ORDERS:
ORDER
I. Statement of the Case
On February 15, 1996, the staff of the Real Estate Commission issued a Notice of Charges seeking
to discipline Carolyn S. Bair (Bair). The charges asserted Bair's actions in managing a rental property
owned by Dr. and Mrs. Duncan (Duncan) and actions in renting a property to Mr. and Mrs. John R.
Fenton (Fenton) violated § 40-57-170(A)(4) and (11) (Supp. 1996) and Regulation 105-21(B)(2).
A hearing before the Board of the Real Estate Commission (Board) on March 20, 1996 resulted in
a written Order of April 17, 1996 finding Bair in violation of § 40-57-170(A)(4) (Supp. 1996), but
failing to find Bair in violation of § 40-57-170(A)(11) (Supp. 1996) or Regulation 105-21(B)(2).
The Board found Bair violated § 40-57-170(A)(4) (Supp. 1996) in that she " . . . engaged in conduct
in a real estate transaction which demonstrates bad faith, dishonesty, untrustworthiness, or
incompetency in a manner as to endanger the interest of the public." The Board imposed a public
reprimand, a $500 fine and a requirement that Bair refund to Fenton any deposit Bair received from
Fenton. Bair timely appealed the Board's decision to the Administrative Law Judge Division (ALJD)
pursuant to S.C. Code Ann. § 40-57-220 (Supp. 1996), with the appeal conducted under S.C. Code
Ann. §§1-23-600(D) (Supp. 1996) and 1-23-380(B) (Supp. 1996). I conclude the Board's decision
does not contain factual findings sufficient to support the conclusions reached and therefore remand
for a rehearing.
II. Issues Presented(1)
Are the Board's findings of fact sufficiently detailed to enable an appellate body to determine whether
the findings are supported by the evidence or whether the law has been properly applied?
III. Discussion
An ALJD review must determine whether the Board had substantial evidence upon which to base its
findings of fact and whether the Board applied the correct law. S.C. Code Ann. §§ 1-23-380(B) and
1-23-380(A)(6) (Supp. 1996). Bair argues the Board's findings of fact do not demonstrate that her
actions in the Duncan and Fenton matters constituted bad faith, dishonesty, untrustworthiness, or
incompetency in a manner as to endanger the interest of the public. I find the Board's fact finding is
insufficient to allow an appellate review of this matter.
An appellate review must have findings of fact sufficient to allow review. S.C. Code Ann. § 1-23-350
(Supp. 1996). In deciding the adequacy of factual findings, implicit findings of fact receive particular
scrutiny since such facts are devoid of the detail required to determine if the findings are supported
by the evidence or to decide if the law has been properly applied to those findings. Able
Communications, Inc. v. South Carolina Public Service Com'n, 290 S.C. 409, 351 S.E.2d 151
(1986). Specifically, if a material fact is in dispute, the fact-finder may not rely upon implicit fact
finding, but instead the fact-finder must make specific and express findings of fact. Aristizabal v.
Woodside-Division of Dan River, 268 S.C. 366, 234 S.E.2d 21 (1977).
A. Duncan Matter
Here, the Board's order fails to decide material facts in dispute. Instead, the Board's findings rely
upon a neutral determination of facts which only implicitly and thus insufficiently find acts of bad
faith, dishonesty, untrustworthiness, or incompetency.
1. Board's Findings of Fact
The Board found that on April 1, 1995, Duncan and Bair entered a written rental agreement which
allowed Bair to manage Duncan's property at 1875 St. Andrews Commons. Duncan's daughter,
Teresa, an employee of Bair, lived in the Duncan unit when the unit was not rented and with Bair
when the unit was rented. Bills related to the unit were submitted by Teresa to Bair for payment. On
January 25, 1995, Bair wrote a check to State Farm for $445.55 representing an insurance premium
for Teresa. The $445.55 was charged to Duncan and reflected on Duncan's rental management
statement. On July 20, 1995, Duncan notified Bair that the agreement was terminated effective
immediately. Based on these facts and these facts alone, the Board found Bair " . . . has engaged
in conduct in a real estate transaction which demonstrates bad faith, dishonesty, untrustworthiness,
or incompetency in a manner as to endanger the interest of the public."
2. Disputed Facts Only Implicitly Determined
The above findings are the only findings of fact in the Duncan matter. While the Board determined
that Bair charged the Duncan rental account for "an insurance premium for Teresa Duncan," the fact
in dispute is not whether Bair charged the account but rather whether Bair had explicit or implied
permission to do so. No findings on the "knowledge and permission facts" are made by the Board
even though the record plainly demonstrates this critical fact was in dispute.
The testimony shows Bair stated she paid the bill for Teresa since "Teresa told her to pay this, which
she did not question, and she paid it." The record before the Board supports a view that Bair paid
other non-rental expenses such as utility bills incurred by Teresa while Teresa lived in the rental unit.
Just like the non-rental insurance bill of Teresa, the non-rental utility expenses were also charged to
the rental account. Such circumstances assert knowledge by and permission from Duncan and thus
require the knowledge issue to be squarely decided in a factual finding.
Further, the time period for which Duncan may have had notice of these non-rental charges is also
disputed. The testimony suggests Duncan may have had notice by a billing in January of 1995 while
at another point Duncan may have gotten notice in May, June or July of 1995. In other words, a
factual dispute existed on whether Duncan knew Bair was paying non-rental expenses for Teresa and
whether permission allowed Bair to charge those expenses to the rental account. No findings of fact
are stated on this factual dispute.
The duty to squarely decide the factual dispute of knowledge and permission is all the more obvious
since the allegations of wrongdoing specifically assert Bair "had no authority to charge the account
of Dr. and Mrs. Duncan . . . " Notice of Charges, Allegation 4. In pressing Bair's defense, Bair's
attorney attempted to demonstrate Bair had the requisite permission to charge the rental account.
Thus, in the absence of a finding of fact that Bair had no such authority, merely establishing that Bair
paid expenses for Teresa does not support a finding of bad faith, dishonesty, untrustworthiness, or
incompetency in a manner as to endanger the interest of the public. Rather, to reach the result
established by the Board, an implicit finding of fact must be made that Duncan did not know of the
payments and that Duncan did not explicitly or by implication give permission. Such implicit fact
finding is inappropriate for a critically disputed fact. Aristizabal v. Woodside-Division of Dan River,
268 S.C. 366, 234 S.E.2d 21 (1977).
B. Fenton Matter
A similar finding of implicit facts occurs in the dispute concerning Mr. and Mrs. John R. Fenton. The
fact in dispute is not whether Bair retained $58 dollars of the Fenton deposit, but rather whether the
Fentons canceled their reservation. No findings on the disputed facts of cancellation are made by the
Board even though this critical fact was in dispute.
1. Board's Findings of Fact
The Board found that Bair and the Fentons entered into a rental contract for a unit in the St. Andrews
Commons for the week of July 22, 1995 to July 29, 1995, at a rate of $850.00 plus tax with Bair
receiving a deposit of $308.00. On July 20, 1995, Bair learned the St. Andrews Commons unit had
been removed from the market. Correspondingly, also on July 20, 1995, Bair informed the Fentons
that the St. Andrews Commons unit had been taken off the market and that a second unit had been
scheduled for the Fentons in Tanglewood. The Fentons agreed to the change. When the Fentons
arrived in Hilton Head, they were told the Tanglewood unit had been damaged by water and was
unavailable. Bair offered the Fentons several alternatives which were inspected and rejected by the
Fentons. The Fentons requested a refund of their deposit which request was denied by Bair. Bair
subsequently refunded $250.00, retained $50.00 as a cancellation fee, and offered no explanation for
the failure to return the $8.00. Based on these facts the Board found Bair "engaged in conduct in a
real estate transaction which demonstrates bad faith, dishonesty, untrustworthiness, or incompetency
in a manner as to endanger the interest of the public."
2. The Disputed Fact Of Cancellation Only Implicitly Determined
The above findings are the only findings of fact in the Fenton matter. Bair's defense asserts the
Fentons canceled their reservation. The cancellation, Bair argues, allowed her to retain a cancellation
fee of at least $58 since the rental agreement allowed retention of the entire deposit unless the
cancellation was made 30 days in advance. In this matter, even though the testimony shows the
cancellation facts were disputed, no findings decide the disputed facts and the appellate body is left
to speculate on the sufficiency of the evidence which supports the implicit finding of no cancellation.
The cancellation facts were clearly in dispute. The contract allowed Bair to provide alternative
accommodations when required by uncontrollable events. Since the St. Andrews unit was
unavailable, Bair offered the Fentons three alternative units. The Fentons rejected each unit.
Apparently, the Fentons contacted another rental agent while Bair was preparing to present a fourth
unit for the Fenton's consideration. Before the fourth unit could be offered, however, the Fentons,
through the efforts of the second rental agent, secured a satisfactory unit. When Bair attempted to
offer a fourth alternative, the Fentons informed Bair they had found other accommodations and the
Fentons requested that Bair refund the deposit money. These facts demonstrate a plain dispute over
the cancellation facts.
The Board, however, did not address the disputed cancellation facts. Where critical facts are
unanswered but are only implied, the appellate body must improperly speculate on whether the
evidence sufficiently supports the implicit findings of fact. Aristizabal v. Woodside-Division of Dan
River, 268 S.C. 366, 234 S.E.2d 21 (1977). In the instant case, for example, did the Board reach its
implicit finding of "no cancellation" based on finding the loss of the St. Andrews unit was not an
"uncontrollable event?" Or, did the Board's implicit finding of no cancellation turn upon the Board's
finding that the alternative units provided to the Fentons were not comparable to the original St.
Andrews unit? The need for specific fact-finding is all the more required where the actual charges
brought against Bair assert she "failed to account for and return all of the Fenton's advance deposit
as required by the statutes and regulations of the Real Estate Commission." Notice of Charges,
Allegation 10. Such a charge requires specific facts on whether the deposit was properly retained
under the disputed cancellation facts. Without specific fact-finding, the appellate body cannot
determine the basis for the decision and cannot examine the decision under the substantial evidence
standard.
IV. Order
Before a penalty can be imposed, Bair must be found guilty of violating the bad faith, dishonesty,
untrustworthiness, or incompetency requirements of S.C. Code Ann. § 40-57-170(A)(4) (Supp.
1996). In the Board's Order at Conclusion of Law 2, Bair is found guilty of violating S.C. Code Ann.
§ 40-57-170(A)(4) (Supp. 1996) and the Board states that the factual support for the violation is set
forth in the findings of fact of the order. The Board's decision relies upon implicit findings of fact.
Such findings are not sufficiently detailed to enable the appellate body to determine whether the
findings are supported by the evidence or whether the law has been properly applied. Accordingly,
the Board's Order dated April 17, 1996 is vacated and remanded with the Board required to make
specific findings of fact sufficient to allow appellate review.
AND IT IS SO ORDERED.
____________________________
RAY N. STEVENS
Administrative Law Judge
This 10th day of April 1997.
1. Bair asserts five issues on appeal: Did the Board err in finding that Bair violated § 40-57-170(A)(4);
did the Board err in applying a burden of proof of clear and convincing; did the Board violate the due
process or the impairment of contracts clauses of the United States Constitution and the South
Carolina Constitution; did the Board err by ignoring the contracts between Bair and the Duncans and
Bair and the Fentons; and did the Board violate Bair's constitutional and civil rights? Given the
disposition of this case, I need not address these issues. |