Miller v. Dep't of Real Estate

• Decision Date: 17 October 2022
• Docket Number: B311510
• Parties: Everet Gordon MILLER et al., Plaintiffs and Appellants, v. DEPARTMENT OF REAL ESTATE et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

84 Cal.App.5th 141

300 Cal.Rptr.3d 189

Everet Gordon MILLER et al., Plaintiffs and Appellants,

v.DEPARTMENT OF REAL ESTATE et al., Defendants and Respondents.

B311510

Court of Appeal, Second District, Division 7, California.

Filed October 17, 2022

Klinkert, Gutierrez & Neavel, James E. Klinkert, Paul J. Gutierrez, Anaheim, and Kelly J. Neavel, Canyon Lake, for Plaintiffs and Appellants.

Rob Bonta, Attorney General, Tamar Pachter, Senior Assistant Attorney General, Brian D. Wesley, Supervising Deputy Attorney General, and Anna Barsegyan, Deputy Attorney General, for Defendants and Respondents.

SEGAL, J.

INTRODUCTION

Nijjar Realty, Inc. and its real estate broker of record, Everet Miller, operated a mobilehome park owned by one of Nijjar's clients. The Department of Real Estate filed an accusation alleging Nijjar violated various provisions of the Real Estate Law ( Bus. & Prof. Code, § 10000 et seq. ),¹ the Health and Safety Code, and administrative regulations under the Health and Safety Code by (1) employing an unlicensed individual to solicit and enter into lease-to-own agreements with the tenants/buyers of several mobilehomes; and (2) permitting the tenants/buyers to move into mobilehomes that were not permitted for human occupancy. Following a hearing, an administrative law judge ruled Nijjar violated the statutes and regulations. The administrative law judge issued a proposed order revoking Nijjar Realty's and Miller's licenses, which the Department adopted.

Nijjar and Miller filed a petition for a writ of administrative mandate, contending they did not receive a fair hearing because the administrative law judge considered improper evidence, including expert testimony from several witnesses the Department did not designate as experts. Nijjar and Miller also contended the administrative law judge erred in ruling they violated statutes in the Business and Professions Code and the Health and Safety governing the sale and occupancy of mobilehomes.

The trial court denied the petition, ruling that the administrative law judge did not consider any improper evidence and, after conducting an independent review of the evidence, that Nijjar and Miller violated the applicable statutes. Nijjar and Miller appeal, making the same arguments they made in the trial court. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Department Files an Accusation Against Nijjar and Miller

Nijjar maintained and managed the Four J's Trailer Park in Oildale, California. A separate entity, Cobra 28 No. 7, LP, owned the mobilehome park. In 2018 the Department filed an accusation against Nijjar and Miller. The Department alleged, as relevant here, Nijjar violated two provisions of the Real Estate Law: (1) section 10137, which prohibits a broker from retaining and compensating a person who acts as a broker without a license ( §§ 10130 - 10131.4, 10137 ), and (2) section 10131.6, subdivision (b), which prohibits a real estate broker from maintaining a place of business "where two or more ... mobilehomes are displayed and offered for sale" by the broker unless the broker also has a mobilehome dealer license issued by the Department of Housing and Community Development (HCD) ( § 10136, subd. (d) ; see Health & Saf. Code, § 18000, et seq. ). The Department alleged Nijjar violated these statutes by "employ[ing] and compensate[ing]" Jose Rodriguez, an unlicensed person, to represent the seller of mobilehomes at the park in three separate "lease to own agreement[s]." The Department also alleged Nijjar, in violation of several provisions of the Health and Safety Code and related HCD regulations, "allowed immediate residential occupancy" of several mobilehomes at the park that were "not authorized for human occupancy," including those offered in the lease-to-own agreements.

B. The Administrative Law Judge Conducts a Hearing

1. Nijjar and Miller File a Motion To Exclude the Department's Evidence, Which the Administrative Law Judge Denies

Prior to the hearing, the administrative law judge issued a conference order requiring the Department and Nijjar and Miller to file and exchange witness and exhibit lists 19 days before the hearing. The order stated that, "at the discretion of the Administrative Law Judge, failure to comply ... shall be grounds to exclude exhibits from evidence and to bar witnesses from testifying."

The Department filed a prehearing statement identifying potential witnesses and exhibits, but did not file a final witness and exhibit list until five days before the hearing. Nijjar and Miller filed a motion asking the administrative law judge to preclude the Department from "offering any exhibits" or "offering the testimony of any witnesses" during the hearing (effectively, a terminating sanction), or in the alternative, to prohibit the Department from introducing any expert opinion testimony. The administrative law judge denied the motion because (1) the Department in its prehearing statement had given Nijjar and Miller copies of all the documents it intended to use as exhibits and identified its witnesses and (2) the Department represented to the administrative law judge that none of its witnesses would offer expert opinion testimony.

Nijjar and Miller filed a separate motion to exclude evidence that, after Rodriguez executed the lease-to-own agreements with the tenant/buyers of the mobilehomes, one of the mobilehomes caught fire, killing an infant. The administrative law judge denied the motion because the Department represented it only intended to show that the fire "brought the state agencies ... to the site," not that Nijjar caused the fire.

2. The Department Presents Evidence That Residents Occupied Unpermitted Mobilehomes

The HCD, in addition to issuing mobilehome dealer licenses, generally regulates the operation of mobilehome parks. (See Health & Saf. Code, § 18200 et seq. ) Robert Martinez, a representative of the Codes and Standards Division of the HCD, testified that in 2015 Four J's obtained permits to install certain electrical infrastructure at the park, before installing any mobilehomes. In January 2016, however, Martinez inspected the park and "discovered people living in some mobile home units that had not undergone an inspection," and for which no one had applied for permits. Martinez issued Nijjar a "Notice of Violation" that stated seven mobile homes had been installed without a permit and that instructed Nijjar to correct the violations.

Miller admitted at the hearing he "did not know ... one way or the other" whether the mobilehomes were permitted for human occupancy.

About three weeks after Martinez inspected the park, one of the unpermitted mobilehomes caught fire. Martinez inspected the park again and found the mobilehome that caught fire was "completely destroyed." An adjacent mobilehome was also "totally" destroyed, and another was "partially" destroyed. Martinez issued Nijjar a new notice of violation, stating that the remaining mobilehomes "shall be vacated immediately" and that "the mobilehome units shall not be occupied until ... inspected and approved for occupancy ...."

3. The Department Presents Evidence of the Lease-to-own Agreements

George Jediny, an investigator for the HCD, interviewed Rodriguez at the park in February 2016. Rodriguez told Jediny that Nijjar employed him as the manager of Four J's Trailer Park.

The Department submitted three contracts Rodriguez executed in the fall of 2015 on behalf of Nijjar. Each contract designated Nijjar as the "Landlord" and the other party as the "Tenant." The contracts included a form titled "Rental Lease Agreement with Option To Purchase," which stated the tenants would pay Nijjar $325 a month "as rent for the Premises ...." The form also included a provision, under the heading "Option to Purchase," which stated Nijjar "grant[ed] Tenant the exclusive right to an option to purchase the Premises" for a price (either $7,000 or $10,000, depending on the contract), beginning with the term of the lease and expiring upon termination of the lease. The provision also stated that the tenant would "deposit with [Nijjar] the sum of $1,000 as a deposit towards the purchase price of the Premises" and that the tenant would pay a certain amount each month (either $150 or $325), "which include[d] principal and interest at 10% annum, on the unpaid balance ...." During their interview, Rodriguez explained to Jediny that the tenants paid $325 a month to rent the space in the mobilehome park and for utilities, plus an additional sum toward the principal on the mobilehome.

Ernie Ruiz, an investigator for the Department of Real Estate, also interviewed Rodriguez. Rodriguez described for Ruiz the process he followed in obtaining tenants for the lease-to-own agreements. If a prospective tenant was interested in a mobilehome, Rodriguez would inform the tenant it was "available for sale" and give the tenant the keys to the mobilehome. The tenant would then look at the mobilehome, although Rodriguez said he "wouldn't actually physically show" it. If the tenant wanted the mobilehome, Rodriguez would fax the tenant's credit application to his supervisors at Nijjar, who would decide whether to approve the application.

Jediny testified Rodriguez did not have a license issued by the HCD (i.e., a mobilehome dealer license), and Ruiz testified Rodriguez did not have a license issued by the Department of Real Estate. Ruiz also stated Nijjar and Miller had licenses issued by the Department of Real Estate but not by the HCD. Miller admitted at the hearing Nijjar did not have a license issued by the HCD because, according to Miller, "[n]one was required."

4. The Administrative Law Judge Rules Nijjar Violated the Applicable Statutes, and the Department Revokes Nijjar's Licenses

The administrative law judge found that, at all relevant times, Nijjar "operated and managed" the Four J's Trailer Park and "employed Rodriguez as the on-site manager" of the park. The administrative law judge found Nijjar, through...