ORDERS:
ORDER
I. Statement of the Case
On December 12, 1994, the Real Estate Commission (Commission) began steps to discipline
Carolyn S. Bair (Bair). Based on the allegations in the Notice of Charges issued to Bair, the
Commission primarily asserts violations that fall within three categories: improper or inadequate
trust accounting, failure to cooperate with Commission investigators, and co-mingling and
converting to personal use trust funds belonging to others.
The Commission set a hearing for April 19, 1995, to hear the evidence on the allegations. On
April 18, 1995, Bair requested the hearing scheduled for April 19, 1995 be rescheduled due to an
illness. The Board for the Commission denied Bair's request and heard the charges in Bair's
absence on April 19, 1995. The Board's decision of May 2, 1995 revoked Bair's license and
imposed a monetary fine of $7,000.
After a request by Bair, the Board conducted a rehearing on July 19, 1995. On July 25, 1995 the
Board issued an amended order which again determined Bair violated Commission statutes and
regulations. The amended order found additional facts and reduced Bair's previous sanction from
revocation and a $7,000 fine to a probationary period of three years plus a monetary fine of
$7,000.
Bair disagreed with the decision and filed an appeal from the July 25, 1995 order. Jurisdiction is
vested in the Administrative Law Judge Division pursuant to S.C. Code Ann. § 40-57-220 (Supp.
1995), with review conducted under S.C. Code Ann. §§1-23-600(D) (Supp. 1995) and
1-23-380(B) (Supp. 1995).
II. Discussion of Issues
A. Rehearing By Commission on July 19, 1995.
Bair argues she was unfairly prejudiced by the manner in which the Board conducted the
rehearing. She asserts the Board should not have allowed the staff for the Commission to present
its evidence and witnesses. Rather, she asserts the Board should have allowed her to present her
evidence, whereupon the Board should have then considered her evidence as new evidence to be
weighed in conjunction with the evidence already heard by the Board on April 19, 1995. Bair
asserts the procedure employed was in error and that "the only issue in front of the Commission
was to allow [Bair] to present her side of the matter."
I disagree with Bair. A rehearing is a reconsideration of a case by the same court in which the
original determination was made. Kerr-McGee Nuclear Corp. v. New Mexico Environmental
Imp. Bd., 637 P.2d 38 (N.M. 1981). In a reconsideration, the rehearing body, in its discretion,
determines the limits of the rehearing and, if circumstances warrant, may choose to conduct the
rehearing in a de novo fashion. 73A C.J.S. Public Administrative Law And Procedure § 162a
(1983). An exercise of discretion by an administrative agency will not be disturbed unless there is
an abuse of discretion evidenced by a showing that the action of the agency was arbitrary or
unlawful. 73A C.J.S. Public Administrative Law And Procedure § 223a (1983). An exercise of
discretion is not arbitrary where the agency has given due consideration to relevant factors and
has reached a considered decision. 73A C.J.S. Public Administrative Law And Procedure § 224
(1983). Finally, an agency action which allows for the presentation of witnesses, the cross
examination of those witnesses, and the introduction of evidence is not an unlawful action but
rather is specifically allowed under statutory law. S.C. Code Ann. § 1-23-320 (Supp. 1995).
Here, the rehearing by a de novo proceeding was not an abuse of discretion nor an unlawful act. I
find no evidence in the record demonstrating that the Board's decision was arbitrary. The record
shows the Board heard Bair's motion and then granted such motion since it felt compelled by
fairness to do so. It obviously believed that fairness in this case required the Commission to prove
its case a second time with such proof being made in Bair's presence. Such a procedure allowed
Bair the opportunity to cross examine Commission witnesses and attempt to rebut the
Commission's evidence. Such a deliberate process is not arbitrary. Additionally, there is no
unlawfulness associated with the de novo proceeding since the right to confront witnesses and
oppose unfavorable evidence is a proper practice under the Administrative Procedures Act.
Accordingly, Bair was not unfairly prejudiced by the manner in which the Board conducted the
rehearing.
B. Substantial Evidence To Support The Board's Decision
Bair argues the Board's decision does not sufficiently establish the factual basis upon which the
Board relied in reaching its decision. I cannot agree.
The Administrative Procedures Act establishes the "substantial evidence rule" as the standard for
judicial review of decisions of the Board of the Real Estate Commission. S.C. Code Ann. §§
1-23-380(B) and 1-23-380(A)(6)(e) (Supp 1995). The rule establishes that the Board's factual
findings cannot be dismissed if those findings are supported by substantial evidence. Lark v. Bi
Lo, Inc., 276 S.C. 130, 276 S.E.2d 304 (1981). 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. McGuffin v.
Schlumberger-Sangamo, et al., 307 S.C. 184, 414 S.E.2d 162 (1992). It is not the role of this
Court to substitute its judgment for that of the Board unless the Board's decision is affected by
error of law or clearly erroneous in light of the reliable, probative, and substantial evidence in the
record. State ex re. Medlock v. S.C. Coastal Council, 289 S.C. 445, 346 S.E.2d 716 (1986).
Findings of fact do not need any particular form. Able Communications, Inc. v. S.C. Public
Service Comm'n, 290 S.C. 409, 351 S.E.2d 151 (1986). Rather, the findings need only be
sufficiently detailed to enable a reviewing court to determine whether the findings are supported
by evidence and whether the law has been correctly applied. Hamm v. S.C. Public Service
Comm'n, 309 S.C. 295, 422 S.E.2d 118 (1992). Finally, the possibility of drawing two
inconsistent conclusions from evidence does not prevent an administrative agency's finding from
being supported by substantial evidence. Lark v. Bi-Lo, supra.
Here, the order of the Board dated May 2, 1995 makes numerous specific findings of fact. The
Board factually found Bair failed to keep accurate trust account records and stated at least ten
different factual violations supporting its conclusion (trust records did not include dates or monies
received, names from whom received, name of principal on whose behalf funds received,
identification of principal's property, date of deposit, check numbers, running balance,
subaccounts showing income and expenditures, subledgers to account for advance rentals or
security deposits, or monthly reconciliations). In addition, the Board identified six other findings
explaining the Board's position (Bair failed to deposit rental monies in a timely fashion, failed to
document client expense disbursements, failed to obtain written management agreements,
commingled her private funds with client funds, used trust funds to pay personal and business
expenses, and failed to cooperate with Commission investigations). Further, as a result of the
rehearing, the Board issued an Amended Order of July 25, 1995, which reaffirmed the previous
order of May 2, 1995, but made several additional findings of fact. There, the Board found that
while Bair had prior problems, she had now established proper accounting procedures, had
cooperated with an investigation of July 11, 1995, and had no shortages of client or tenant funds
in the escrow account.
The factual findings are supported by the record and are sufficient to form the basis for the
Board's actions. The testimony is replete with evidence of Bair's failure to maintain records,
failure to cooperate, and lack of competency in operating her office. The Board, who saw and
heard the witnesses, could properly have believed and relied upon the testimony in reaching its
findings. A review of the transcript demonstrates extensive testimony on the charges brought.
In an exchange between the Commission's attorney and a Commission investigator, the following
testimony resulted:
Question: "As a result of your investigation work there that day, were you able to determine
how much money was contained in Ms. Bair's escrow account?"
Answer: "No."
Question: "Were you able to determine who the money belonged to?"
Answer: "No."
(April 19, 1995 Transcript, P. 12, lines 12-18)
In further testimony, the investigator explained:
"She never did a reconciliation of a bank statement to a general ledger. Most of the time she
never had a current general ledger."
(April 19, 1995 Transcript, P. 14, lines 12-14)
There is evidence of a lack of cooperation:
Question: "I assume that Ms. Bair, even with you there in her office requesting these
records, did not comply with the Commission's subpoena that ordered those things to be
produced?"
Answer: "No. In fact, she became very hostile and was screaming and cursing at us, telling
us we were disrupting her business and she didn't have time for us."
(April 19, 1995 Transcript, P. 14, lines 18-24)
In response to a question from a Commissioner concerning the nature of the business, a
Commission investigator responded as to the lack of competency as follows:
Answer: "She was the owner of the company. She owned the cleaning business. I think she
did the repairs. She was a jack-of-all-trades. When you went into her office, it was like dogs
and cats and total disruption, and I don't see how she ran a real estate business - or how she
does."
(April 19, 1995 Transcript, P.18, 1. 13-18)
The inability to identify funds in the escrow accounts and the lack of cooperation was further
presented to the Board:
Question: "To this day, have you been able to determine how much money is in Ms. Bair's
escrow account?"
Answer: "No."
Question: "To this day, have you been able to get Ms. Bair to completely cooperate with
your instructions on producing records?"
Answer: "No"
Question: "To this day, have you been able to determine who owns the contents of her
escrow account ?"
Answer: "No"
(April 19, 1995 Transcript, P. 29,1. 17 through P.30,1.1)
Even as late as the July 19, 1995 hearing, the Board was still receiving evidence as to the
uncertainty of the escrow accounts of Bair:
Question: "As of the time of our last hearing, had you been able to assemble a
comprehensive, accurate, and intelligible record of what Ms. Bair had in her escrow account
and who it belonged to?"
Answer: "No, sir."
(July 19, 1995 Transcript, P. 24, lines 3-9)
Finally, the Board heard testimony of Bair's use of the escrow account and how such escrow
accounts were used to hold her personal funds. (July 19, 1995 Transcript, P. 23, lines 14-24).
The Board had before it sufficient evidence from which it could have concluded Bair used the
trust monies for her own personal expenses. Accordingly, based upon the entire record as a
whole, the Board's factual findings are supported by the record and I am not persuaded the factual
findings should be dismissed or disregarded.
C. Authority For $7,000 Fine
Bair asserts the order and the record do not provide a sufficient basis for the Board to assess a
penalty of $7,000. I disagree. The primary rule of statutory construction is to ascertain and give
effect to the legislature's intent or purpose as expressed in the statute. Green v. Thornton, 265
S.C. 436, 219 S.E.2d 827 (1975). Further, the legislature's intent should be ascertained primarily
from the plain language of the statute. 82 C.J.S. Statutes § 322(b) (1953). In addition, unless the
statute requires a different interpretation, the words used must be given their ordinary meaning.
Hughes v. Edwards, 265 S.C. 529, 220 S.E.2d 231 (1975). Finally, statutory interpretations
applied by an agency charged with enforcing the law are to be given significant deference with
such interpretations overruled only where there are cogent reasons. Faile v S. C. Employment
Sec. Comm'n, 267 S.C. 536, 230 S.E.2d 219 (1976).
Under the Commission's interpretation, a person who violates S.C. Code Ann. § 40-57-170
(Supp. 1995) or any regulation of the Commission may be subject to a penalty of not less than
$25 nor more than $500 with such penalty being in addition to any sanctions under S.C. Code
Ann. § 40-57-170 (Supp. 1995). See S.C. Code Ann. § 40-57-250 (Supp. 1995). S.C. Code
Ann. § 40-57-170 (Supp. 1995) authorizes the Commission to "assess fines . . . where the licensee
is found by the commission to be guilty of any of the following acts." The language "any of the
following" demonstrates the intent of the General Assembly to refer to singular acts when a
penalty is to be assessed. Thus, since the intent is for a penalty for each violation, and since that
intent is applied as the Commission's administrative view, a penalty for each violation is
appropriate.
Here, the Board found that Bair committed fourteen violations. (April 19, 1995 Transcript, P. 33.
lines 7-14) The Board applied a fine of $500 for each violation resulting in a total of $7,000.
(April 19, 1995 Transcript, P. 52, lines 11-13). Thus, the penalty of $7,000, supported both by
the law and the record, is proper.
D. Consumer Complaints
Bair asserts the Board improperly considered evidence of complaints made against her by
members of the public. The Board committed no error in receiving such evidence.
The admissibility of evidence is within the discretion of the tribunal receiving the evidence. See
State v. Atchison, 268 S.C. 588, 235 S.E.2d 294 (1977). Failure to make an objection at the time
the evidence is offered constitutes a waiver of the objection. Cogdill v. Watson, 289 S.C. 531,
347 S.E.2d 126 (Ct. App. 1986). On appeal, the party may not complain of the testimony
admitted if no objection was made at the time of the admission of the testimony. Cartee v.
Lesley, 286 S.C. 249, 333 S.E.2d 341 (Ct. App. 1985), aff'd 290 S.C. 333, 350 S.E.2d 388
(1986).
At the rehearing, the Board heard evidence of Bair's efforts to correct her problems and establish
adequate control over her trust accounting system. The Commission staff countered by
presenting evidence of a lack of control by seeking to establish that several new complaints from
the public had been received concerning Bair's practices. (July 19, 1995 Transcript, P. 31, lines
17-23). No objection to the questions or answers was entered by Bair. Rather, Bair continued
with the line of questioning initiated by the Commission staff and presented further testimony
about the complaints. Thus, since no objection was raised at the hearing and especially where the
issue was in fact further developed by Bair, Bair is not now able to complain about the Board
hearing such evidence.
E. Staff Attorney Involvement
Bair argues her rights were prejudiced since an attorney known to and familiar with the Board
prosecuted her case. The essence of the argument is that Bair's rights to due process were
impaired by the relationship between the prosecuting attorney and the Board. I disagree.
The combination of investigatory or prosecution and adjudicatory functions in a single
administrative agency is not, in and of itself, a denial of due process. Withrow v. Larkin, 421 U.S.
35, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975). The Administrative Procedures Act does not prohibit
agency personnel engaged in prosecution or investigatory functions from participating in an
adjudication to the extent that they are acting as counsel in such a proceeding. Jacob A. Stein, et
al. 4 Administrative Law § 33.02[4] (1995). While due process requires an impartial decision
maker, it does not preclude an administrative agency from adjudicating a matter by a panel
composed of "persons within the agency who did not participate in investigative or prosecutorial
capacities." The Babcock Center, Inc. v. Office of Audits, 286 S.C. 398, 334 S.E.2d 112
(1985).
Here, the Board members sat as the judge and jury but did not assume the forbidden roles of
investigators or prosecutors. Further, there is no evidence in the record that any member of the
Commission's staff, including the Commission attorney, took part in or influenced the Board's
adjudicative decisions. Accordingly, Bair's due process rights are not impinged by the prosecuting
attorney being known to and familiar with the Board members.
III. Order
Based upon all of the above, Bair has failed to meet the burden of establishing grounds for
reversal of the Board's decision. Therefore, the Board's Order dated May 2, 1995 and the Board's
Amended Order dated July 25, 1995, are affirmed in whole.
AND IT IS SO ORDERED.
____________________________
RAY N. STEVENS
Administrative Law Judge
This 23rd day of February, 1996 |
