Ea40019308 v. Colo. Real Estate Comm'n (In re Disciplinary Action Against the Real Estate Broker's License of Bernard Mcdonnell)

• Citation: 361 P.3d 1138,2015 COA 137
• Decision Date: 24 September 2015
• Docket Number: Court of Appeals No. 14CA1861
• Parties: In re the Disciplinary Action Against the Real Estate Broker's License of Bernard MCDONNELL, License No. EA40019308, Respondent–Appellant, v. THE COLORADO REAL ESTATE COMMISSION, Petitioner–Appellee.
• Court: Court of Appeals of Colorado

361 P.3d 1138

2015 COA 137

In re the Disciplinary Action Against the Real Estate Broker's License of Bernard MCDONNELL, License No. EA40019308, Respondent–Appellant,

v.THE COLORADO REAL ESTATE COMMISSION, Petitioner–Appellee.

Court of Appeals No. 14CA1861

Colorado Court of Appeals, Div. III.

Announced September 24, 2015

Susemihl, McDermott, & Cowan, P.C., Jason W. Downie, Colorado Springs, Colorado, for Respondent–Appellant.

Cynthia Coffman, Attorney General, Lisa Brenner Freimann, First Assistant Attorney General, Joel W. Kiesey, Assistant Attorney General, Nicholas J. Lopez, Fellow, Assistant Attorney General, Denver, Colorado, for Petitioner–Appellee.

Opinion

Opinion by JUDGE FOX

¶ 1 Bernard McDonnell, a licensed real estate broker, appeals a final agency order of the Colorado Real Estate Commission (Commission) disciplining him for taking funds from the Pinecliff Homeowners Association (HOA)¹, located in Colorado Springs, without permission and for his personal use. We affirm the final order as to Counts 1, 2, and 4. We reverse regarding Count 3 and affirm the Commission's sanctions.

I. Background

¶ 2 In 2010 and 2011, while serving as the president of the HOA, McDonnell wrote four checks totaling $10,000 on the HOA's account payable to himself or to his business, Rocky Mountain Batting Cages (RMBC). As president, McDonnell had authority to sign HOA checks, but he also had a fiduciary duty to ensure that all expenses were approved through the proper administrative channels and that HOA funds were spent only on HOA business. The HOA's financial practice was for the HOA's treasurer to prepare a voucher for each expense, identifying the payee and the purpose of the expenditure. The HOA board would then review the vouchers and at least two board members would sign their approval. No vouchers were prepared or board members' signatures gathered for the $10,000 in checks at issue here. And McDonnell used the check proceeds to pay RMBC's operating expenses, not for the HOA's benefit.

¶ 3 When the HOA's treasurer, Pam Dees, discovered one of these checks—a $2000 check payable to RMBC—McDonnell claimed that he had written the check on the HOA account by mistake and promised to repay the HOA in full, which he did shortly thereafter. When Dees's term as treasurer ended, McDonnell took custody of the HOA's accounting records and did not appoint a new or interim treasurer. Shortly thereafter, Deby Williams, a Pinecliff resident, contacted McDonnell and volunteered to assume the duties of treasurer. McDonnell took no action to call a board meeting to consider Williams's election and, despite multiple requests by Williams, he refused to provide her access to the HOA's financial records.

¶ 4 The following year, one HOA board member circulated an e-mail requesting that the board meet to discuss, in part, the “annual financial/treasurer's report.” McDonnell declined to attend the meeting and informed the board that he was resigning. He then deposited the remaining $8000 that he had withdrawn for non-HOA purposes into the HOA bank account.

¶ 5 Shortly thereafter, the HOA board discovered the checks that McDonnell had written and reported him to the police department and the Commission. No criminal charges were filed, but the Commission opened an investigation.

¶ 6 The Commission charged McDonnell with four violations of the Colorado Real Estate Broker License Law:

Count 1: Failing to account for or to remit moneys belonging to others within a reasonable time pursuant to section 12–61–113(1)(g), C.R.S. 2015.

Count 2: Converting, diverting, or commingling the funds of others with one's own funds pursuant to section 12–61–113(1)(g.5).

Count 3: Demonstrating unworthiness or incompetency to act as a real estate broker pursuant to section 12–61–113(1)(n).

Count 4: Engaging in dishonest dealing pursuant to section 12–61–113(1)(t).

¶ 7 McDonnell objected to the Commission's jurisdiction to sanction him for conduct that did not involve a real estate matter and denied that he was subject to discipline under any of the four counts.

¶ 8 An administrative law judge (ALJ) held an evidentiary hearing and concluded that, in general, the Commission's sanction authority extended to certain conduct outside the context of real estate. Whether McDonnell's conduct warranted sanctions under the specific counts charged, however, would depend on the scope of each statutory provision. Accordingly, the ALJ addressed each provision and determined as follows:

Count 1: Section 12–61–113(1)(g)is limited to situations where a licensee fails to account for or remit money in connection with some type of real estate transaction. McDonnell's actions do not, therefore, fall within the scope of this section.

Count 2: “Nothing in the language of [section] 12–61–113(1)(g.5)suggests that, to constitute grounds for discipline, an act of conversion must relate to a real estate transaction[,]” and McDonnell's actions amount to conversion in violation this section.

Count 3: Section 12–61–113(1)(n)applies to situations where a licensee demonstrates unworthiness or incompetency in “conducting business” in the context of real estate. McDonnell was not conducting business and his actions do not, therefore, fall within the scope of this section.

Count 4: “[N]othing in the language of [section] 12–61–113(1)(t)limits its reach to the context of real estate transactions[,]” and McDonnell's actions amount to dishonest dealing in violation of this section.

¶ 9 Both parties filed exceptions to the ALJ's decision with the Commission. The Commission affirmed that McDonnell had violated section 12–61–113(1)(g.5)(Count 2) and section 12–61–113(1)(t)(Count 4) and agreed with the ALJ's reasoning on both counts. However, the Commission reversed the ALJ's conclusions as to Counts 1 and 3 and instead concluded:

Count 1: Section 12–61–113(1)(g)(Count 1) permits disciplining a licensee whether “acting as a real estate broker[s] or otherwise[,]” and McDonnell's conduct of failing to account for or remit money belonging to others violates this section.

Count 3: The statutory phrase “conducting business” in section 12–61–113(1)(n)includes businesses that are not based in real estate, and McDonnell's conduct of demonstrating unworthiness and incompetency in his business dealings with the HOA and RMBC violates this section.

¶ 10 McDonnell now appeals the Commission's order, again contending that the Commission lacked the authority to sanction him under any of the four statutory provisions charged because his conduct did not concern real estate matters. We agree in part and disagree in part.

II. Standard of Review

¶ 11 The standard of review for Commission actions is governed by statute. Colo. Real Estate Comm'n v. Hanegan,947 P.2d 933, 935 (Colo.1997). We “may not overturn agency actions unless such actions are arbitrary, capricious, legally impermissible, or an abuse of discretion.” Id.(summarizing section 24–4–106(7), C.R.S. 2015).

¶ 12 McDonnell's jurisdictional challenges require statutory construction, which we conduct de novo. Colo. Real Estate Comm'n v. Bartlett,272 P.3d 1099, 1101 (Colo.App.2011). When interpreting a statute, we ascertain and give effect to the intent of the General Assembly, looking first to the statute's plain language and according words and phrases their ordinary meanings. Specialty Rests. Corp. v. Nelson,231 P.3d 393, 397 (Colo.2010); Colo. Citizens for Ethics in Gov't v. Comm. for Am. Dream,187 P.3d 1207, 1220 (Colo. App. 2008). We give effect to every part of the statute and avoid constructions that would render a word, phrase, or provision meaningless. Bartlett,272 P.3d at 1102.

¶ 13 If the plain language is ambiguous, we employ rules of statutory interpretation to resolve the ambiguity. Anderson v. Longmont Toyota, Inc.,102 P.3d 323, 327 (Colo.2004). We read applicable statutory provisions as a whole to accord consistent, harmonious, and sensible effect to all parts. Id.In harmonizing seemingly conflicting statutes, we consider the consequences of a given construction and the ultimate goal of the statutory scheme. Id.We presume the General Assembly intended just and reasonable results, § 2–4–201(1)(c)–(d), C.R.S. 2015, and we avoid statutory interpretations leading to absurd outcomes, Anderson,102 P.3d at 327; State v. Nieto,993 P.2d 493, 501 (Colo.2000).

¶ 14 Finally, we give considerable weight to an agency's reasonable interpretation of its own enabling statute, but we are not bound by its legal interpretations. Specialty Rests. Corp.,231 P.3d at 397; Anderson,102 P.3d at 327.

III. Jurisdiction

¶ 15 We first address and reject McDonnell's contention that the Commission does not have the authority to sanction him for conduct that does not involve “selling, exchanging, buying, renting, or leasing” real estate. See§ 12–61–101(2)(a), C.R.S. 2015.

¶ 16 To ensure that licensed brokers remain “competen[t] to transact the business of a real estate broker in such manner as to safeguard the interest of the public,” § 12–61–102, C.R.S. 2015; see In re Currin,55 B.R. 928, 933 (Bankr.D.Colo.1985), the Commission has the authority to “take disciplinary action against [them],” Albright v. McDermond,14 P.3d 318, 322 (Colo.2000); see also§ 12–61–113(1). Specifically, the Commission can sanction a licensed broker for any of the grounds identified in section 12–61–113(1). Contrary to McDonnell's assertion, some of the grounds identified, by their very terms, do not involve “selling, exchanging, buying, renting, or leasing” real estate, and many others do not involve conduct specific to brokers:

• “Knowingly making any misrepresentation.” § 12–61–113(1)(a).

• “[V]iolating any reasonable rule or regulation promulgated by the [C]ommission in the interests of the public.” § 12–61–113(1)(k).

• “Conviction of, entering a plea of guilty to, or entering a plea of nolo contendere to” various crimes under the Colorado Criminal Code, federal law, or the laws of other states. § 12–61–113(1)(m).

• “Failing to immediately

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