Mulready v. Board of Real Estate Appraisers

• Decision Date: 29 December 2009
• Docket Number: Docket: Ken-09-179
• Citation: Mulready v. Board of Real Estate Appraisers, 984 A.2d 1285, 2009 ME 135 (Me. 2009)
• Parties: Robert J. MULREADY v. BOARD OF REAL ESTATE APPRAISERS.
• Court: Maine Supreme Court

984 A.2d 1285

2009 ME 135

Robert J. MULREADY v. BOARD OF REAL ESTATE APPRAISERS.

Docket: Ken-09-179

Supreme Judicial Court of Maine.

Argued: October 30, 2009.

Decided: December 29, 2009.

Scott J. Lynch, Esq. (orally), Homblower Lynch Rabasco & Van Dyke, P.A., Lewiston, ME, for Robert J. Mulready.

Janet T. Mills, Attorney General, Andrew L. Black, Asst. Atty. Gen. (orally), Office of the Attorney General, Augusta, ME, for the Maine Board of Real Estate Appraisers.

Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, and GORMAN, JJ.

MEAD, J.

[¶ 1] Robert J. Mulready appeals from a judgment entered in the Superior Court (Kennebec County, Jabar, J.), affirming the decision of the Board of Real Estate Appraisers (BREA) (Bowditch, Acting Chairman) to issue a warning and order him to pay hearing costs pursuant to 10 M.R.S. §§ 8003(5-A)(A)(2), (B)(2),¹ 8003-D² (2008). The BREA found that Mulready violated the Uniform Standards of Professional Appraisal Practice and Advisory Opinions' (USPAP) Standards Rule 2-1(b)³ and Ethics Rule on Conduct.⁴ Because the two rules fall within the BREA's realm of expertise and do not plainly compel another result, and because the BREA's factual findings are supported by the record, we affirm the judgment.

I. BACKGROUND

[¶ 2] Mulready has been licensed as a certified general appraiser in Maine since January 24, 2000. In June 2005, Dead River 80 Exchange Street, LLC (Dead River) purchased an office building located at 80 Exchange Street in Bangor (80 Exchange) for $2,700,000. In April 2005, the City of Bangor's Tax Assessor (Assessor) had valued it at $6,323,600. Dead River hired Mulready to assist with the tax abatement process.

[¶ 3] In a letter dated September 6, 2005, Mulready informed the Assessor that he had been retained by Dead River regarding the assessment of 80 Exchange. The Assessor responded that he would "need a copy of the engagement letter from Dead River 80 Exchange LLC designating you as their representative," among other documents. He wrote that, without the documents, he could not discuss the assessment with Mulready or begin a review. On September 14, Dead River's asset manager sent the Assessor a letter, stating that Mulready was Dead River's "duly authorized agent ... regarding all matters related to the assessment of" 80 Exchange.

[¶ 4] In a December 18, 2005, letter, Mulready thanked the Assessor and another staff member for meeting with him on December 13 about "our application for an abatement." He also wrote:

In the last few months I have had various reasons to review several properties owned by Dead River Properties. They are well managed, well maintained and ownership has a pride in the communities they are involved in.... The building requires over $2,100,000 in capital improvements and tenant fit up to what is recognized as a tired building. Within 12 months to 24 months this property will have been returned to the market as a full Class A office building.

Mulready opined that 80 Exchange had a value of $3,500,000.

[¶ 5] The Assessor denied the abatement application on December 28, 2005. On January 22, 2006, Mulready wrote a letter to the chairperson of the Board of Assessment Review (BOAR) stating, "we wish to appeal" the abatement denial. In signing the letter, he identified himself as Dead River's "Duly Authorized Agent."

[¶ 6] On April 11, 2006, Mulready sent Dead River's attorney a "Complete Summary Appraisal Report" that he had prepared. In the cover letter transmitting his report, Mulready concluded that the market value of 80 Exchange based on a fee simple appraisal was $3,885,000. In the report itself, he stated that 80 Exchange is located in a moderate climate according to the Marshall and Swift Valuation Service (Marshall and Swift) terminology.

[¶ 7] Mulready's report was submitted as part of Dead River's appeal to the BOAR. At the beginning of the BOAR hearing, Mulready and Dead River's attorney notified the BOAR members that Mulready had made an error when calculating the gross rental area of Comparable Land Sale #2 (Comparable Sale 2). At the hearing, Dead River's attorney called Mulready as a witness. On May 9, 2006, the BOAR granted Dead River an abatement based on its determination that the original assessment had been "manifestly wrong."

[¶ 8] On May 26, 2006, Paul Linehan of Maine Valuation Company, who had reviewed Mulready's report for the City of Bangor, filed a complaint on behalf of the Assessor against Mulready with the Office of Licensing and Registration, which includes the BREA. 10 M.R.S. § 8001(38)(CC) (2008). He alleged that Mulready's report did not comply with the USPAP, that its conclusions were not properly supported, and that the results were unreliable. He also alleged that there was "some question in the assessor's mind regarding [Mulready's] initial role as a consultant—`advocate'" and then acting as "an `unbiased' appraiser."

[¶ 9] In its decision approved on January 8, 2008, the BREA found that statements in Mulready's December 18, 2005, and January 22, 2006, letters, as noted above, constituted advocacy and that he had acted as an advocate for Dead River in the abatement appeal in violation of the USPAP's Ethics Rule on Conduct. The decision also noted that Mulready's report did not mention his previous work for Dead River on its abatement application. The BREA found that he "perform[ed] an appraisal to support his own advocacy." However, there were insufficient votes to find violations of six other USPAP or statutory requirements, including another portion of the Ethics Rule on Conduct.⁵

[¶ 10] Regarding the USPAP's Standards Rule 2-1(b), the BREA found that the appraisal contained several errors or omissions, which constituted a violation. First, it found that Mulready should have evaluated 80 Exchange as a leased fee, rather than as a fee simple interest. Second, it found that he should have labeled the Bangor climate as "extreme," not "moderate" per Marshall and Swift, and that he did not explain his reasoning for the departure. The BREA additionally found:

[I]t was at first unclear without supplemental information whether the respondent calculated gross rental area or net rental area regarding the subject and comparable properties. Additionally, the respondent's depreciation calculations were confusing and misleading due to a lack of information which led both the city's review assessor and an expert appraiser testifying for Mr. Mulready to question whether he had double counted for depreciation.

The decision also noted Mulready's admitted calculation errors regarding the gross rental area for Comparable Sale 2 and the acreage of Comparable Land Sale # 3 (Comparable Sale 3). For this violation and the Ethics Rule on Conduct violation, the BREA issued Mulready a warning and imposed hearing costs of $3093.75.

[¶ 11] On February 5, 2008, Mulready timely appealed to the Superior Court pursuant to M.R. Civ. P. 80C. The court found no inconsistency in the BREA's finding that Mulready had acted as an advocate and the finding that he had not violated another portion of the Ethics Rule on Conduct. The court noted that the BREA had not affirmatively concluded that Mulready had acted impartially, objectively, independently, and without accommodation of personal interest; it simply found the evidence insufficient to prove a violation of the rule.

[¶ 12] The court determined that Mulready was correct in using a fee simple calculation, rather than a leased fee calculation, a point that the State concedes. The court found nevertheless that there was sufficient evidence in the record to support the BREA's conclusion that Mulready had violated Standards Rule 2-1(b). This appeal followed.

II. DISCUSSION

A. Standard of Review

[¶ 13] "When the Superior Court acts in an intermediate capacity to review an administrative agency's decision pursuant to M.R. Civ. P. 80C, we directly review the agency's decision for errors of law, abuse of discretion, or findings not supported by substantial evidence in the record." Beauchene v. Dep't of Health & Human Servs., 2009 ME 24, ¶ 11, 965 A.2d 866, 870 (quotation marks omitted); see also Seider v. Bd. of Exam'rs of Psychologists, 2000 ME 206, ¶ 8, 762 A.2d 551, 555. Considerable deference is given "to the agency's interpretation of its own rules, regulations, and procedures, and [we] will not set aside the agency's findings unless the rule or regulation plainly compels a contrary result." Beauchene, 2009 ME 24, ¶ 11, 965 A.2d at 870 (quotation marks omitted); see also Seider, 2000 ME 206, ¶ 32, 762 A.2d at 561. We will not "second-guess the agency on matters falling within its realm of expertise." Wood v. Superintendent of Ins., 638 A.2d 67, 71 (Me.1994).

B. USPAP Ethics Rule on Conduct Violation

[¶ 14] The USPAP's standards and rules set minimum requirements for professional appraisal practice and ethics. 32 M.R.S. § 14028 (2008). The USPAP's Ethics Rule on Conduct prohibits appraisers from acting as advocates "for any party or issue." Appraisal Standards Bd., Uniform Standards of Professional Appraisal Practice and Advisory Opinions, Ethics Rule (Conduct), at 7 (2005). The USPAP defines advocacy as "representing the cause or interest of another, even if that cause or interest does not necessarily coincide with one's own beliefs, opinions, conclusions, or recommendations." Id. at 1. Additionally, the commentary notes: "An appraiser may be an advocate only in support of his or her assignment results. Advocacy in any other form in appraisal practice is a violation of the Ethics Rule." Id. Ethics Rule (Conduct) cmt., at 7 (capitalization omitted).

[¶ 15] Mulready argues that the BREA's finding that he acted as an advocate contradicts its earlier finding that he had not violated another portion of the Ethics Rule on Conduct. He alleges that the BREA could not logically find that he had been an advocate for a party or issue and yet also find that he had acted...