Williams v. Commonwealth Of Va. Real Estate Bd., Record No. 2799-09-2.

• Citation: 57 Va.App. 108,698 S.E.2d 917
• Decision Date: 14 September 2010
• Docket Number: Record No. 2799-09-2.
• Court: Court of Appeals of Virginia
• Parties: Edward A. WILLIAMSv.COMMONWEALTH of Virginia REAL ESTATE BOARD.

57 Va.App. 108

698 S.E.2d 917

Edward A. WILLIAMSv.COMMONWEALTH of Virginia REAL ESTATE BOARD.

Record No. 2799-09-2.

Court of Appeals of Virginia,

Richmond.

Sept. 14, 2010.

COPYRIGHT MATERIAL OMITTED

Brenda L. Page, Richmond, (Alan F. Duckworth; Page Law Firm, P.C., on briefs), for appellant.

Steven P. Jack, Assistant Attorney General (Kenneth T. Cuccinelli, II, Attorney General, on brief), for appellee.

Present: PETTY, ALSTON, JJ., and WILLIS, Senior Judge.

ALSTON, Judge.

Edward A. Williams (Williams) appeals a decision of the Circuit Court of Henrico County, affirming the Commonwealth of Virginia Real Estate Board's (Board) decision to revoke Williams's real estate license and impose $9,000 in fines against him. Williams contends the Board's findings are contrary to law, outside the specialized competence of the Board, in violation of Williams's due process rights, and arbitrary and capricious. For the reasons that follow, we affirm in part and reverse in part.

I. BACKGROUND

The underlying facts in this matter are highly contested, and rather convoluted. In the fall of 2004, Williams was a licensed real estate agent working for Virginia Real Estate and Development, Inc. (VARED). On December 8, 2004, Williams entered into an agreement to individually purchase a 1.25-acre lot in Hanover County from Edward Waller (Waller) for $7,000.¹ The agreement specified that Williams would make a $1.00 earnest money deposit with VARED, the escrow agent. The agreement also specified that Williams would pay delinquent taxes on the property, in the amount of $4,205.35, and related fees at closing. The agreement was signed by Waller and Williams and under Williams's signature was written, “Purchaser is a licensed real estate agent.”

On January 5, 2005, the parties settled on the property. Contrary to the terms of the agreement, Williams never deposited $1.00 with the escrow agent. Further, the settlement statement noted that Waller, as opposed to Williams, paid delinquent taxes and fees totaling $6,106.95.

On March 23, 2005, Williams entered into an agreement to individually purchase a 7.5-acre lot adjacent to Waller's lot, from James Thacker (Thacker) for $35,000. The agreement specified that Williams would deposit $1,000 with Courthouse Title, LLC (Courthouse Title), the escrow agent, the same day the parties entered the agreement. The agreement was signed by both parties and included information relating to Williams's real estate license number and his employment with VARED. Williams and Thacker closed on the property on April 28, 2005. Despite the deadline set out in the agreement Williams did not deliver a check to the escrow agent until at least April 12, 2005.²

On February 27, 2007, Michael Pintz (Pintz), the principal broker and owner of VARED and manager of Courthouse Title, filed a complaint with the Department of Professional and Occupational Regulation (Department), alleging Williams violated a number of the Department's regulations while facilitating the Waller and Thacker transactions. Pintz alleged inter alia, that Williams failed to disclose his interest in the transactions; failed to disclose his brokerage relationship with VARED to the parties; failed to safeguard the interests of the public; engaged in a conflict of interest without obtaining the written consent of the parties; materially misrepresented the terms of the agreements; and failed to provide notice of material changes to the contracts. ³ In support of his complaint, Pintz forwarded to the Department a conversation he recorded with Waller, in which Waller explained his interactions with Williams. In the recording, Waller stated that Williams approached him and offered him $7,000 to purchase Waller's property. Waller noted that when Williams approached him, Waller was under the impression that he no longer owned the property because he failed to pay taxes on the property for several years. Waller stated that he willingly signed the purchase agreement with Williams, believing he would receive $7,000 from Williams. Waller then explained that Williams only paid Waller $444.42 at the closing on the property.

The Department conducted an investigation into the complaint, and on November 26, 2007, the Department offered Williams a “consent offer” of $4,250 in fines and completion of an ethics course.⁴ Williams declined the offer.⁵

Accordingly, the Department scheduled an “informal fact-finding conference” (IFF) for March 26, 2008. Before the IFF, Williams suffered a subdural brain hematoma, which required brain surgery and rehabilitation. As a result, Williams requested a continuance of the IFF for “an uncertain duration.” ⁶ The Department granted Williams's request for a continuance and scheduled the IFF for May 7, 2008.

On May 7, 2008, the parties proceeded with the IFF without a further request for a continuance from Williams or his counsel. The presiding Board member, Byrl Taylor (Taylor), conducted the hearing, in which Williams and Pintz testified. Neither Waller nor Thacker was present.

On June 4, 2008, Taylor provided a summary of the IFF and recommendation to the Board. Taylor found Williams failed to disclose his brokerage relationship to the parties in violation of Code § 54.1-2138 (Counts I and VII); failed to deposit $1.00 according to the terms of the Waller contract in violation of 18 VAC 135-20-180(B)(1)(a) (Count II); failed to act as a real estate salesperson in such a manner as to safeguard the interest of the public in violation of 18 VAC 135-20-260(10) (Count III); failed to include the complete terms and conditions of the Waller contract in violation of 18 VAC 135-20-300(6) (Count IV); and failed to provide timely written notice to all principals to the transactions of material changes to the contract in violation of 18 VAC 135-20-310(2) (Counts V and VIII).⁷ Taylor recommended the Board impose $9,000 in fines against Williams and revoke his real estate license. On July 10, 2008, the Board accepted Taylor's recommendation.

Pursuant to Code § 2.2-4026, Williams appealed to the circuit court. Prior to a hearing in circuit court, Waller died.

On October 31, 2008, and April 23, 2009, Williams presented evidence to the circuit court in support of his claim that the Board's decision was erroneous. Williams elicited testimony from E. Nathan Matthews (Matthews), the Department's investigating officer, Taylor, and Doug Schroder (Schroder), the Director of the Department's adjudication team.

Matthews testified that in his investigation, he interviewed Pintz, Williams, an agent from Courthouse Title, and Jerald Huntsinger.⁸ Matthews testified that he did not interview Waller and that he attempted to interview Thacker but Thacker did not want to participate. When Williams's counsel questioned Matthews as to why he did not interview Waller, Matthews stated that, in his opinion, he had sufficient information to evaluate the allegations against Williams without interviewing Waller.

Williams then questioned Schroder about the record presented to the Board. Specifically, Williams directed Schroder's attention to Matthews's investigative notes, the consent offer, and Taylor's notes from the IFF. Counsel asked why these documents, submitted to Taylor after the IFF but before the Board rendered its decision, were not presented to the Board. Schroder responded that the “record closes on the day the IFF is held,” but “[i]f someone asks permission to leave the record open to submit additional information, the Board Member ... has the authority to hold the record open.” Schroder further noted that he provided this information to Williams and his counsel at the time of the IFF.

Williams also asked Schroder why the IFF took place without Waller present. Schroder testified that Waller was sick the day of the IFF. Further, Schroder noted that although Waller's name was listed on the hearing's “participant list,” no one subpoenaed Waller for the IFF.

Finally, Williams questioned Taylor about her recommendation to the Board. Taylor testified that she reviewed Pintz's recorded interview with Waller but she did not ask Matthews to interview Waller further. Questioning Taylor's finding that Pintz was a credible witness, Williams noted that Pintz admitted that he routinely kept earnest money deposits in an operating account rather than his escrow account. Therefore, it was possible, as Williams claimed, that Pintz told Williams to keep the deposits on the contracts, rather than turn them over to the escrow agent. Taylor responded that if there was evidence suggesting Pintz violated the Department's regulations, she would have ordered an investigation of Pintz. Instead, Taylor specifically found Pintz credible.

Williams noted that Taylor, in her summary of the IFF and recommendation to the Board, specifically asked why Waller would sign the settlement statement when it indicated that Waller would pay closing costs and fees. In response, Taylor stated, “Mr. Waller did not have the education and did not understand, and I know that Mr. Williams as [r]ealtor knew what side of the settlement statement [closing costs] should be on and he let it go.” Williams asked Taylor the basis for her other findings. Taylor noted that Williams made changes to the contract without informing the parties or having them initial the changes. Taylor stated that Williams failed to inform the parties in writing that Williams was not representing Waller or Thacker in the transactions. Further, Taylor noted that “[Williams] misrepresented ... who was going to pay for the delinquent taxes.” Finally, Taylor stated that “[t]he county assessment was higher than any amount of money [Waller] got or received.” ⁹ When the court asked Taylor how she learned of the tax assessment when that information was not in the agency's record, Taylor responded that she found the information “online.” Taylor stated that she “did not rely on [the assessment],” but later admitted that it “was one of the...