Bernards Township, NJ Conley agreed to purchase property from Guerrero. Attorney review clause allowed either party to cancel during review period. Guerrero’s counsel sent notice of cancellation by facsimile and during review period.

26 CONTRACTS Conley v. Guerrero Issue: Whether cancellation of a contract that required cancellation by personal service, certified mail, or telegram was effective when the cancellation was sent by facsimile and . Standard NJ Attorney Review Provision: “If an attorney for the Buyer or the Seller reviews and disapproves of this contract, the attorney must notify the Broker(s) and the other party named in this contract within the three-day period. Otherwise this contract will be legally binding as written. The attorney must send the notice of disapproval to the Broker(s) by certified mail, by telegram, or by delivering it personally. The telegram or certified letter will be effective upon sending. The personal delivery will be effective upon delivery to the Broker’s office.” – Page 20 –

27 CONTRACTS Goldman v. Olmstead Citation: 414 S.W.3d 346 Court: Texas Court of Appeals, 5th District Goldmans – Buyers Hewett – Buyers’ agent Olmsteads – Sellers Smith – Sellers’ agent Smith is Mrs. Olmstead’s mother – Page 21 –

28 CONTRACTS Goldman v. Olmstead – Page 21 – 3813 Stanford “TREC may suspend or revoke a license... or take disciplinary action... if a license holder engages in misrepresentation dishonesty, or fraud when selling real property in the name of a person related to the license holder.” – Tex. Occ. Code Ann. § (a)(3)

29 FAIR HOUSING Keller v. City of Fremont Citation: 719 F.3d 931 Court: U.S. Court of Appeals, 8th Circuit – Page 23 – Fremont, Nebraska

30 FAIR HOUSING Keller v. City of Fremont Ordinance 5165: “It is unlawful for any person or business entity to rent to, or permit occupancy by, an illegal alien, knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law.” “An ‘illegal alien’ is an alien who is not lawfully present in the United States, according to [federal law.]” – Page 23 –

31 FAIR HOUSING Keller v. City of Fremont Fremont Rental Process: 1.Prospective renter obtains occupancy license – provide $5 fee and citizenship information and immigration status – minors and temp. residents exempt 2.City issues occupancy license 3.Renter may begin tenancy and landlord must keep copy of renter’s occupancy license 4.Police ask federal government to verify immigration status. 5.If renter is unlawfully present, renter must establish lawful presence or occupancy license is revoked. – Page 23 –

32 FAIR HOUSING Keller v. City of Fremont “We find no hint in the FHA’s history and purpose that such a law or ordinance,... violates the FHA if local statistics can be gathered to show that a disproportionate number of the adversely affected aliens are members of a particular ethnic group. In most cases today, that would of course be Latinos, but at various times in our history, and in various locales, the “disparate impact” might have been on immigrants from Ireland, Germany, Scandinavia, Italy, China, or other parts of the world. It would be illogical to impose FHA disparate impact liability based on the effect an otherwise lawful ordinance may have on a sub-group of the unprotected class of aliens not lawfully present in this country.” – Page 23 –

33 FAIR HOUSING Miami Valley Hous. Ctr., Inc. v. Connor Group Citation: 725 F.3d 571 Court: U.S. Court of Appeals, 6th Circuit 599/1br — Great Bachelor Pad! (Centerville) Our one bedroom apartments are a great bachelor pad for any single man looking to hook up. This apartment includes a large bedroom, walk in closet, patio, gourmet kitchen, washer dryer hook up and so much more.... – Page 25 –

34 FAIR HOUSING Miami Valley Hous. Ctr., v. Connor Group – Page 25 – Chesapeake Landing Apartments Dayton, Ohio

35 FAIR HOUSING Miami Valley Hous. Ctr. v. Connor Group Connor Group Craigslist Headlines: "No Matter What They Say, Size Does Matter!" "Wanna Be on TOP?!!" "Single??... Mingle at The Greene!!" "Hook-Up Here!" "E-Harmony thinks we are a match!" "Happy Hour!!" "Size DOES Matter!! And We Measure Up!!" "It's That Time of the Month Again... Feeling a Different Kind of Cramp Though?" – Page 25 –

36 FAIR HOUSING Miami Valley Hous. Ctr. v. Connor Group Jury Instructions: “If an ordinary reader who is a member of a protected class would be discouraged from answering the advertisement because of some discriminatory statement or indication contained therein, then the fair housing laws have been violated.” “Focus on the message being conveyed by the advertisement at issue in this matter. Ask yourselves whether the message focuses on the suitability of the property to the renter, which is permissible, or whether it impermissibly focuses on the suitability of the renter to the owner.” – Page 25 –

37 GOVERNMENT Baumgart v. Mont. Dept. of Commerce Citation: 2014 MT 194 Court: Supreme Court of Montana – Page 26 –

38 GOVERNMENT Baumgart v. Mont. Dept. of Commerce – Page 26 –

39 GOVERNMENT Baumgart v. Mont. Dept. of Commerce – Page 26 –

40 GOVERNMENT Kansas Bldg. Industry Workers Compensation Fund v. State of Kansas Citation: 49 Kan. App. 2d P.3d 404 Court: Court of Appeals Kansas Legislature Swept Fee Funds: Insurance Department Bank Commissioner Real Estate Commission – Page 28 –

41 GOVERNMENT Kansas Fund v. State of Kansas Trade associations (including Kansas Association of Realtors) challenged the sweep alleging: invalid exercise of police power because amount swept exceeded cost of services was an unauthorized and unconstitutional tax intended to raise general fund revenue unconstitutional taking in violation of the commerce clause and 5 th and 14 th amendment denied equal protection rights – Page 28 –

42 GOVERNMENT Kansas Fund v. State of Kansas Status: Kansas Supreme Court granted State of Kansas’ request to review ruling on standing. Court of Appeals suggested sweep may be unconstitutional under Panhandle Easter Pipe Line Co. v. Fadely, 332 P.2d 568 (Kan. 1958). – Page 28 –

43 HEARINGS Bobo v. State Real Estate Comm’n Citation: 2014 Tenn. App. LEXIS 266 Court: Court of Appeals of Tennessee Smith – purchased property with aid of her broker, Donna Bobo Bobo – real estate broker who represented Smith in the purchase and rental of property Global – Bobo’s partnership with Horton. Under agreement with Smith, took title to Smith’s properties and was responsible for paying Smith’s mortgage. – Page 30 –

44 HEARINGS Bobo v. State Real Estate Comm’n – Page 30 – Dungreen Avenue Memphis, TN Global (Bobo’s company) “is acting as the principal owner in this transaction and plans to make... an unconscionable profit with this property.” – Broker’s agreement with her client, Ms. Smith

45 HEARINGS Bobo v. State Real Estate Comm’n Bobo’s Contention: Decision improperly based on complainant Smith’s hearsay statements. Court of Appeals: Hearsay may be substantial evidence if corroborated by other competent evidence. Bobo’s admissions corroborated Smith’s hearsay statements. – Page 30 –

46 HEARINGS Bobo v. State Real Estate Comm’n Bobo’s Contention: Lack of opportunity to confront complainant Smith was denial of due process. Court of Appeals: Bobo had notice of the hearing and notice that Smith did not intend to testify, yet did not continue hearing or procure Smith’s testimony. – Page 30 –

47 HEARINGS Bobo v. State Real Estate Comm’n Bobo’s Contention: Commission biased by its prior consideration of rejected consent order Court of Appeals: Bobo failed to object. Commission was required to serve in multiple, overlapping roles. Dual functions are inherent in administrative agencies and this structure does not, without other evidence, demonstrate bias. No evidence any Commissioner was prejudiced by knowledge of rejected consent order. – Page 30 –

48 HEARINGS Pagel v. Iowa Real Estate Comm’n Citation: Cause No. CVCV (2014). Court: Iowa District Court, Crawford County Jane Pagel – real estate broker who was preparing a BPO Jack Seuntjens – real estate broker who listed 1554 Oneida – Page 33 –

49 HEARINGS Pagel v. Iowa Real Estate Comm’n Pagel removed personal property. In a police report, she was quoted as saying: “no one realtor has exclusive right to show the house” and on repossessions, the personal property “is considered up for grabs.” Based, in part, on police report, Pagel’s testimony was deemed not credible. – Page 33 –

50 LICENSING Curd v. Ky. State Bd. of Licensure for Prof’l Eng’rs & Land Surveyors Citation: 433 S.W.3d Ky. LEXIS 226 Court: Supreme Court of Kentucky – Page 36 – Eadsville Highway Denneys (exp: WEST) Southwoods (exp: CURD) Matthews Tract

51 LICENSING Curd v. Ky. State Bd. of Licensure – Page 36 – The purpose of immunity for witnesses at trial is to encourage witnesses to testify freely.

52 LICENSING Curd v. Ky. State Bd. of Licensure for Prof’l Eng’rs & Land Surveyors Expert Immunity = Typically Immunity From Civil Liability Allowing Discipline for Expert Testimony: Promotes Public Trust in Profession Encourages Accurate Testimony Through Accountability to Peers Judges = Not Experts – Page 36 –

53 LICENSING Izzi v. Bureau of Prof’l & Occupational Affairs, State Real Estate Comm’n Citation: 2014 Pa. Commw. Unpub. LEXIS WL Court: Commonwealth Court of Pennsylvania – Page 38 –

54 LICENSING Izzi v. State Real Estate Comm’n – Page 38 – Fall 2006 Oct. 4, 2006 Oct. 20, 2006 Jan. 7, 2007 – Hantwerker/Tobin agree to sell to Izzi’s company ($86,000) – Hantwerker/Tobin – Izzi Sale Closes – Izzi’s company sells to Nieves ($99,000) – Izzi files deed, transfer certificate stating H/T conveyed to Nieves

55 LICENSING Izzi v. State Real Estate Comm’n – Page 38 – 2011 Jun. 15, 2011 Apr. 23, 2013 Aug. 6, 2013 Jun. 15, 2016 – Discipline initiated against Izzi – Consent agreement revoking Izzi’s license – Izzi reinstatement request – Commission denies reinstatement – Izzi eligible for reinstatement

56 LICENSING Izzi v. State Real Estate Comm’n Only an adjudication is reviewable. Adjudication: Final order, decree, determination, or ruling? – and – Impact personal or property rights? – Page 38 –

57 LICENSING Izzi v. State Real Estate Comm’n “Unless ordered to do so by Commonwealth Court, the Commission shall not reinstate the license, within five years of the date of revocation, of any person whose license has been revoked under this act.” – 63 P.S. § (c). – Page 38 –

58 MISREPRESENTATION Gussio v. Mississippi Real Estate Commission Citation: 122 So. 3d 783 Court: Court of Appeals of Mississippi John Gussio (father) responsible broker owns Gussio Realty Greg Gussio (son) affiliate broker owns Lexus Homes, builder of subject home – Page 42 – 114 Carriage Lane Florence, MS

59 MISREPRESENTATION Gussio v. Mississippi R.E. Commission Spring 2010 March 29 April 2 April 15 – Keen & Davis make offer through Hancock. Greg informs Hancock home is under contract. – Greg informs Hancock contract will expire Mar. 30 and invites offer. – Keen and Lexus Homes (Greg) sign contract with Apr. 28 closing date. – Davis drives by and sees people moving in. Sale to first buyer closes. – Page 42 –

60 MISREPRESENTATION Gussio v. Mississippi R.E. Commission Keen filed complaint with MREC on April 16. MREC investigated. Gussios submitted some information, but the information provided was not responsive to MREC’s requests. MREC initiated discipline. MREC held a hearing and found the Gussios made substantial misrepresentations and failed to comply with the investigation. MREC imposed 60 day suspensions and extra CE. – Page 42 –

61 MISREPRESENTATION Gussio v. Mississippi R.E. Commission – Page 42 – “We’ve discussed honesty as a policy, but, so far, it hasn’t gained any momentum.” MREC: Determined it was irrelevant whether Gussio & Keen had valid contract. Decision supported by substantial evidence of misrepresentation. Correctly disciplined Gussios for failing to respond. Had jurisdiction over Greg’s personal transaction.

62 PUBLIC RECORDS Prudential Locations LLC v. United States HUD Citation: 739 F.3d 424 Court: U.S. Court of Appeals, 9th Circuit – Page 44 –

63 PUBLIC RECORDS Prudential Locations v. HUD “No person shall give and no person shall accept any fee, kickback, or thing of value [for referring] business incident to or a part of a real estate settlement service involving a federally related mortgage loan.” – 12 U.S.C. § 2607(a) (RESPA). – Page 44 –

64 PUBLIC RECORDS Prudential Locations v. HUD “Prudential Locations Real Estate Salespersons get monetary kickbacks ($$,$$$) for the amount of business that is referred to Wells Fargo.” – 2003 letter HUD investigated – Page 44 –

65 PUBLIC RECORDS Prudential Locations v. HUD – Page 44 – Prudential agreed to stop violating RESPA and paid a $48,000 penalty.

66 PUBLIC RECORDS Prudential Locations v. HUD Prudential was: “blatantly violating RESPA laws again.” “charging an extra fee for an in house transaction coordinator EVERY TIME to agents that do not use ($75 extra fee) Wells Fargo (affiliated company of Prudential Locations LLC)....” – HUD investigated but did not substantiate allegations. – Page 44 –

67 PUBLIC RECORDS Prudential Locations v. HUD Prudential requested HUD’s records related to the two investigations. HUD provided 400 pages. HUD redacted information identifying the authors of the 2003 letter and “Release of this information would constitute an unwarranted invasion of personal privacy [outweighing any] interest of the general public in reviewing these portions of government documents.” – HUD – Page 44 –

68 PUBLIC RECORDS Prudential Locations v. HUD FOIA: Government records available upon a properly made request unless one of nine statutory exemptions apply. Agency can withhold: “personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” – 5 U.S.C. § 552(b)(6) (FOIA Exemption 6).” – Page 44 –

69 PUBLIC RECORDS Prudential Locations v. HUD Exemption 6 has a two part test: 1.Personnel, medical, or similar file? 2.Clearly unwarranted invasion of personal privacy if produced? Prudential did not contest the court’s finding that the information satisfied part 1. – Page 44 –

70 PUBLIC RECORDS Prudential Locations v. HUD Unwarranted invasion of personal privacy? Balance privacy interest against public interest served by disclosure privacy interest in being free from retaliation, harassment, embarrassment, or stigma privacy interest in avoiding unwanted contact agency’s assurance of confidentiality may be considered – Page 44 –

71 PUBLIC RECORDS Prudential Locations v. HUD Public interest in disclosure? Extent disclosure sheds light on agencies performance of statutory duties Lets citizens know what government is up to Court: Revealing identities would not add to available information concerning HUD’s performance. – Page 44 –

72 Thank You! Don Harris Montana Board of Realty Regulation (406)

73 CONTRACTS Knutsen v. Dion Citation: 2013 VT 106, 90 A.3d 866 Court: Supreme Court of Vermont – Page 22 –

74 CONTRACTS Knutsen v. Dion Vermont Association of Realtors Standard Form Purchase Agreement: limited liability of the brokers involved in the transaction required pre-suit mediation. Form used by plaintiff buyer’s broker. VAR not otherwise involved in transaction. – Page 22 –

75 MISREPRESENTATION Hall v. Rockcliff Realtors Citation: 215 Cal. App. 4th Cal. Rptr. 3d 739 Court: Court of Appeal of California, 1st Appellate District, Division Four – Page 42 –

76 MISREPRESENTATION Hall v. Rockcliff Realtors – Page 42 –

77 PUBLIC RECORDS Texas State Bd. of Veterinary Medicine v. Giggleman Citation: 408 S.W.3d 696 Court: Court of Appeals of Texas, 3rd District, Austin – Page 45 –

78 PUBLIC RECORDS Texas State Bd. of Veterinary Medicine v. Giggleman – Page 45 –

79 TRUST ACCOUNTS Century 21, LLC v. All Prof’l Realty, Inc. Citation: 2013 U.S. Dist. LEXIS WL Court: U.S. District Court, Eastern District of California – Page 47 –

80 RESPA Baehr v. Creig Northrop Team, P.C. Citation: 2014 U.S. Dist. LEXIS WL Court: U.S. District Court, District of Maryland, Northern Division – Page 45 –


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