SC Administrative Law Court Decisions

The present matter arises out of Appellant’s conduct during two real estate transactions in 2000 and 2001. At the time of these transactions, Appellant was a real estate broker duly licensed by the Commission. In the first of these transactions, Appellant entered into a contract with George L. Reiner for the sale of a one-acre tract of land in Pelion, South Carolina. When he entered into the contract with Mr. Reiner, Appellant did not have legal title to the property in question, but rather had only contracted to purchase the property from its actual owner. However, this purchase was never completed, Appellant never acquired legal title to the property, and, consequently, Appellant was not able to deliver the property to Mr. Reiner. In the second transaction, Appellant entered into a contract with Betty M. Thompson for the sale of a parcel of property in Lugoff, South Carolina, which was then occupied by Ms. Thompson’s daughter and son-in-law. Appellant contends that the purchase price for the property was, at all times, the $11,000 price recited in the written contract. However, Ms. Thompson testified that, under her understanding of her agreement with Appellant, the purchase price of the property would be the outstanding balance due on the initial installment contract for the property, an amount of approximately $9300. After an investigation into these matters, the Commission charged Appellant with misconduct under several provisions of the Commission’s practice act, held a hearing on those charges, and, finding Appellant guilty of the charges, imposed upon Appellant the sanctions described above, including the revocation of his real estate broker’s license.

ANALYSIS

This tribunal’s review of a final decision in a contested case decided by a professional or occupational licensing board or commission within the South Carolina Department of Labor, Licensing and Regulation is governed by the provisions of S.C. Code Ann. § 1-23-380(A) (Supp. 2002). S.C. Code Ann. § 1-23-380(B) (Supp. 2002); see also S.C. Code Ann. § 1-23-600(D) (Supp. 2002). Under the standard of review set forth in Section 1-23-380, this tribunal “shall not substitute its judgment for that of the [Commission] as to the weight of the evidence on questions of fact.” S.C. Code Ann. § 1-23-380(A)(6) (Supp. 2002). However, if this tribunal finds the Commission’s decision deficient in certain particulars, it “may . . . remand the case for further proceedings.” Id. Upon careful consideration of the Commission’s October 10, 2002 Final Order, I find that it is appropriate to remand the instant case to the Commission so that it may reconsider and clarify the basis for its conclusion that Appellant committed misconduct in violation of the real estate brokers’ practice act.

An administrative agency has an obligation to state clearly and completely the facts essential to its conclusion; where the agency fails to do this, remand is appropriate. 2 Am. Jur. 2d Administrative Law § 630 (1994); see also Campbell v. La-Z-Boy East, 295 S.C. 384, 368 S.E.2d 679 (Ct. App. 1988) (holding that where an agency failed to define the basis for its findings of fact, the case should be remanded for the agency to make sufficiently detailed findings).

Proceedings seeking to suspend or revoke the license of a professional are serious matters. The professional’s ability to earn a living is at stake. Of equal gravity, however, is the public’s legitimate interest in the continued services of qualified professionals. And, unequivocally, the Commission is charged with protecting the public interest by administering the laws and regulations governing the practice of real estate brokering.

It is therefore imperative, given the magnitude of cases such as the one at hand, that the Commission’s final order clearly and completely articulate the facts and rationale supporting its conclusion. In the present case, the Commission reached the following Conclusions of Law regarding Appellant’s conduct:

2. [Appellant] has violated S.C. Code Ann. § 40-57-145(A)(1) (Supp. 2001) in that [Appellant], as evidenced by the conduct described herein above, made substantial misrepresentations in real estate transactions in which he was involved.

3. [Appellant] has violated S.C. Code Ann. § 40-57-145(A)(2) (Supp. 2001) in that [Appellant], as evidenced by the conduct described herein above, made false promises of a character likely to influence, persuade and induce.

4. [Appellant] has violated S.C. Code Ann. § 40-57-145(A)(4) (Supp. 2001) in that [Appellant], as evidenced by his conduct in the transactions with Ms. Thompson and Mr. Reiner, demonstrated bad faith, dishonesty, untrustworthiness and incompetency in a manner so as to endanger the interest of the public.

(R. at 4-5) (emphasis added). Beyond these three paragraphs, the only other Conclusions of Law in the Commission’s final order are a statement of the Commission’s jurisdiction and a caveat that the sanctions imposed on Appellant were designed to protect the public rather than punish Appellant. (R. at 4-5.)

Plainly, these conclusions of law fail to articulate a rationale or provide an analytical basis for the Commission’s conclusions. They do not contain a specific discussion of how or why the conduct described in the order is violative of the cited code sections. For example, Conclusion of Law #2 does not specify which of the representations made by Appellant during the two transactions were substantial misrepresentations. Similarly, Conclusion of Law #3 does not describe what false promises were made by Appellant during these transactions, nor suggest how these promises were likely to influence, persuade, and induce others. And, in this same vein, Conclusion of Law #4 does not hint at what part of Appellant’s conduct in the transactions in question constituted bad faith, dishonesty, untrustworthiness, and incompetency. Moreover, these findings are particularly vague when one considers that the alleged misconduct described in the Commission’s order is not confined to a single incident, but rather includes two separate transactions, each with its own lengthy course of dealings. Certainly, in these transactions, not every representation made by Appellant was a substantial misrepresentation, not every promise was a false promise, and not every action was made in, and indicative of, bad faith, dishonesty, untrustworthiness, and incompetency. Nevertheless, the Commission’s order fails to state its Conclusions of Law with sufficient particularity for a reader to reach any narrower conclusions regarding Appellant’s conduct.

Here, the Commission’s order is conclusory, is without explanation, and is, therefore, deficient. In a recent line of cases, our State Supreme Court has held, and made it abundantly clear, that an administrative agency must make specific findings of fact and explain its rationale in sufficient detail so as to afford meaningful judicial review. See Kiawah Property Owners’ Group v. S.C. Pub. Serv. Comm’n, 338 S.C. 92, 525 S.E.2d 863 (1999); Porter v. S.C. Pub. Serv. Comm’n, 333 S.C. 12, 507 S.E.2d 328 (1998); Porter v. S.C. Pub. Serv. Comm’n, 332 S.C. 93, 504 S.E.2d 320 (1998); Heater of Seabrook, Inc. v. S.C. Pub. Serv. Comm’n, 332 S.C. 20, 503 S.E.2d 739 (1998). The Court has further overruled earlier precedent in this area to the extent that those cases suggest that an appellate court “will, sua sponte, search the record for substantial evidence supporting a decision when an administrative agency’s order inadequately sets forth the agency’s findings of fact and reasoning.” Porter, 333 S.C. at 22 n.3, 507 S.E.2d at 333 n.3.

While this tribunal is reluctant to remand a case such as this, the construction of the Commission’s order in the present case leaves this tribunal no alternative. It is not incumbent upon this tribunal to divine, through inferential deduction, how and why the conduct generally described constitutes specific violations of specific statutory provisions. Rather, the Commission has the burden of showing, with particularity, the nexus between the conduct and the alleged wrongdoing, while explaining and supplying legal analysis to support its conclusions. The mere restatement of the applicable regulatory statute, with an appended reference to the “conduct described herein,” does not make the wrongdoing self-evident. The facts of the matter must be specifically articulated and connected to the proscribed statutory conduct for this tribunal to conduct any meaningful review of the Commission’s decision.

In sum, while the Commission may have conducted an orderly analysis to reach its conclusions, and may have had specific conduct in mind when it set forth the conclusions of law in its order, it did not provide such analysis nor reveal its rationale for reaching those conclusions in the text of the order. As noted above, the South Carolina Supreme Court has indicated that it is imperative for an agency to make plain the underlying rationale for its conclusions to afford meaningful judicial review of its decisions. Here, the Commission has not done so, and, as a result, this tribunal cannot undertake meaningful review of its order.

ORDER

IT IS THEREFORE ORDERED that this case is REMANDED to the South Carolina Real Estate Commission to reconsider the record and the basis for its conclusions in accordance with this Order.^[1]

AND IT IS SO ORDERED.

______________________________

JOHN D. GEATHERS

Administrative Law Judge

Post Office Box 11667

Columbia, South Carolina 29211-1667

May 19, 2003

Columbia, South Carolina