Vermont Ass'n of Realtors, Inc. v. State

• Decision Date: 24 May 1991
• Docket Number: No. 89-048,89-048
• Citation: 593 A.2d 462,156 Vt. 525
• Parties: VERMONT ASSOCIATION OF REALTORS, INC. v. STATE of Vermont, Vermont Real Estate Commission.
• Court: Vermont Supreme Court

Page 462

593 A.2d 462

156 Vt. 525

VERMONT ASSOCIATION OF REALTORS, INC. v. STATE of Vermont, Vermont Real Estate Commission.

No. 89-048.

Supreme Court of Vermont.

May 24, 1991.

Thomas F. Heilmann of Heilmann, Ekman & Associates, Inc., Burlington, for plaintiff-appellant.

Jeffrey L. Amestoy, Atty. Gen., Marilyn Signe Skoglund, Asst. Atty. Gen., and John H. Chase, Montpelier, for defendant-appellee.

Ralph W. Holman, Chicago, Ill., and Thomas F. Heilmann, Burlington, for amicus curiae Nat. Ass'n of Realtors.

Before ALLEN, C.J., PECK, GIBSON and DOOLEY, JJ., and MARTIN, Superior Judge, Specially Assigned.

GIBSON, Justice.

Plaintiff, Vermont Association of Realtors, Inc., appeals from the dismissal of its complaint, which challenges (1) the statutory provision establishing the composition of the Vermont Real Estate Commission and (2) various rules promulgated by the Commission. We affirm.

In 1985, the Legislature generally amended the statute dealing with the regulation of real estate brokers and salespersons. Pursuant to the authority conferred on it by that statute, the Vermont Real Estate Commission promulgated various rules regulating the activities of real estate brokers and salespersons. Plaintiff filed a complaint asking the superior court (1) to declare 26 V.S.A. § 2251(b) invalid and unenforceable and (2) to enjoin the Commission from enforcing certain rules that it contends were promulgated without statutory authority and in violation of the Administrative Procedure Act (APA). On August 5, 1987, the court issued a preliminary injunction against the enforcement of Rules 26(c)(3) and (4). On November 23, 1988, the court granted the State's motion for summary judgment and dismissed the case.

On appeal, plaintiff argues that the court erred (1) in upholding the constitutionality of 26 V.S.A. § 2251(b); (2) in applying the wrong standard to determine whether the Commission exceeded the scope of its legislative authority; (3) in deciding that the Commission did not act outside its authority; and (4) in concluding that the Commission complied with the APA.

I.

Plaintiff first argues that 26 V.S.A. § 2251(b), which requires that at least one of the three broker members of the seven-member Real Estate Commission must not be a member of a professional real estate association, is unconstitutional because it deprives plaintiff's members of their rights of freedom of association and privacy guaranteed by the First Amendment to the United States Constitution. ¹ We disagree.

Although there is some uncertainty over the scope of the First Amendment right of association and the level of scrutiny with which to review statutes that allegedly impair associational rights, courts generally will first consider whether the governmental action infringes on First Amendment interests, and, if so, the significance of the infringement and the nature of the associational right infringed. See Elrod v. Burns, 427 U.S. 347, 360, 96 S.Ct. 2673, 2683, 49 L.Ed.2d 547 (1976); MacGuire v. Houston, 717 P.2d 948, 952 (Colo.1986); 3 R. Rotunda, J. Nowak & J. Young, Constitutional Law: Substance and Procedure § 20.41, at 199-204 (1986). Only significant and substantial restraints on freedom of association require strict scrutiny. MacGuire, 717 P.2d at 952; see Elrod, 427 U.S. at 362, 96 S.Ct. at 2684; Kusper v. Pontikes, 414 U.S. 51, 58, 94 S.Ct. 303, 308, 38 L.Ed.2d 260 (1973).

According to plaintiff, by requiring that one of the three broker members of the Commission be unaffiliated with a real estate organization, § 2251(b) inhibits brokers who wish to serve on the Commission from being members of a real estate association and impinges on members' privacy interests by making it necessary for them to reveal their associations. We cannot agree. Plaintiff's speculative predictions on the impact of this law, which are unsupported by evidence, neither trigger a strict scrutiny standard of review nor indicate that further factual investigation is required. Plaintiff has failed to show a significant impairment of its associational rights or any demonstrable injury that will result from its members having to disclose whether they belong to a real estate association. Cf. O'Neal v. United States, 601 F.Supp. 874, 878-80 (N.D.Ind.1985) (summary judgment affirmed; two members of organization unable to show that an IRS summons requesting their telephone records significantly impacted on their associational rights).

Assuming that the statute in question has a minimal impact on plaintiff's associational rights, we agree with the trial court that the requirements of the statute are rationally related to the State's legitimate interest in creating a real estate commission with broad representation. A large percentage of the brokers and salespersons in the state are not members of a professional real estate organization. The State's interest in seeing that at least one person on the Commission is in a similar situation is legitimate, notwithstanding plaintiff's claim that such a rule will deter those who would like to serve on the Commission from joining a professional real estate organization. We conclude that summary judgment was appropriate here.

II.

Next, plaintiff argues that the court applied the wrong standard in determining whether the Commission exceeded its statutory authority, and, further, that the court erred in concluding that the challenged rules did not exceed the authority delegated to the Commission by the Legislature. We disagree with both contentions.

This Court has consistently held that agency actions, including the promulgation of rules, enjoy a presumption of validity. See In re Club 107, 152 Vt. 320, 323, 566 A.2d 966, 967 (1989); Consumer Credit Ins. Ass'n v. State, 149 Vt. 305, 308, 544 A.2d 1159, 1161 (1988); In re Agency of Administration, 141 Vt. 68, 74-75, 444 A.2d 1349, 1351-52 (1982). Here, the trial court examined the rules and determined that they were within the scope of the Commission's statutory authority. The court then stated that it did not have the authority "to determine whether these rules are the best way to effectuate the statute," but rather that it must defer to the agency's judgment "absent a compelling indication that the Commission misinterpreted this statute." We see no error in the standard of review applied by the court.

Nor did the court err in concluding that the rules were within the statutory grant of authority. While we presume the validity of agency actions, "an agency's regulations must be reasonably related to its enabling legislation in order to withstand judicial scrutiny." In re Club 107, 152 Vt. at 323, 566 A.2d at 967-68. There must be some nexus between the agency regulation, the activity it seeks to regulate, and the scope of the agency's grant of authority. Id. at 324, 566 A.2d at 968. Accordingly, we will not countenance any agency rule that exceeds the authority delegated to the agency under its enabling act. Id. at 326, 566 A.2d at 969 (Liquor Control Board exceeded its legislative authority by promulgating regulation prohibiting "obscene, lewd, or indecent entertainment").

Under the instant enabling act, the Commission

shall adopt rules in accordance with [the APA] necessary for the performance of its duties, including:

(1) a definition of the activities which may be performed only by a licensee ...;

(2) qualifications for obtaining licensure ...;

(3) explanations of appeal and other significant rights given to applicants and the public;

(4) procedures for disciplinary and reinstatement cases.

26 V.S.A. § 2252(a) (emphasis added). The act also permits the Commission to "adopt rules relating to the procedures to be followed in handling complaints and conducting hearings under this chapter." Id. § 2252(c)(5).

Before examining the individual rules to determine whether they are within the Commission's authority, we point out that the word "including" in a statute is ordinarily a word of enlargement, not one of limitation. ² In re Hartman, 2 Ohio St.3d 154, 156, 443 N.E.2d 516, 517 (1983) (common usage of word "including" implies that following list is not exhaustive); Portland Distrib. Co. v. Department of Revenue, 307 Or. 94, 97, 763 P.2d 1189, 1190 (1988) (word "including" did not limit application of statute to taxes listed). Thus, the Commission has the authority to promulgate any rule "necessary for the performance of its duties," even if the rule is not within the scope of the four enumerated types. Keeping this in mind, we acknowledge the fact that, generally, the purpose of a real estate licensing statute "is to regulate real estate activities so as to protect the public." Arizona State Real Estate Dep't v. American Standard Gas & Oil Leasing Serv., 119 Ariz. 183, 186, 580 P.2d 15, 18 (Ct.App.1978); see Boise Cascade Home & Land Corp. v. New Jersey Real Estate Comm'n, 121 N.J.Super. 228, 240, 296 A.2d 545, 551 (1972) (real estate commission created under regulatory licensing act to protect public from incompetent and unscrupulous practice). The Vermont statute is no exception. ³

We now examine the challenged rules. Plaintiff's most strident arguments are raised against Rules 26(c)(3) and (4), which require that a listing agreement contain

(3) Authorization for the broker to offer the property for sale, and a description of the way a prospective buyer may deliver his or her acceptance of the offer if not to the broker.

(4) The terms and conditions upon which the licensee is authorized to offer the property for sale.

Plaintiff asserts that the Commission has no authority to regulate listing agreements. Plaintiff further argues that by requiring listing agreements to specify a broker's authority to offer property, Rules 26(c)(3) and (4) fly in the face of the established common-law rule that listing agreements are not offers. While conceding that the Commission rules cannot be overturned merely because they entail a nontraditional approach, amicus ...