ORDERS:
ORDER
The
above-captioned matter is before this court pursuant to S.C. Code Ann. § 40-1-160
(2001) and S.C. Code Ann. § 1-23-600(D) (Supp. 2007) for an administrative
appeal arising out of a buyer’s complaint against Appellant Larry A. Yates following
a difficult real estate transaction. After conducting a hearing on the
complaint, the Real Estate Commission (Commission) of Respondent South Carolina
Department of Labor, Licensing and Regulation (Department or LLR) issued an
order suspending Yates’ real estate license for six months, imposing a fine of
$2,500, and requiring Yates to complete a course in the law of agency and a
course in the law of contracts. Yates seeks review of the Commission’s order.
The issues in this case are governed by the provisions in
Chapter 57 of Title 40 of the South Carolina Code. This court is mindful
of the great care that must be taken in examining the language and interplay of
these provisions. Further, this court is limited by the record,
findings, and conclusions as developed below. For the reasons that follow, the
Commission’s order is affirmed in part, reversed in part, and remanded for
reconsideration of the sanction imposed.
FACTS
In
October 2005, Wesley and Sonja White contacted Larry Yates, who is both a
licensed real estate agent and a licensed contractor, to assist them in buying
a home. After being shown several homes, the Whites entered a sales contract
with Flora Bryant for a house located at 1210 Brookwood Circle in West
Columbia, just down the street from where the Whites lived. Bryant was ninety
years old, preparing to move into a nursing home, and in the process of
renovating the house. Issues arose with the Whites’ difficulty in obtaining financing,
the seller’s unwillingness to move out of her home, the condition of the
house, and the offset of costs for the buyers to perform necessary repairs and
renovations.
Yates
facilitated the Whites’ acquisition of the house. During and after the
closing, the Whites discovered several problems with the condition of the
house. Yates, in his capacity as a contractor, performed many of the repairs
for the $3,450 offset allowed by the seller in the contract. Mrs. White filed
with the Commission a complaint against Yates, in which she alleged that she
and her husband had not been given adequate disclosure of the condition of the
house and that Yates had performed sub-standard repair work.
In
its Notice of Charges, the Commission charged Yates with failing to execute a
written buyers’ representation agreement with the Whites; failing to disclose
to the Whites certain defects in the house; and violating the law because the
form that he used for the contract of sale indicated that the buyers had
received the seller’s property condition disclosure form when they had not
received that form.
After
a hearing, the Commission concluded that Yates had violated: (1) S.C. Code
Ann. § 40-1-110(a), (d), (f), (g), (k) and (l) (2001), by failing to provide
the “written disclosure statement in question,” while indicating in a contract
with the Whites that the written document was provided; (2) S.C. Code Ann. §
40-57-135(D)(4) (Supp. 2007), by failing to execute a written agency agreement
with the Whites; (3) S.C. Code Ann. § 40-57-137(H)(2)(c) (2001), by failing to
disclose to the Whites all relevant facts concerning the transaction; (4) S.C.
Code Ann. § 40-57-139(C) & (E) (Supp. 2007), by failing to provide an
agency disclosure form to the Whites at the appropriate time; and (5) S.C. Code
Ann. § 40-57-145(A)(4) & (13) (2001 & Supp. 2007), by failing to
disclose the party for whom he acted as an agent in a real estate transaction,
as evidenced by his failure to provide to the Whites the “written disclosure
document.” This appeal followed.
ISSUES
ON APPEAL
I. Did the Commission violate the Administrative Procedures Act (APA) by
failing to set forth in the Notice of Charges statutes or factual allegations
that would warrant license suspension?
II. Did the Commission’s final order violate S.C. Code Ann. § 1-23-340,
which requires that a proposed decision be circulated where the officials have
not heard the case, or S.C. Code Ann. § 1-23-350, which requires the decision
to set forth separately stated findings of fact and conclusions of law?
III. Did the Commission err in finding that Yates violated S.C. Code Ann. §
40-57-135(D)(4) when he failed to execute a written agency agreement with the
buyers?
IV. Did the Commission err in concluding that Yates violated S.C. Code Ann.
§ 40-57-137(H)(2)(c) by failing to disclose to the buyers all relevant facts concerning
the transaction?
V. Did the Commission err in concluding that Yates violated S.C. Code Ann.
§ 40-1-110(a), (d), (f), (g), (k) and (l), by including in a contract signed by
the Whites language indicating that they had received the Residential Property
Condition Disclosure Statement when Yates had failed to provide that document
to the Whites?
VI. Did the Commission err in concluding that Yates violated S.C. Code Ann. §
40-57-139(C), (E) , by failing to provide an agency disclosure form to the
Whites at the appropriate time?
VII. Did the Commission err in concluding that Yates violated S.C. Code Ann.
§ 40-57-145(A)(4) and (13), by failing to disclose the party for whom he acted
as an agent in a real estate transaction?
STANDARD
OF REVIEW
Pursuant
to the appellate standard of review set forth in S.C. Code Ann. § 1-23-380(A)(5)
(Supp. 2007), this court may not substitute its judgment for that of the Commission
as to the weight of the evidence on questions of fact, but may reverse or
modify the Commission’s decision on appeal if its findings, inferences,
conclusions, or decisions are, among other things, “made upon unlawful
procedure”, “clearly erroneous in view of the reliable, probative and
substantial evidence on the whole record” or “arbitrary and capricious or
characterized by abuse of discretion.” S.C. Code Ann. § 1-23-380(A)(5)(c), (e),
(f) (Supp. 2007).
“‘Substantial
evidence’ is not a mere scintilla of evidence nor the evidence viewed blindly
from one side of the case, but is evidence which, considering the Record as a
whole, would allow reasonable minds to reach the conclusion that the
administrative agency reached or must have reached in order to justify its
action.” Lark v. Bi-Lo, Inc., 276 S.C. 130, 135, 276 S.E.2d 304, 306
(1981). “The ‘possibility of drawing two inconsistent conclusions from the
evidence does not prevent an administrative agency’s finding from being
supported by substantial evidence.’” Grant v. South Carolina Coastal Council,
319 S.C. 348, 461 S.E.2d 388 (1995) (citing Palmetto Alliance, Inc. v. South
Carolina Public Service Commission, 282 S.C. 430, 432, 319 S.E.2d 695, 696
(1984)). Further, an abuse of discretion occurs when an
administrative agency’s ruling is based upon an error of law, such as
application of the wrong legal principle; or, when based upon factual
conclusions, the ruling is without evidentiary support; or, when the ruling
does not fall within the range of permissible decisions applicable in a
particular case, such that it may be deemed arbitrary and capricious. Cf. State v. Allen, 370 S.C. 88, 634 S.E.2d
653 (2006) (application of standard to circuit court) (citing Fontaine v.
Peitz, 291 S.C. 536, 539, 354 S.E.2d 565, 566 (1987)).
LAW/ANALYSIS
This
court is mindful of the difficulties facing pro se litigants and its duty
to assist them to ensure fairness. See ALC Rule 38 and accompanying
note. This court is also aware that appellate courts will occasionally hear an
appeal despite poorly-stated grounds for appeal if the court is able to readily
determine the issue to be reviewed and the appeal appears to have merit. See,
e.g., Sandel v. Cousins, 266 S.C. 19, 221 S.E.2d 111 (1975). To
this extent, this court has discerned the issues as put forth by Yates in the
instant matter as follows.
I. Notice
of Facts/Charges Warranting Suspension of License
Yates
maintains that he did not realize that the Commission’s charges were that
serious and that he did not have proper notice that one of the possible
sanctions would be the suspension of his license. He argues that the Commission
violated S.C. Code Ann. § 1-23-320(b) (2005), which provides what the Notice of
Charges must include, and S.C. Code Ann. § 1-23-370(c) (2005), which requires
the agency to give notice to the licensee of facts warranting the intended
discipline. I disagree.
S.C.
Code Ann. § 40-1-110 (Supp. 2007) gives the Commission authority to “cancel,
fine, suspend, revoke, or restrict the authorization to practice of an
individual who” violates applicable statutes or regulations. See also S.C. Code Ann. § 40-57-145 (20) (2001) (commission may take disciplinary action
against real estate licensee who violates any provision of Title 40, Chapter
57). The Notice of Charges advised Yates that his license could be suspended
or revoked if he is found to have violated the Commission’s statutes or
regulations. Further, the Notice of Charges set forth facts establishing at
least one statutory violation. While this court might have imposed a lesser
sanction for those violations that are supported by the record, the specific
sanction to be imposed for any statutory violation falls within the
Commission’s discretion. See Deese v. S.C. State Bd. of Dentistry,
286 S.C. 182, 332 S.E.2d 539 (Ct. App. 1985) (Board had wide discretion on what
sanction to impose within statutory range; even disparate sanction within
statutory authority was not arbitrary and capricious). Therefore, I find no
violation of S.C. Code Ann. § 1-23-320(b) (2005) or S.C. Code Ann. §
1-23-370(c) (2005).
II. Final
Order/ Administrative Procedures Act (APA) Compliance
A. Final
Order: Separate Findings of Fact & Conclusions of Law
Yates
argues the Commission’s final order violates S.C. Code Ann. § 1-23-350 (2005)
of the APA and is therefore void and unenforceable. Specifically, he argues that
because the Commission chose to render its final decision at the conclusion of
the hearing, R.127-28, it is limited to that order and may not supplement that
decision in written form. R.1-3. Yates further argues that because the
Commission’s oral ruling did not separately set forth findings of fact and
conclusions of law at the conclusion of the hearing, the order is void and
unenforceable under section 1-23-350. I disagree.
Section
1-23-350 provides that a final decision or order adverse to a party in a
contested case “shall be in writing or stated in the record” and must provide “findings
of fact and conclusions of law, separately stated.” S.C. Code Ann. § 1-23-350
(2005). No language in the statute prohibits an agency from issuing a written
order after the agency has stated its ruling in the record. Courts and
commissions routinely make oral rulings from the bench with more complete
written orders to follow. The Commission’s final written
order contained separately stated findings of fact and conclusions of law. Therefore,
the Commission’s final order was APA compliant.
B.
Circulating Proposed Decision
Secondly, Yates
argues that the Commission violated the APA by not circulating a proposed
decision and not allowing each party to file briefs and exceptions. I
disagree.
S.C. Code Ann.
§ 1-23-340 (2005) provides:
When in a contested case a
majority of the officials of the agency who are to render the final decision have
not heard the case or reviewed the record, the decision, if adverse to a
party to the proceeding other than the agency itself, shall not be made until a
proposal for decision is served upon the parties, and an opportunity is
afforded to each party adversely affected to file exceptions and present briefs
and oral argument to the officials who are to render the decision.
(emphasis
added). Here, those members of the Real Estate Commission participating in the
decision-making heard the case before voting. Therefore, section 1-23-340 is
not applicable to this case.
III. Failure to
Execute Written Agency Agreement
Yates
argues that the Commission erred in holding that he violated S.C. Code Ann. §
40-57-135(D)(4) (Supp. 2007) by failing to execute a written agency agreement
with the Whites. I disagree. Section 40-57-135(D)(4) provides as follows:
(D) No licensee either
directly or indirectly may buy for his own account or for a corporation or any
other business in which he holds an interest or for a close relative, real
estate listed with him or real estate for which he has been approached by the
seller or prospective buyer to act as agent, without first making his true
position clearly known in writing to all parties involved.
Upon request of the department, the licensee shall provide evidence of having
made this disclosure.
. . .
(4)
A listing or buyer's representation agreement must be in writing and must set
forth all material terms of the parties' agency relationship . . . .
S.C. Code Ann. §
40-57-135(D)(4) (Supp. 2007). Item (4) of subsection (D) lists several provisions
that the written agreement must include (see sub-items (a) through (l)).
The
introductory language of subsection (D), examined in isolation, may give the
reader the impression that subsection (D) can address only those situations
where the licensee is self-dealing. That language requires a self-dealing
licensee to make “his true position clearly known in writing to all parties
involved.” However, items (1) through (4) listed under subsection (D) set forth
specific requirements for offers to purchase real estate (item 1), closing
statements (item 2), division of a commission among participating licensees
(item 3), listing agreements (item 4), and buyer’s representation agreements
(item 4). Curiously, these requirements are of a general nature, rather than
unique to self-dealing. Likewise, none of the sub-items under item (4) are
unique to self-dealing, but rather are of a nature that could apply to all
circumstances involving a licensee’s agency relationship with a buyer or seller.
Further, the requirements in items (1) through (4) are not found in any other
part of Chapter 57 of Title 40. Therefore, the legislature could not have
possibly intended to limit these requirements to circumstances involving
self-dealing. Their placement within subsection (D) can be better explained by
inartful drafting. See Carolina Power & Light Co. v.
Town of Pageland,
321 S.C. 538, 543, 471 S.E.2d 137, 140 (1996) (holding that courts
will reject a meaning when to accept it would lead to a result so plainly
absurd that it could not possibly have been intended by the legislature or
would defeat the plain legislative intent).
Moreover,
an interpretation of these provisions that makes them applicable to all real
estate transactions is consistent not only with the purpose of Chapter 57,
which is to protect the public interest, but also with other
requirements in Chapter 57. Subsections (E) and (G) of S.C. Code Ann. §
40-57-139 (Supp. 2007) impose the following obligations on a licensee assisting
a buyer or seller in a real estate transaction:
(E) A licensee who has substantive contact
with a potential buyer or seller shall provide to the potential buyer or seller
an agency disclosure form at the first substantive contact. At the time of
contact, it is presumed that the potential buyer or seller is to be a customer
of the licensee as defined by this chapter and that the licensee shall offer
services to a customer as defined by Section
40-57-137(O) only until the potential buyer or seller requests
representation; however, before ratification of the real property sales agreement, the real estate licensee must represent
either the buyer or seller in an agency capacity in order to be in compliance
with this chapter.
. . .
(G) For all real estate transactions, no
agency relationship between a buyer, seller, landlord, or tenant and a
brokerage company and its affiliated licensees exists unless the buyer,
seller, landlord, or tenant and the brokerage company and its affiliated
licensees agree, in writing, to the agency relationship. No type of agency
relationship may be assumed by a buyer, seller, landlord, tenant, or licensee
or created orally or by implication. A licensee must not be considered to have
an agency relationship with a party or have agency obligations to a party but
is responsible only for exercising reasonable care in the discharge of the
licensee’s specified duties, as provided in [Chapter 57], and, in the case of a
client, as specified in the agency agreement.
S.C. Code Ann. §
40-57-139(E), (G) (Supp. 2007) (emphasis added). Reading these two provisions together,
one must reach the conclusion that a listing agreement or a buyer’s
representation agreement must be in writing and that a licensee who represents
a buyer or seller in the sale of real estate must have the written agreement in
place before the contract of sale is ratified.
Similarly,
other requirements in Chapter 57 contemplate a licensee’s compliance with the
requirement of section 40-57-139(E) to bring the agency relationship into
lawful existence by executing a written agency agreement before the contract of
sale is ratified. See S.C. Code Ann. § 40-57-137(H) (2001) (listing
requirements for buyer’s agent to fulfill “[o]n reaching a written agreement to
provide brokerage services . . . .”); S.C. Code Ann. § 40-57-139(C) (Supp. 2007)
(requiring licensee “who becomes a buyer’s agent” to provide agency disclosure
form to buyer “at the time an agency agreement is signed.”).
In
light of all of the agency requirements in Chapter 57, it is reasonable to
interpret the requirements of section 40-57-135(D)(1) through (4), including
the requirement of a written agreement, to apply to all listing or buyer’s
representation agreements and not just to those involving self-dealing
licensees. See State v. Gordon, 356 S.C. 143, 152, 588 S.E.2d
105, 110 (2003) (holding that the court should not consider the
particular clause being construed in isolation, but should read it in
conjunction with the purpose of the whole statute and the policy of the law and
that sections which are part of the same general statutory law
must be construed together and each one given effect, if it can be done by any
reasonable construction); Joiner v. Rivas, 342 S.C. 102, 536 S.E.2d 372 (2000) (holding
that statutes dealing with the same subject matter must
be construed together, if possible, to produce a single, harmonious result); Mid-State Auto Auction of
Lexington, Inc. v. Altman, 324 S.C. 65,
69, 476 S.E.2d 690, 692 (1996) (holding that, in ascertaining the
intent of the legislature, a court should not focus on any single section or
provision but should consider the language of the statute as a whole). Therefore, I find no compelling
reasons to overrule the Commission’s interpretation of section 40-57-135(D)(4)
as applicable to Yates. See Sloan v. South Carolina Bd. of Physical Therapy
Examiners, 370 S.C. 452, 636 S.E.2d 598, 607 (2006) (holding that the
construction of a statute by the agency charged with its administration is
entitled to the most respectful consideration and should not be overruled
absent compelling reasons).
Even
if section 40-57-135(D)(4) could be read as not requiring written agreements
for all licensees, as opposed to only self-dealing licensees, this court may
affirm Conclusion of Law # 3 on the ground that a writing is required by Subsections
(E) and (G) of S.C. Code Ann. § 40-57-139 (Supp. 2007). See Rule
220(c), SCACR (stating that the appellate court may affirm any ruling, order,
decision or judgment upon any ground appearing in the Record on Appeal); ALC
Rule 68 (stating that South Carolina Appellate Court Rules may be applied in
ALC proceedings where practicable). Although the Department did not cite subsection
(G) in its Notice of Charges, that document placed Yates on notice that he was
being charged with failing to execute a written agreement with the Whites and
that the Department interpreted the cited statutory provisions to require a written
agreement. There was no guess work
involved in the preparation of Yates’ defense against this allegation in the
Notice of Charges; any reasonable person would have known the specific facts
that were at issue. Yates was fully apprised of the nature of the violation
with which he was charged. See 2 Am.
Jur. 2d Administrative Law § 285 (1994) (stating that the requirement of
notice in an administrative proceeding is not as strict or exacting as that in
a judicial proceeding but that it must be reasonable under the circumstances of
the particular case and must fully apprise a person of the nature of the offense
with which he is charged).
The
record shows no written buyer’s representation agreement between Yates and the
Whites. Therefore, based on the foregoing analysis, the Commission’s
Conclusion of Law # 3 should be affirmed.
IV. Failure to
Disclose Relevant Facts
Yates
argues that the Commission erred in concluding that he violated S.C. Code Ann.
§ 40-57-137(H)(2)(c) by failing to disclose relevant facts to the Whites. This
court is unable to conduct a meaningful review of the conclusion at issue
because neither the finding on which it is based nor the conclusion itself specify
which defects were obvious or should have been known to Yates or which defects
were relevant to the Whites’ decision to purchase the house. Therefore, the
conclusion must be reversed.
Conclusion of Law # 4 states the following:
The Respondent
violated S.C. Code Ann. §40-57-137(H)(2)(c) in that he failed to disclose to
the buyers all relevant facts concerning the transaction which were known to
him or reasonably should have been known to him.
R.2, Conclusion
of Law # 4. It appears that Conclusion of Law # 4 is based on Finding of Fact
# 3, which states:
The Respondent also
is a license[d] contractor and before the closing cleared a number of items
from the property’s termite inspection report and the heating and air
conditioning system, but failed to disclose obvious defects to the buyers.
R.1. Section
40-57-137, which the Commission charged Yates with violating, provides in
pertinent part:
(H) On reaching a
written agreement to provide brokerage services to a potential buyer of real
estate, a buyer’s agent shall:
(1) perform the
terms of the written brokerage agreement made with the buyer;
(2) in accordance
with subsection (A), promote the interest of the buyer by performing the
buyer’s agent’s duties which include:
. .
.
(c) disclosing
to the buyer all relevant facts concerning the transaction which are actually
known to the licensee or, if acting in a reasonable manner, should have been
known to the licensee, except as directed otherwise in this section. Nothing
in this chapter shall limit a buyer’s obligation to inspect the physical
condition of the property which the buyer may purchase; . . . .
S.C. Code Ann. §
40-57-137(H)(2)(c) (2001).
This
court is unable to conduct a meaningful review of Conclusion of Law # 4 because
it does not state the relevant facts that Yates should have disclosed to the
Whites. Conclusion of Law # 4
is apparently based on Finding of Fact # 3; however, that finding does not
specify which defects were obvious or should have been known to Yates or which
defects were relevant to the Whites’ decision to purchase the house. Neither
Finding of Fact # 3 nor Conclusion of Law # 4 contain the adequate reasoning
necessary to allow this court to conduct a meaningful review. Therefore, Conclusion of Law # 4 must be reversed. See Porter v. South Carolina Public
Service Comm’n, 333 S.C. 12, 507 S.E.2d 328 (1998) (holding that
deferential standard of review does not mean that a reviewing court will accept
administrative agency's decision at face value without requiring agency to
explain its reasoning; further holding that agency must make findings
sufficiently detailed to enable a reviewing court to determine whether findings
are supported by evidence and whether law has been applied properly to
findings; further holding that where material facts are in dispute, agency must
make specific, express findings of fact; and overruling precedent to extent
that it suggests that a reviewing court will, sua sponte, search record for
substantial evidence supporting decision when agency's order inadequately sets
forth findings of fact and reasoning).
V. Seller’s Property
Condition Disclosure Form
Yates
argues that the Commission erred in concluding that he violated applicable code
provisions by using a form for the contract of sale that included the buyers’ acknowledgement
that they received the Residential Property Condition Disclosure statement when,
in fact, they had not received that statement. Yates reasons that it was not his
responsibility to deliver that form to the Whites. I disagree. Because Yates
facilitated the Whites’ execution of the contract of sale, he had a
responsibility to ensure that they had, in fact, received the property
condition disclosure statement. Substantial evidence supports the Commission’s
finding that the Whites did not receive that statement. In this respect, Yates
violated his duty to provide competent and professional service to the Whites.
However, the Commission’s findings were inadequate to support its conclusion
that Yates’ misconduct was intentional. Therefore, Conclusion of Law # 2 must
be affirmed in part and reversed in part.
Conclusion
of Law # 2 states the following:
The Respondent
violated S.C. Code Ann. § 40-1-110(a), (d), (f), (g), (k), and (l) in that he
committed a fraudulent, deceitful, or dishonest act; intentionally used a
fraudulent statement in a document connected with the practice of the
profession or occupation; committed a dishonorable, unethical, or
unprofessional act likely to deceive, defraud, or harm the public; lacks the
professional or ethical competence to practice the profession or occupation;
violated a provision of the article; and violated the code of professional
ethics adopted by the commission, as evidenced by his failure to provide the
written disclosure statement in question, while indicating in a contract with
the buyers that he provided the written document.
Conclusion of
Law # 2 is based on the Commission’s fourth finding of fact, which states:
The Respondent used
a pre-printed, non-standard offer-to-purchase document containing a clause indicating
the buyers were given a Residential Property Condition Disclosure form though
they were not given this form.
The pre-printed
contract form referenced in the fourth finding states in pertinent part:
The Purchasers
acknowledges [sic] receipt the Seller furnished required South Carolina
Residential Property Condition Disclosure Statement, reve[a]ling any and all
known property defects, both past and present, however, it is hereby agreed
that except for the hvac system and any termite treatment or damage, the Seller
is selling the property “as is” and as such, she will not be responsible for
any renovations, repairs or warranties.
R.138 ¶ 1. S.C.
Code Ann. § 40-1-110 (2001) provides in pertinent part:
A board may
cancel, fine, suspend, revoke, or restrict the authorization to practice of an
individual who:
(a) used a false,
fraudulent, or forged statement or document or committed a fraudulent,
deceitful, or dishonest act or omitted a material fact in obtaining licensure
under this article;
(d) has intentionally used a fraudulent statement in a document connected with the practice of the
individual’s profession or occupation;
(f) has committed
a dishonorable, unethical, or unprofessional act that is likely to deceive,
defraud, or harm the public;
(g) lacks the
professional or ethical competence to practice the profession or occupation;
(k) violates a
provision of this article or of a regulation promulgated under this article;
(l) violates the
code of professional ethics adopted by the applicable licensing board for the
regulated profession or occupation or adopted by the department with the advice
of the advisory panel for the professions and occupations it directly
regulates.
S.C. Code Ann. §
40-1-110 (2001) (emphasis added).
The
Commission’s order does not include a finding that Yates intended to
deceive the Whites or otherwise violate the law. Further, the findings do not
reference any actions that would violate section 40-1-110(a) (prohibiting
dishonesty in obtaining licensure). Moreover, the Commission failed to set
forth either the specific provisions of the code of professional ethics that
Yates violated or its reasoning in reaching the conclusion that Yates violated
those provisions. Therefore, to the extent that Conclusion of Law # 2 states
that Yates violated subsections (a), (d) and (l) of section 40-1-110 or
otherwise refers to his conduct in terms of intentional wrongdoing, it is
reversed. See Porter, 507 S.E.2d at 332-333.
To
the extent that Conclusion of Law # 2 refers to Yates’ conduct as incompetent
or unprofessional or states that Yates violated subsections (f), (g), or (k),
Conclusion of Law # 2 is affirmed. The substantial evidence in the record
shows that Yates facilitated the execution of the Contract of Sale for the
property at 1210 Brookwood Circle (R. 136-140) and allowed the Whites to
formally acknowledge receipt of the Residential Property Condition Disclosure
Statement from the seller (R. 138, ¶ 1) when, in fact, the Whites did not
receive that statement. (R. 58, l. 3-15). Thus, a reasonable mind could
conclude that Yates had either failed to obtain the statement for the Whites or
received it from the seller and failed to pass it on to the Whites. Significantly,
the Whites’ written acknowledgement of receipt of the statement could limit any
possible recourse that the Whites may have against the seller.
Under
S.C. Code Ann. § 40-57-137(H)(2)(c) (2001), Yates had a duty to disclose to the
Whites all relevant facts concerning the property which were either actually
known to him or, if acting in a reasonable manner, should have been known to
him. Because the information in the Residential Property Condition Disclosure
Statement should have been known to Yates if he had been acting in a reasonable
manner, his failure to provide that information to the Whites was
unprofessional and demonstrated a lack of competence to properly practice his
profession.
VI. Agency Disclosure Form
Yates
argues that the Commission erred in concluding that he violated S.C. Code Ann.
§ 40-57-139(C) & (E) (Supp. 2007) by failing to provide an agency
disclosure form to the Whites. I agree.
The
Commission concluded as a matter of law the following:
The Respondent
violated S.C. Code Ann. § 40-57-139(C) and (E) in that he failed to provide an agency
disclosure form to the buyers at the time an agency agreement was signed.
Further, by failing to provide the buyers an agency disclosure form at the
first substantive contact.
R.2, Conclusion
of Law # 5.
S.C.
Code Ann. § 40-57-139 (Supp. 2007) provides in pertinent part:
(C) A licensee who
becomes a buyer’s agent shall provide an agency disclosure form to the buyer at
the time an agency agreement is signed. Acknowledgement of receipt of the form
must be contained in the buyer agency agreement.
. . .
(E) A licensee who
has substantive contact with a potential buyer or seller shall provide to the
potential buyer or seller an agency disclosure form at the first substantive
contact. At the time of contact, it is presumed that the potential buyer or
seller is to be a customer of the licensee as defined by this chapter and that
the licensee shall offer services to a customer as defined by Section
40-57-137(O) only until the potential buyer or seller requests representation;
however, before ratification of the real property sales agreement, the real
estate licensee must represent either the buyer or seller in an agency capacity
in order to be in compliance with this chapter.
S.C. Code Ann. §
40-57-139(C) & (E) (Supp. 2007). Both of these subsections imposed on
Yates a duty to provide the agency disclosure form to the Whites.
While there was conflicting evidence on this point, the Commission made no finding of fact regarding Yates’ failure to provide the
form. More importantly, the Commission did not charge Yates in the Notice of
Charges with failing to give the Whites the brochure. R.5-6. Similar to an
indictment in a criminal case, the Commission is limited to prosecuting the
charges identified in the notice of charges. See Huber v. S.C. State
Bd. Of Physical Therapy Exam’rs, 316 S.C. 24, 27-28, 446 S.E.2d 433, 435
(1994) (failure to give notice that improper record keeping for other patients
would be basis for sanction was violation of procedural due process where only
one patient was referenced in notice of charges) (citing Burdge v. State Bd.
Of Med. Exam’rs, 304 S.C. 42, 403 S.E.2d 114 (1991)). Because Yates did
not receive adequate notice of this charge and because there is no finding to
support Conclusion of Law # 5, that conclusion must be reversed.
VII. “Written Disclosure Document”
Yates
argues that the Commission erred in concluding that he demonstrated bad faith,
dishonesty, untrustworthiness, or incompetency in a manner endangering the
public’s interest and that he failed to disclose the party for whom he acted as
an agent. I agree.
Conclusion
of Law # 6 reads as follows:
The Respondent
violated S.C. Code Ann. § 40-57-145(A)(4) and (13) in that he demonstrated bad
faith, dishonesty, untrustworthiness, or incompetency in a manner endangering
the public’s interest, and failed to disclose, in accordance with § 40-57-139,
the party or parties for whom he acted as an agent in a real estate
transaction, as evidenced by his failure to provide the written disclosure
document.
CONCLUSION
The
Commission’s order is affirmed in part and reversed in part:
(1) To
the extent that Conclusion of Law # 2 refers to Yates’ conduct as incompetent
or unprofessional or states that Yates violated S.C. Code Ann. § 40-1-110(f),
(g), or (k), Conclusion of Law # 2 is affirmed. To the extent that Conclusion
of Law # 2 states that Yates violated subsections (a), (d) and (l) of section
40-1-110 or otherwise refers to his conduct in terms of intentional wrongdoing,
it is reversed;
(2) Conclusion
of Law # 3 is affirmed; and
(3) Conclusions
of Law #’s 4, 5 and 6 are reversed.
This case is remanded to the Commission to reconsider the
sanction imposed in light of this Court’s reversal of Conclusions of Law
#’s 4, 5, 6 and part of Conclusion of Law # 2. Any resulting
amendments to the Commission’s order must be made solely on the basis of the
record on appeal in this case. See Parker v. South Carolina Pub.
Serv. Comm’n, 288 S.C. 304, 342 S.E.2d 403
(1986) (administrative agency may not
consider additional evidence upon remand unless court allows it because that
affords a party two bites at the apple).
ORDER
For
the reasons set forth above, IT IS HEREBY ORDERED that the Commission’s
order is AFFIRMED IN PART and REVERSED IN PART, as more
specifically set forth above. This case is hereby REMANDED to the
Commission for reconsideration of the sanction imposed.
AND
IT IS SO ORDERED.
______________________________
May 5, 2008 JOHN
D. GEATHERS
Columbia, South Carolina Administrative
Law Judge
1205 Pendleton
Street, Suite 224
Columbia, South
Carolina 29201-3731
South Carolina law is well settled that an oral
ruling is not final where a written order is to follow and that the written
order may even contradict the oral ruling and will be controlling. While
agencies are allowed to issue only an oral ruling under section 1-23-350 and
are not required to have a written ruling,
South Carolina law is clear that[, where a written
order is to follow,] “[n]o order is final until it is written and entered.
Until written and entered, the trial judge retains discretion to change his [or
her] mind and amend his [or her] oral ruling accordingly.” A written order may
be issued which is inconsistent with a prior oral ruling, and to the extent the
two conflict, the written order controls. “The written order . . . constitutes
the final judgment of the court.”
Although Yates did not execute a written agency
agreement with the Whites, he had a specific duty of disclosure under section
40-57-137(H)(2)(c). Subsection (H) contemplates that a licensee providing
services to a buyer during or after ratification of the contract of sale will
comply with section 40-57-139(E) & (G) by bringing the agency relationship
into legal existence with a written agreement.
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