ORDERS:
ORDER
This
matter comes before the South Carolina Administrative Law Court (ALC or Court)
upon a Petition for Injunctive Relief filed by the South Carolina Department of
Labor, Licensing and Regulation, South Carolina Manufactured Housing Board
(Board). In its Petition, the Department of Labor, Licensing and Regulation
(Department) seeks an Order enjoining Respondent from the practice of
unlicensed manufactured home contracting, as well as imposing monetary
sanctions of up to Ten Thousand ($10,000.00) Dollars per violation upon
Respondent and for any other relief the Court deems just and proper. A hearing
was held upon that motion on October 8, 2008.
FINDINGS
OF FACTS
Having observed the
witnesses and exhibits presented at the hearing and taking into consideration
the burden of persuasion and the credibility of the witnesses, I make the
following findings of fact by a preponderance of evidence:
1. Respondent
was previously licensed by the Manufactured Housing Board (Board) as a
manufactured home retail dealer in South Carolina in 1989. However, in 2001,
Respondent was charged with federal crimes related to the business of
manufactured homes sales in South Carolina. The following year, in resolution
of those charges, Respondent agreed to surrender her South Carolina
manufactured home retail dealer license. Respondent thus has not been licensed
as a manufactured home retail dealer and/or sales person since 2002.
Nevertheless, in 2003,
it was brought to the attention of the Board that Respondent, acting without a
license, may have been “engaging in or offering to engage in the business of
selling manufactured homes in South Carolina as a manufactured housing
dealer.” Accordingly, in April of 2003, the Board served Respondent with an
order to cease and desist “from engaging in or offering to engage in the
business of selling manufactured housing in South Carolina as a manufactured
home dealer and or salesperson.” That cease and desist order is still in
effect.
The
Board contends that Respondent violated its cease and desist order by the
following acts:
· Sale of a manufactured home at 200 South Hampton Road on April
27, 2007;
· Sale of a manufactured home at Lot No. 4, MacGregor Downs Mobile
Home Park on July 4, 2007;
· Sale of a manufactured home at 3410 Princeton Road on June 14,
2007;
· Offering for sale a manufactured home located at 151 Randall Drive;
· Offering for sale a manufactured home located 200 South Hampton
Avenue;
· Offering for sale a manufactured home located at 3412 Princeton Road; and
· Offering for sale a manufactured home located at 1027 Pine Plain Road.
2. On October
17, 2006, Respondent purchased property located at 200 South Hampton Road in Lexington County, South Carolina. Attached to that property was a de-titled mobile home.
Respondent later sold the property to Mr. Steven Hickerson on April 27, 2007.
At the time of that sale, the de-titled mobile home was still attached to
property. The home was thus de-titled when Respondent purchased the real
estate and remained de-titled when she sold the real estate. Furthermore, the
de-titled mobile home was treated as a part of the real estate at all times and
the sale was consummated as a real estate closing by a real estate attorney.
3. In early
2006, Respondent acquired a manufactured home located at Lot Four of the
MacGregor Downs mobile home park. Although the home was originally titled in
Respondent’s name, she transferred the title into her son’s name. He lived in
the home while attending Midlands Technical College. After Respondent’s son
moved out of the home, Respondent learned that the Ronnie Russell family was in
need of a place to stay. Thus, Respondent’s son transferred title in the
MacGregor Downs home back to Respondent and Respondent allowed the Russell
family to stay in that home free of charge while she acquired another
manufactured home for them to purchase from her.
Respondent thereafter
purchased property located at 3410 Princeton Road in Gaston, South Carolina on
May 8, 2007. Attached to that property was a de-titled mobile home.
Respondent later sold the property to Ronnie Russell on June 14, 2007. At the
time of that sale, the de-titled mobile home was still attached to property.
The home was thus de-titled when Respondent purchased the real estate and
remained de-titled when she sold the real estate. Furthermore, the de-titled
mobile home was treated as a part of the real estate at all times and the sale
was consummated as a real estate closing by a real estate attorney.
4. In June of
2007, Respondent agreed to assist Frederick Steff in purchasing a manufactured
home for Steff’s daughter to live in while she helped care for her mother.
Respondent then showed them one manufactured home in Sumter, South Carolina.
On July 4, 2007, Respondent accepted an $11,000 deposit from Steff for the home
in Sumter and executed a closing agreement with him for that home. Afterwards,
Respondent told Steff that sale of the manufactured home in Sumter could not go
through but she had a manufactured home in Columbia that she could sell him.
Respondent subsequently sold the home her son and the Russells had lived in at
MacGregor Downs to Steff on October 3, 2007. Title to the MacGregor Downs home
was not retired prior to Respondent’s sale of it to Steff.
5. Manufactured
homes located at 151 Randall Drive in West Columbia, South Carolina and 200 South Hampton Avenue in Lexington, South Carolina were offered for sale through the
Manufactured Housing Global Network (Housing Network) internet site. The
Housing Network listed Chastain Builders as the seller of those homes and gave
Respondent’s telephone number as the contact number. However, Respondent
testified that she did not place those advertisements with the Housing Network.
Indeed, Respondent does
not own or operate a business known as “Chastain Builders.” Additionally, the
information regarding that listing was obtained by the Board from Respondent’s
ex-husband’s parole officer. Respondent explained that her ex-husband is very
familiar with listing manufactured homes for sale in the Housing Network and
would have been very motivated to falsely list the above homes as being offered
for sale by her. More importantly, no evidence was offered to show that Respondent
personally made the listings with the Housing Network. Therefore, I find that
the evidence failed to establish that Respondent placed advertisements for
manufactured homes with the Manufactured Housing Global Network website.
6. On
August 18, 2008, Respondent offered for sale two (2) parcels of real property
each with de-titled mobile homes affixed to the real estate in an advertisement
named the Carolina Trader. Those properties were located at 3412 Princeton Road and 1027 Pine Plain Road in Lexington, South Carolina. Respondent owns
these two properties in her own name.
The Board is an agency
of the State of South Carolina vested with the authority to
regulate the sale of manufactured
housing in the State of South Carolina pursuant to the Uniform Standards Code
for Manufactured Housing, S.C. Code § 40-29-5 et seq. (2001 & Supp.
2007) (Manufactured Housing Code). As set forth above, the Department contends
that Respondent violated the Board’s cease and desist order by continuing to
sell manufactured homes in violation of the Manufactured Housing Code. Therefore,
the Department seeks an order from this court prohibiting Respondent from
engaging in or offering to engage in the business of selling manufactured
housing in South Carolina and imposing a fine of no more than Ten Thousand
($10,000.00) Dollars for each violation of the Board’s Order.
S.C. Code Ann. §
40-1-210 (2001) provides that the “department . . . may institute a civil
action through the Administrative Law [Court], in the name of the State, for
injunctive relief against a person violating . . . an order of the board.”
Section 40-1-210 further provides that an administrative law judge may impose a
fine of “no more than ten thousand dollars” for each violation of the Board’s
order.
S.C. Code Ann. § 1-23-600(G) (as amended by 2008 S.C. Act No. 334) also provides
that:
Notwithstanding another provision of law, the Administrative
Law Court has jurisdiction to review and enforce an administrative process
issued by an agency or by a department of the executive branch of government,
as defined in Section 1-30-10, such as a subpoena, administrative search
warrant, cease and desist order, or other similar administrative order or
process. A department or agency of the executive branch of government
authorized by law to seek an administrative process may apply to the Administrative Law Court to issue or enforce an administrative process.
No party disputes that
the homes involved in the sales in this case were manufactured homes.[2] S.C. Code
Ann. § 40-29-30(A) provides that: “No person may engage in the business of
selling, wholesale or retail, as a manufactured home retail dealer . . . in
this State without being licensed by the board.” The term “manufactured home
retail dealer” includes a person who sells or offers to sale three or more
manufactured homes in any twelve-month period. S.C. Code Ann. § 40-29-20(13)
(Supp. 2007). Therefore, the Manufactured Housing Code prohibits a person who
is not a licensed “manufactured home retail dealer” from selling or offering
for sale three or more manufactured homes in any twelve-month period.
Respondent does not
dispute that she was unlicensed as a manufactured home retail dealer when she
sold or offered for sale the manufactured homes at issue in this case. Instead,
Respondent contends that two of the manufactured homes she is accused of
selling (200 South Hampton Road and 3410 Princeton Road) were not governed by
the Manufactured Housing Code but were rather simply sales of real property.[3] In both of
those incidents, Respondent sold parcels of real estate pursuant to a deed for
real property to which manufactured homes were affixed. More importantly, the
title to the manufactured homes affixed to those properties had been retired
pursuant to S.C. Code Ann. §§ 56-19-500 et. seq. (2006 &
Supp. 2007). Likewise, two of the manufactured homes she is accused of offering
for sale (3412 Princeton Road and 1027 Pine Plain Road) involved manufactured
homes that were affixed to real property. The offer for sale was for the real
property to which a de-titled manufactured home was affixed. Therefore,
Respondent contends that all of those properties were also not governed by the
Manufactured Housing Code.
Unless a person is a
dealer who is selling a new mobile home for which there is a manufacturer’s
certificate of origin, a certificate of title is required to sell any mobile
home.[4]
S.C. Code Ann. § 56-19-210 (2006). However, once a manufactured home is sold,
the owner may seek to have the title “retired” pursuant to Sections 56-19-500 et seq. if the home is “affixed”[5] to property. The legal effect of retiring a title is that the manufactured
home is treated as real property. S.C. Code Ann. § 56-19-560 (Supp. 2007).
The register of deeds or clerk of court in the county where manufactured home
is located “may not in any particulars still treat the manufactured home as
personal property.” Id. Therefore, when referring to a manufactured
home for which the title certificate has been retired, “owner” means “the
person who owns the real property.” S.C. Code Ann. § 56-19-500(5) (2006). In
fact, the statutorily established affidavit necessary to retire a title
certificate clearly sets forth: “WARNING: the execution and filing of this
affidavit transfers ownership of the manufactured home to the lawful owner of
the real property to which it is affixed.” S.C. Code Ann. § 56-19-510(D)(9) (Supp.
2007). That affidavit is recorded “as if it were a deed to real property.”
S.C. Code Ann. § 56-19-510(B) (Supp. 2007).
The Department avers
that in regulating manufactured homes Congress made no distinction between
homes that are deemed personal property under state law and homes that are
deemed real property under state law. Congress enacted the National
Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C.
§§ 5401 et seq. (Federal Act), with the express intent “to protect the
quality, durability, safety, and affordability of manufactured homes; . . .
[and] to protect residents of manufactured homes with respect to personal
injuries and the amount of insurance costs and property damages in manufactured
housing.” 42 U.S.C. § 5401(1) & (5). In carrying out that purpose,
Congress clearly established its authority to regulate manufactured homes as
follows:
Whenever a Federal manufactured home construction and safety
standard established under this chapter is in effect, no State or political
subdivision of a State shall have any authority either to establish, or to
continue in effect, with respect to any manufactured home covered, any standard
regarding the construction or safety applicable to the same aspect of
performance of such manufactured home which is not identical to the Federal
manufactured home construction and safety standard. Federal preemption under
this subsection shall be broadly and liberally construed to ensure that
disparate State or local requirements or standards do not affect the uniformity
and comprehensiveness of the standards promulgated under this section nor the
Federal superintendence of the manufactured housing industry as established by this
chapter.
42 U.S.C. § 5403(d). Therefore,
Congress has expressly prohibited state governments from establishing standards
for the safety and construction of manufactured homes that differ from the federal
standards. Furthermore, whether a building qualifies as a “manufactured home”
turns on its structural characteristics, not on whether it is considered real
or personal property under state law. See 42 U.S.C. § 5402(6) (defining
a manufactured home, in part, as a transportable structure “which is built on a
permanent chassis and designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and includes the
plumbing, heating, air-conditioning, and electrical systems contained
therein.”).
Here, though the homes
that were sold by Respondent were clearly manufactured homes subject to the
federal manufactured home construction and safety standards, there is no
contention that the homes did not comply with those federal standards.
Rather the issue is whether Respondent had the authority to sell the homes.
However, contrary to the Department’s assertion, the federal standards do not
regulate the subsequent resale of a manufactured home.
The federal standards do
prohibit a person from selling or offering to sale “any manufactured home which
is manufactured on or after the effective date of any applicable Federal
manufactured home construction and safety standard under this chapter and which
does not comply with [the federal standards].” 42 U.S.C.A. § 5409(a)(1).
Nevertheless, the Federal Act specifically provides that those prohibitions
“shall not apply to the sale, the offer for sale, or the introduction or
delivery for introduction in interstate commerce of any manufactured home after
the first purchase of it in good faith for purposes other than resale.” 42
U.S.C.A. § 5409(b)(1) (emphasis added). That intention is further echoed in
subsequent provisions of the federal standards. See 42 U.S.C.A. §
5413. Moreover, in defining its regulatory preemption of the construction
standards of manufactured homes, Section 5403(d) “reserved to each State the
right to establish standards for the stabilizing and support systems of
manufactured homes sited within that State, and for the foundations on which
manufactured homes sited within that State are installed, and the right to
enforce compliance with such standards, except that such standards shall be
consistent with the purposes of this chapter and shall be consistent with the
design of the manufacturer.” Therefore, I do not find that Congress has
preempted the regulation of the resale of a manufactured home unless the home
is initially purchased by a person with the intent to simply resell the home.
The Department also
argues that the State of South Carolina’s regulations prohibit the resale of a
de-titled manufactured homes by someone who is not licensed by the Board. The
Department’s expansive interpretation of the application of Manufactured
Housing Code to regulate the subsequent sale of de-titled manufactured homes
permanently affixed to real property is plainly not supported by the Code.
Rather, as does the federal law, the South Carolina Act provides that “[i]t is
the policy and purpose of this State to provide protection to the public
against those possible hazards [of improper manufacturing] and for that purpose
to forbid the manufacture and sale of new manufactured homes which are
not constructed so as to provide safety and protection to their owners and
users and further to require that the business practices of the industry are
fair and orderly.” S.C. Code Ann. § 40-29-330 (Supp. 2007). That intention is
further echoed in subsequent provisions of the state’s laws. See S.C.
Code Ann. §§ 40-29-260(A) and (B) (Supp. 2007); see also S.C.
Code Ann. § 40-29-360 (B)(Supp. 2007) (requiring energy efficiency labels to be
affixed by the manufacturer on new homes which may removed by the consumer).
Moreover, I find that the General Assembly would have made clear the necessity,
in cases involving the sale of real property with an affixed de-titled
manufactured home, for separate sales of the real property and the manufactured
home if that had been its intent. See Charleston County School Dist.
v. State Budget and Control Bd., 313 S.C. 1, 5, 437 S.E.2d 6, 8 (1993) (“The
cardinal rule of statutory construction is to ascertain and effectuate the
intent of the legislature.”); Mun. Ass’n of S.C. v. AT & T
Communications of S. States, Inc., 361 S.C. 576, 606 S.E.2d 468 (2004) (a
statute must be read in a sense which harmonizes it with its subject matter and
accords with its general purpose.).
Based
upon the above law, I find that the manufactured homes for which the title
certificate has been retired and that were affixed to the property were not
personal property but were rather fixtures upon the real property.
Since those sales thus were not sales of manufactured homes, those acts did not
violate the Board’s Cease and Desist Order. The only remaining manufactured
home Respondent sold in a twelve month period in South Carolina was the sale of
the home to Mr. Frederick Steff on July 4, 2007.
Accordingly, Respondent’s conduct does not violate the prohibition against
engaging in the business of selling manufactured homes as a retail dealer or
salesman or offering such for sale on more than two occasions in any twelve month
period.
ORDER
IT IS THEREFORE
ORDERED that Respondents’ Motion for Summary Judgment is GRANTED.
AND IT IS SO
ORDERED.
_______________________________
Ralph
King Anderson, III
Administrative
Law Judge
December 10, 2008
Columbia, South Carolina
A manufactured home is defined as:
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