Allard v. Kentucky Real Estate Com'n, 90-CA-002026-MR

• Decision Date: 14 February 1992
• Docket Number: No. 90-CA-002026-MR,90-CA-002026-MR
• Citation: 824 S.W.2d 884
• Parties: John ALLARD, Appellant, v. KENTUCKY REAL ESTATE COMMISSION and Loy and Phyllis Brashear, Appellees.
• Court: Kentucky Court of Appeals

Page 884

824 S.W.2d 884

John ALLARD, Appellant, v. KENTUCKY REAL ESTATE COMMISSION and Loy and Phyllis Brashear, Appellees.

No. 90-CA-002026-MR.

Court of Appeals of Kentucky.

Feb. 14, 1992.

Ralph M. Mobley, Elizabethtown, for appellant.

John L. Ackman, Jr., Louisville, for appellees.

Before LESTER, C.J., WILHOIT, J., and STEPHENS, Special Judge.

STEPHENS, Special Judge.

Appellant, John Allard, appealed to the Hardin Circuit Court from an order of the Kentucky Real Estate Commission. That order revoked appellant's real estate license and ordered him to pay appellees, Loy and Phyllis Brashear, the sum of Fifteen Thousand Dollars ($15,000.00), with alternative provisions regarding that restitution. This appeal is from the opinion and order of the Hardin Circuit Court affirming the action of the Kentucky Real Estate Commission.

Appellant is a licensed real estate broker and is also in the home construction/real estate development business. Appellant contracted with the Brashears to sell them a lot and to construct a home thereon. Between the beginning and the end of this contractual arrangement much occurred. One (1) house and lot was substituted for another, by agreement of the parties. Money was paid from appellees to appellant. Money was borrowed from a lending institution and the appellees' lot encumbered. Appellant failed to pay mechanics and materialmen who had filed liens against the property. The lending institution foreclosed on its mortgage. Appellant filed bankruptcy. And, while all this was transpiring, appellant petitioned for a dissolution of his marriage. As a result of these various dealings, the Brashears lost the Fifteen Thousand Dollars ($15,000.00) they had paid to Allard. There are many other details of the dealings among the parties, which have been specifically set out in the findings of fact, conclusions of law and recommended decision of the commission's hearing officer and in the circuit court's opinion and order. This Court will not attempt to replicate all those details, but will only refer to them as is necessary for an understanding of this opinion.

Appellant argues, initially, that there was no proof of fraud or misrepresentation to support the decision of the commission. In his detailed findings of fact and statement of law, adopted by the commission, the hearing officer specifically found that appellant violated KRS 324.160 in that he made a substantial misrepresentation, his conduct constituted improper, fraudulent or dishonest dealing, and he committed gross negligence. Further, the commission found that appellant violated 201 KAR 11:040(1) and (2) with respect to the deficiencies in the contract, the contract's failure to specify financing and the existence of the encumbrance on the property. As found by the circuit court, the commission's findings of fact are amply supported by the evidence. As such, those findings are binding upon this Court. KRS 324.210; and, Kosmos Cement Co., Inc. v. Haney, Ky., 698 S.W.2d 819 (1985).

Appellant argues that a finding of negligence is not sufficient to support a suspension of his license and that there must be a showing of intentional wrongdoing. In support of this position appellant cites Helm v. Warner, Ky.App., 597 S.W.2d 159 (1980). In that appellant was found to have committed fraudulent and dishonest acts, a resolution of this issue is not critical. However, it must be pointed out that appellant's reliance upon Helm, supra, is misplaced. KRS 324.160(1)(s), which establishes gross negligence as a sufficient cause for suspension, was adopted subsequent to the decision in Helm.

Appellant's contractual arrangements with the Brashears were conducted in appellant's capacity as developer/builder and not in his capacity as a licensed real estate broker. Therefore, he argues, the commission had no jurisdiction over his conduct. In support of this position he cites Leishman v. Goodlett, Ky.App., 608 S.W.2d 377 (1980). Once again, appellant has been thwarted by the Kentucky Legislature. KRS 324.020(2) was adopted in 1982 to specifically apply the provisions of KRS Chapter 324 to a licensee acting in the capacity of an owner or builder/developer. The commission properly exercised its authority over Allard as a result of his conduct in issue herein.

As mentioned previously, the commission's hearing officer entered detailed findings of fact. Thereafter, under the heading "Recommended Decision" the hearing officer recommended that Allard pay the Brashears only Nine Thousand Eight Hundred Dollars ($9,800.00), upon his failure to do so the Real Estate, Education, Research and Recovery Fund reimburse Brashears that amount, and the license of Allard be suspended until he reimburses the fund that amount. The provisions of that recommended decision are set apart from the hearing officer's findings. Nowhere within the findings is the recommendation to be found or referred to. Thereafter, the commission entered its brief order, which reads in its entirety as follows:

Based upon the record in this matter, the Commission adapts [sic] the findings and conclusions of the hearing officer, except the setoff for rent to which Respondent complained.

The Respondent's license is revoked, and he is ordered to pay Complainant the sum of $15,000.00 within 30 days. If he does not so pay, the Kentucky research, education and recovery fund shall pay Complainant $15,000.00.

The Respondent shall return his license to the Commission office immediately.

Subsequent to...