ARELLO Latest Court Decisions 2013-2014

ARELLOLatest Court Decisions

2013-2014ARELLO Law and Regulation CommitteeSeptember, 2014

LAW & REGULATION COMMITTEE & VOLUNTEERSSincerest Thanks:• Gene Allison• Chris Booth• Julie Cropp• Terry Duggan• Herb Freeman• Mike Gamblin• Kenneth Gill• Ulani Gulstone• Kevin Hypes• Daniel Kehew• Robert Kinniebrew• Trevor Koot

• Jeanette Langford• Greg Lemon• Kerri Lewis• Charlie Moody• Tom Pool• David Raphael• Steve Sargenti• Nikki Senter• James Therrien• Janet Thoren• Allen Trammell• Kim WellsBriefing Cases

ADMINISTRATIVE LAWOhio Div. of Real Estate v. Knight

Citation: 2013-Ohio-2896Court: Court of Appeals of Ohio,

8th Appellate District

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Columbus, OhioDecember 13, 2010


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Complaint Process:

1. Complaint Filed2. Division Investigates 3. Charges Filed / Notice of Hearing4. Hearing (before Hearing Examiner 12/13/10)5. Recommended Decision (1/27/11)6. Commission Meeting (4/6/11)7. Commission Adopts/Modifies/Rejects (4/6/11)

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Hearing examiner found 10 violations and recommended revocation.

Before the Ohio Real Estate Commission:

• Knight submitted evidence.

• No hearing or testimony.

• Commission adopted recommended order.

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Judicial Review:

• Division initially filed incomplete record• partial transcript due to inaudible recording

• Division files supplement to complete record• complete transcript• additional correspondence submitted by Knight

before the Commission meeting• Court: Division improperly bootstrapped

evidence about Eral to Knight & remanded.– Page 3 –


Ohio Court of Appeals reversed the Common Pleas Court.

Incomplete record prejudiced licensee

• Delay in completing transcript not prejudicial

• Failure to include documents submitted by Knight harmed her case before C.P. Court.• Only evidence Knight submitted

• Court remanded and instructed C.P. Court to enter judgment against the Division

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ADMINISTRATIVE LAWOni v. Tenn. Dep’t of Health

Citation: 2013 Tenn. App. LEXIS 4672013 WL 3808214

Court: Court of Appeals of Tennessee,Nashville

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2003

Oct. 2003

Aug. 2007

Nov. 2007Mar. 2011

- Oni charged with burglary, theft, and battery in Georgia

- Oni indicates no criminal charges on NY renewal

- Oni accepted reprimand in lieu of formal discipline in Tennessee and agreed to pay $3,000 fine and $3692.65 costs

- Oni indicates no reprimand on NY renewal- Oni’s NY license revoked for failing to

report criminal charges and reprimand

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January 2012 Tennessee Order:• Oni found in violation of prior reprimand to to

his failure to pay remaining $692.65 balance• Oni found in violation of Tennessee law

because he was disciplined in New York• Oni required to pay $692.65 costs remaining

from 2007 reprimand.

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January 2012 Tennessee Order:

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• Oni revoked based on New York revocation.


Judicial Review:

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• Affirmed Board decision requiring payment of 2007 costs

• Reversed Board decision revoking TN medical license

• “By simply mirroring the New York Board’s choice of discipline, the Board rendered an arbitrary or capricious decision.”

BROKERAGE PRACTICETang v. Zhang

Citation: 2013 BCCA 52Court: Court of Appeal for British Columbia

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Vancouver, British Columbia


Issue: Buyer’s Forfeiture of $100,000 Deposit on $2,030,000 Vancouver Home.

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“amount paid by the Buyer will be absolutely forfeited to the seller in accordance with the Real Estate Services Act,

on account of damages”


Williamson Pacific Developments v. Johns, (1997) 35 B.C.L.R. (3d) 180.• $45,000 deposit• “nonrefundable” “deposit

on account of purchase” forfeited “on account of damages”

• Court: no power in equity to relieve buyers’ forfeiture

Agosti v. Winter, 2009 BCCA 490.• $10,000 deposit• “amount paid by the Buyer

will be absolutely forfeited to the seller in accordance with the Real Estate Services Act, on account of damages”

• Court: sellers do not have unconditional right to payment of deposit

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Court of Appeal for British Columbia:• noted deposit language identical to Agosti• reconciled Williamson & Agosti • overruled Agosti• reversed trial court judgment for buyers

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General Principles With Respect to Deposits:• Whether a buyer’s deposit is forfeited is a matter of

contractual intent.• A true deposit is intended to motivate the parties to carry

through on their bargains and generally forfeited by the buyer when the buyer defaults.

• A deposit is an exception to the general rule that a contractual amount subject to forfeiture is an unlawful penalty.

• A deposit forfeited “on account of damages” does not mean the deposit is lost only if damages are shown.

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BROKERAGE PRACTICEWestgate Smoky Mts. v. Phillips

Citation: 2013 Tenn. LEXIS 1014, Unemployment Ins. Rep. (CCH) P8438.

Court: Supreme Court of Tennessee

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Westgate Smoky Mountain ResortGatlinburg, TN


Procedural History11/200912/2009

3/201010/2010

2011

8/2012

12/2013

- Vukich-Daw terminated- Department of Labor: Vukich-Daw = employee.

- timeshare salesperson not a “real estate agent”- Labor Appeals Tribunal: Vukich-Daw = employee- Board of Review: Vukich-Daw = employee- Chancery Court: Vukich-Daw = not an employee

- timeshare salesperson is “real estate agent”- Court of Appeals: Vukich-Daw = employee

- timeshare salesperson not a “real estate agent”- Supreme Court: Vukich-Daw = not an employee

- timeshare salesperson is “real estate agent”

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Statutory Timeline1973

1981

1983

1987

1989

- Tennessee Real Estate Broker License Act (REBLA)• licensure of real estate “brokers” and “affiliate brokers”

- REBLA amended to add time-share transactions to activities performed by brokers and affiliate brokers

- Time-Share Act• created time-share “sales agents”• time-share “sales agents” were required to be under

supervision of a broker and subject to REBLA & TREC- Employment Security Law excludes “qualified real estate

agent”- REBLA amended to add time-share “salespersons”• “salespersons” under supervision of broker

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Criteria:1. Qualified real estate agent– legislative history shows intent to treat timeshare

salesperson as “qualified real estate agent”– timeshare salesperson licensed by TREC

2. Paid on commission3. Services performed under written contract

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CONTRACTSConley v. Guerrero

Citation: 2014 N.J. Super. Unpub. LEXIS 709Court: Superior Court of New Jersey,

Chancery Division,Somerset County

NOTE: Issue involves facsimile messages and electronic mail, not regular mail as reported.

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The CedarsBernards Township, NJ

• Conley agreed to purchase property from Guerrero.

• Attorney review clause allowed either party to cancel during review period.

• Guerrero’s counsel sent notice of cancellation by facsimile and email during review period.


Issue: Whether cancellation of a contract that required cancellation by personal service, certified mail, or telegram was effective when the cancellation was sent by facsimile and email.

Standard NJ Attorney Review Provision:“If an attorney for the Buyer or the Seller reviews and disapproves of this contract, the attorney must notify the Broker(s) and the other party named in this contract within the three-day period. Otherwise this contract will be legally binding as written. The attorney must send the notice of disapproval to the Broker(s) by certified mail, by telegram, or by delivering it personally. The telegram or certified letter will be effective upon sending. The personal delivery will be effective upon delivery to the Broker’s office.”

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CONTRACTSGoldman v. Olmstead

Citation: 414 S.W.3d 346Court: Texas Court of Appeals, 5th District

Goldmans – Buyers• Hewett – Buyers’ agent

Olmsteads – Sellers• Smith – Sellers’ agent• Smith is Mrs. Olmstead’s mother

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CONTRACTSGoldman v. Olmstead

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3813 Stanford

“TREC may suspend or revoke a license . . . or take disciplinary action. . . if a license holder engages in misrepresentation dishonesty, or fraud when selling real property in the name of a person related to the license holder.” – Tex. Occ. Code Ann. § 1101.652(a)(3)

FAIR HOUSINGKeller v. City of Fremont

Citation: 719 F.3d 931Court: U.S. Court of Appeals, 8th Circuit

– Page 23 –Fremont, Nebraska


Ordinance 5165:• “It is unlawful for any person or business entity to rent to, or permit occupancy by, an illegal alien, knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law.”• “An ‘illegal alien’ is an alien who is not lawfully present in

the United States, according to [federal law.]”

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Fremont Rental Process:1. Prospective renter obtains occupancy license

– provide $5 fee and citizenship information and immigration status– minors and temp. residents exempt

2. City issues occupancy license3. Renter may begin tenancy and

landlord must keep copy ofrenter’s occupancy license

4. Police ask federal government toverify immigration status.

5. If renter is unlawfully present, renter must establish lawful presence or occupancy license is revoked.

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“We find no hint in the FHA’s history and purpose that such a law or ordinance, . . . violates the FHA if local statistics can be gathered to show that a disproportionate number of the adversely affected aliens are members of a particular ethnic group. In most cases today, that would of course be Latinos, but at various times in our history, and in various locales, the “disparate impact” might have been on immigrants from Ireland, Germany, Scandinavia, Italy, China, or other parts of the world. It would be illogical to impose FHA disparate impact liability based on the effect an otherwise lawful ordinance may have on a sub-groupof the unprotected class of aliens notlawfully present in this country.”

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FAIR HOUSINGMiami Valley Hous. Ctr., Inc. v. Connor Group

Citation: 725 F.3d 571Court: U.S. Court of Appeals, 6th Circuit

599/1br — Great Bachelor Pad! (Centerville)

Our one bedroom apartments are a greatbachelor pad for any single man looking tohook up.

This apartment includes a large bedroom, walkin closet, patio, gourmet kitchen, washer dryerhook up and so much more. . . .

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FAIR HOUSINGMiami Valley Hous. Ctr., v. Connor Group

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Chesapeake Landing ApartmentsDayton, Ohio

FAIR HOUSINGMiami Valley Hous. Ctr. v. Connor Group

Connor Group Craigslist Headlines:• "No Matter What They Say, Size Does Matter!"• "Wanna Be on TOP?!!"• "Single?? . . . Mingle at The Greene!!"• "Hook-Up Here!"• "E-Harmony thinks we are a match!"• "Happy Hour!!"• "Size DOES Matter!! And We Measure Up!!"• "It's That Time of the Month Again . . . Feeling a Different Kind of Cramp Though?"

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FAIR HOUSINGMiami Valley Hous. Ctr. v. Connor Group

Jury Instructions: “If an ordinary reader who is a member of a protected class would be discouraged from answering the advertisement because of some discriminatory statement or indication contained therein, then the fair housing laws have been violated.”

“Focus on the message being conveyed by the advertisement at issue in this matter. Ask yourselves whether the message focuses on the suitability of the property to the renter, which is permissible, or whether it impermissibly focuses on the suitability of the renter to the owner.”

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GOVERNMENTBaumgart v. Mont. Dept. of Commerce

Citation: 2014 MT 194Court: Supreme Court of Montana

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GOVERNMENTKansas Bldg. Industry Workers

Compensation Fund v. State of Kansas

Citation: 49 Kan. App. 2d 354310 P.3d 404

Court: Court of Appeals Kansas

Legislature Swept Fee Funds:• Insurance Department• Bank Commissioner• Real Estate Commission

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GOVERNMENTKansas Fund v. State of Kansas

Trade associations (including Kansas Association of Realtors) challenged the sweep alleging:• invalid exercise of police power because amount

swept exceeded cost of services • was an unauthorized and unconstitutional tax

intended to raise general fund revenue• unconstitutional taking in violation of the

commerce clause and 5th and 14th amendment• denied equal protection rights

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GOVERNMENTKansas Fund v. State of Kansas

• Status: Kansas Supreme Court granted State of Kansas’ request to review ruling on standing.

• Court of Appeals suggested sweep may be unconstitutional under Panhandle Easter Pipe Line Co. v. Fadely, 332 P.2d 568 (Kan. 1958).

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HEARINGSBobo v. State Real Estate Comm’n

Citation: 2014 Tenn. App. LEXIS 266Court: Court of Appeals of Tennessee

Smith – purchased property with aid of her broker, Donna Bobo

Bobo – real estate broker who represented Smith in the purchase and rental of property

Global – Bobo’s partnership with Horton. Under agreement with Smith, took title to Smith’s properties and was responsible for paying Smith’s mortgage.

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Dungreen AvenueMemphis, TN

Global (Bobo’s company) “is acting as the principal owner in this transaction and plans to make . . . an unconscionable profit with this property.”

– Broker’s agreement with her client, Ms. Smith


Bobo’s Contention:• Decision

improperly based on complainant Smith’s hearsay statements.

Court of Appeals:• Hearsay may be substantial

evidence if corroborated by other competent evidence.

• Bobo’s admissions corroborated Smith’s hearsay statements.

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Bobo’s Contention:• Lack of

opportunity to confront complainant Smith was denial of due process.

Court of Appeals:• Bobo had notice of the

hearing and notice that Smith did not intend to testify, yet did not continue hearing or procure Smith’s testimony.

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Bobo’s Contention:• Commission

biased by its prior consideration of rejected consent order

Court of Appeals:• Bobo failed to object.• Commission was required to

serve in multiple, overlapping roles. Dual functions are inherent in administrative agencies and this structure does not, without other evidence, demonstrate bias.

• No evidence any Commissioner was prejudiced by knowledge of rejected consent order.

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HEARINGSPagel v. Iowa Real Estate Comm’n

Citation: Cause No. CVCV037875 (2014).Court: Iowa District Court,

Crawford County

Jane Pagel – real estate broker who was preparing a BPOJack Seuntjens – real estate broker who listed 1554 Oneida

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HEARINGSPagel v. Iowa Real Estate Comm’n

Pagel removed personal property. In a police report, she was quoted as saying: “no one realtor has exclusive right to show the house” and on repossessions, the personal property “is considered up for grabs.”

Based, in part, on policereport, Pagel’s testimonywas deemed not credible.

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LICENSINGCurd v. Ky. State Bd. of Licensure for Prof’l

Eng’rs & Land SurveyorsCitation: 433 S.W.3d 291

2014 Ky. LEXIS 226Court: Supreme Court of Kentucky

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Eadsville Highway

Denneys(exp: WEST)

Southwoods(exp: CURD)

Matthews Tract

LICENSINGCurd v. Ky. State Bd. of Licensure

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The purpose of immunity for witnesses at trial is to encourage witnesses to testify freely.

LICENSINGCurd v. Ky. State Bd. of Licensure for Prof’l

Eng’rs & Land Surveyors

Expert Immunity =Typically Immunity From Civil Liability

Allowing Discipline for Expert Testimony:• Promotes Public Trust in Profession• Encourages Accurate Testimony Through

Accountability to Peers• Judges = Not Experts

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LICENSINGIzzi v. Bureau of Prof’l & Occupational

Affairs, State Real Estate Comm’nCitation: 2014 Pa. Commw. Unpub.

LEXIS 1282014 WL 803622

Court: Commonwealth Court of Pennsylvania

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LICENSINGIzzi v. State Real Estate Comm’n

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Fall 2006

Oct. 4, 2006

Oct. 20, 2006

Jan. 7, 2007

– Hantwerker/Tobin agree to sell to Izzi’s company ($86,000)– Hantwerker/Tobin – Izzi Sale Closes– Izzi’s company sells to Nieves ($99,000)– Izzi files deed, transfer certificate stating H/T conveyed to Nieves


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2011Jun. 15, 2011Apr. 23, 2013

Aug. 6, 2013

Jun. 15, 2016

– Discipline initiated against Izzi– Consent agreement revoking Izzi’s license– Izzi reinstatement request– Commission denies reinstatement– Izzi eligible for reinstatement


Only an adjudication is reviewable.

Adjudication:• Final order, decree, determination, or ruling?

– and –• Impact personal or property rights?

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“Unless ordered to do so by Commonwealth Court, the Commission shall not reinstate the license, within five years of the date of revocation, of any person whose license has been revoked under this act.”

– 63 P.S. §455.501(c).

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MISREPRESENTATIONGussio v. Mississippi Real Estate

CommissionCitation: 122 So. 3d 783Court: Court of Appeals of Mississippi

John Gussio (father)• responsible broker • owns Gussio RealtyGreg Gussio (son)• affiliate broker• owns Lexus Homes, builder of subject home

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114 Carriage LaneFlorence, MS

MISREPRESENTATIONGussio v. Mississippi R.E. Commission

Spring 2010

March 29

April 2

April 15

– Keen & Davis make offer through Hancock. Greg informs Hancock home is under contract. – Greg informs Hancock contract will expire Mar. 30 and invites offer. – Keen and Lexus Homes (Greg) sign contract with Apr. 28 closing date. – Davis drives by and sees people moving in. Sale to first buyer closes.

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• Keen filed complaint with MREC on April 16.• MREC investigated. Gussios submitted some

information, but the information provided was not responsive to MREC’s requests.

• MREC initiated discipline. • MREC held a hearing and found the Gussios made

substantial misrepresentations and failed to comply with the investigation.

• MREC imposed 60 day suspensions and extra CE.– Page 42 –


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“We’ve discussed honesty as a policy, but, so far, it hasn’t gained any momentum.”

MREC:• Determined it was irrelevant

whether Gussio & Keen had valid contract.

• Decision supported by substantial evidence of misrepresentation.

• Correctly disciplined Gussios for failing to respond.

• Had jurisdiction over Greg’s personal transaction.

PUBLIC RECORDSPrudential Locations LLC v.

United States HUDCitation: 739 F.3d 424Court: U.S. Court of Appeals, 9th Circuit

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PUBLIC RECORDSPrudential Locations v. HUD

“No person shall give and no person shall accept any fee, kickback, or thing of value [for referring] business incident to or a part of a real estate settlement service involving a federally related mortgage loan.” – 12 U.S.C. § 2607(a) (RESPA).

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“Prudential Locations Real Estate Salespersons get monetary kickbacks ($$,$$$) for the amount of business that is referred to Wells Fargo.”

– 2003 letter

HUD investigated

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Prudential agreed to stop violating RESPA and paid a $48,000 penalty.


Prudential was:• “blatantly violating RESPA laws again.”• “charging an extra fee for an in house transaction

coordinator EVERY TIME to agents that do not use ($75 extra fee) Wells Fargo (affiliated company of Prudential Locations LLC). . . .”

– 2008 email

HUD investigated but did not substantiate allegations.

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Prudential requested HUD’s records related to the two investigations.

HUD provided 400 pages.

HUD redacted information identifying the authors of the 2003 letter and 2008 email.• “Release of this information would constitute an

unwarranted invasion of personal privacy [outweighing any] interest of the general public in reviewing these portions of government documents.” – HUD

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FOIA: Government records available upon a properly made request unless one of nine statutory exemptions apply.

Agency can withhold:“personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” – 5 U.S.C. § 552(b)(6) (FOIA Exemption 6).”

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Exemption 6 has a two part test:1. Personnel, medical, or similar file?2. Clearly unwarranted invasion of personal

privacy if produced?

Prudential did not contest the court’s finding that the information satisfied part 1.

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Unwarranted invasion of personal privacy?• Balance privacy interest against public interest

served by disclosure• privacy interest in being free from retaliation,

harassment, embarrassment, or stigma• privacy interest in avoiding unwanted contact• agency’s assurance of confidentiality may be

considered

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Public interest in disclosure?• Extent disclosure sheds light on agencies

performance of statutory duties• Lets citizens know what government is up to

Court: Revealing identities would not add to available information concerning HUD’s performance.

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Thank You!

Don HarrisMontana Board of Realty Regulation

[email protected](406) 841-2316

CONTRACTSKnutsen v. Dion

Citation: 2013 VT 106, 90 A.3d 866Court: Supreme Court of Vermont

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CONTRACTSKnutsen v. Dion

Vermont Association of Realtors Standard Form Purchase Agreement:• limited liability of the brokers involved in the

transaction• required pre-suit mediation.

Form used by plaintiff buyer’s broker.VAR not otherwise involved in transaction.

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MISREPRESENTATIONHall v. Rockcliff Realtors

Citation: 215 Cal. App. 4th 1134155 Cal. Rptr. 3d 739

Court: Court of Appeal of California, 1st Appellate District, Division Four

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MISREPRESENTATIONHall v. Rockcliff Realtors

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PUBLIC RECORDSTexas State Bd. of Veterinary Medicine v.

GigglemanCitation: 408 S.W.3d 696Court: Court of Appeals of Texas,

3rd District, Austin

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PUBLIC RECORDSTexas State Bd. of Veterinary Medicine v.

Giggleman

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TRUST ACCOUNTSCentury 21, LLC v. All Prof’l Realty, Inc.

Citation: 2013 U.S. Dist. LEXIS 856372013 WL 3146805

Court: U.S. District Court, Eastern District of California

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RESPABaehr v. Creig Northrop Team, P.C.

Citation: 2014 U.S. Dist. LEXIS 110302014 WL 346635

Court: U.S. District Court, District of Maryland, Northern Division

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Documents

ARELLO Latest Court Decisions 2013-2014