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ARELLO Latest Court Decisions 2013-2014

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  1. ARELLOLatest Court Decisions2013-2014 ARELLO Law and Regulation Committee September, 2014

  2. Law & regulation committee & Volunteers Sincerest Thanks: • Gene Allison • Chris Booth • Julie Cropp • Terry Duggan • Herb Freeman • Mike Gamblin • Kenneth Gill • UlaniGulstone • Kevin Hypes • Daniel Kehew • Robert Kinniebrew • Trevor Koot • Jeanette Langford • Greg Lemon • Kerri Lewis • Charlie Moody • Tom Pool • David Raphael • Steve Sargenti • Nikki Senter • James Therrien • Janet Thoren • Allen Trammell • Kim Wells Briefing Cases

  3. administrative lawOhio Div. of Real Estate v. Knight Citation: 2013-Ohio-2896 Court: Court of Appeals of Ohio, 8th Appellate District Columbus, Ohio December 13, 2010 – Page 3 –

  4. administrative lawOhio Div. of Real Estate v. Knight – Page 3 –

  5. administrative lawOhio Div. of Real Estate v. Knight Complaint Process: • Complaint Filed • Division Investigates • Charges Filed/ Notice of Hearing • Hearing (before Hearing Examiner 12/13/10) • Recommended Decision (1/27/11) • Commission Meeting (4/6/11) • Commission Adopts/Modifies/Rejects (4/6/11) – Page 3 –

  6. administrative lawOhio Div. of Real Estate v. Knight Hearing examiner found 10 violations and recommended revocation. Before the Ohio Real Estate Commission: • Knight submitted evidence. • No hearing or testimony. • Commission adopted recommended order. – Page 3 –

  7. administrative lawOhio Div. of Real Estate v. Knight Judicial Review: • Division initially filed incomplete record • partial transcript due to inaudible recording • Division files supplement to complete record • complete transcript • additional correspondence submitted by Knight before the Commission meeting • Court: Division improperly bootstrapped evidence about Eral to Knight & remanded. – Page 3 –

  8. administrative lawOhio Div. of Real Estate v. Knight Ohio Court of Appeals reversed the Common Pleas Court. Incomplete record prejudiced licensee • Delay in completing transcript not prejudicial • Failure to include documents submitted by Knight harmed her case before C.P. Court. • Only evidence Knight submitted • Court remanded and instructed C.P. Court to enter judgment against the Division – Page 3 –

  9. Administrative lawOni v. Tenn. Dep’t of Health Citation: 2013 Tenn. App. LEXIS 467 2013 WL 3808214 Court: Court of Appeals of Tennessee, Nashville – Page 3 –

  10. Administrative lawOni v. Tenn. Dep’t of Health 2003 Oct. 2003 Aug. 2007 Nov. 2007 Mar. 2011 • Oni charged with burglary, theft, and battery in Georgia • Oni indicates no criminal charges on NY renewal • Oni accepted reprimand in lieu of formal discipline in Tennessee and agreed to pay $3,000 fine and $3692.65 costs • Oni indicates no reprimand on NY renewal • Oni’s NY license revoked for failing to report criminal charges and reprimand – Page 3 –

  11. Administrative lawOni v. Tenn. Dep’t of Health January 2012 Tennessee Order: • Oni found in violation of prior reprimand to to his failure to pay remaining $692.65 balance • Oni found in violation of Tennessee law because he was disciplined in New York • Oni required to pay $692.65 costs remaining from 2007 reprimand. – Page 3 –

  12. Administrative lawOni v. Tenn. Dep’t of Health January 2012 Tennessee Order: • Oni revoked based on New York revocation. – Page 3 –

  13. Administrative lawOni v. Tenn. Dep’t of Health Judicial Review: • Affirmed Board decision requiring payment of 2007 costs • Reversed Board decision revoking TN medical license • “By simply mirroring the New York Board’s choice of discipline, the Board rendered an arbitrary or capricious decision.” – Page 3 –

  14. Brokerage practiceTang v. Zhang Citation: 2013 BCCA 52 Court: Court of Appeal for British Columbia Vancouver, British Columbia – Page 18 –

  15. Brokerage practiceTang v. Zhang Issue: Buyer’s Forfeiture of $100,000 Deposit on $2,030,000 Vancouver Home. “amount paid by the Buyer will be absolutely forfeited to the seller in accordance with the Real Estate Services Act, on account of damages” – Page 18 –

  16. Brokerage practiceTang v. Zhang Williamson Pacific Developments v. Johns,(1997) 35 B.C.L.R. (3d) 180. • $45,000 deposit • “nonrefundable” “deposit on account of purchase” forfeited “on account of damages” • Court: no power in equity to relieve buyers’ forfeiture Agosti v. Winter, 2009 BCCA 490. • $10,000 deposit • “amount paid by the Buyer will be absolutely forfeited to the seller in accordance with the Real Estate Services Act, on account of damages” • Court: sellers do not have unconditional right to payment of deposit – Page 18 –

  17. Brokerage practiceTang v. Zhang Court of Appeal for British Columbia: • noted deposit language identical to Agosti • reconciled Williamson & Agosti • overruled Agosti • reversed trial court judgment for buyers – Page 18 –

  18. Brokerage practiceTang v. Zhang General Principles With Respect to Deposits: • Whether a buyer’s deposit is forfeited is a matter of contractual intent. • A true deposit is intended to motivate the parties to carry through on their bargains and generally forfeited by the buyer when the buyer defaults. • A deposit is an exception to the general rule that a contractual amount subject to forfeiture is an unlawful penalty. • A deposit forfeited “on account of damages” does not mean the deposit is lost only if damages are shown. – Page 18 –

  19. Brokerage practiceWestgate Smoky Mts. v. Phillips Citation: 2013 Tenn. LEXIS 1014, Unemployment Ins. Rep. (CCH) P8438. Court: Supreme Court of Tennessee – Page 18 –

  20. Brokerage practiceWestgate Smoky Mts. v. Phillips Westgate Smoky Mountain Resort Gatlinburg, TN – Page 18 –

  21. Brokerage practiceWestgate Smoky Mts. v. Phillips Procedural History Vukich-Daw terminated Department of Labor: Vukich-Daw = employee. timeshare salesperson not a “real estate agent” Labor Appeals Tribunal: Vukich-Daw = employee Board of Review: Vukich-Daw = employee Chancery Court: Vukich-Daw = not an employee timeshare salesperson is “real estate agent” Court of Appeals: Vukich-Daw = employee timeshare salesperson not a “real estate agent” Supreme Court: Vukich-Daw = not an employee timeshare salesperson is “real estate agent” 11/2009 12/2009 3/2010 10/2010 2011 8/2012 12/2013 – Page 18 –

  22. Brokerage practiceWestgate Smoky Mts. v. Phillips Statutory Timeline Tennessee Real Estate Broker License Act (REBLA) licensure of real estate “brokers” and “affiliate brokers” REBLA amended to add time-share transactions to activities performed by brokers and affiliate brokers Time-Share Act created time-share “sales agents” time-share “sales agents” were required to be under supervision of a broker and subject to REBLA & TREC Employment Security Law excludes “qualified real estate agent” REBLA amended to add time-share “salespersons” “salespersons” under supervision of broker 1973 1981 1983 1987 1989 – Page 18 –

  23. Brokerage practiceWestgate Smoky Mts. v. Phillips Criteria: • Qualified real estate agent • legislative history shows intent to treat timeshare salesperson as “qualified real estate agent” • timeshare salesperson licensed by TREC • Paid on commission • Services performed under written contract – Page 18 –

  24. contractsConley v. Guerrero Citation: 2014 N.J. Super. Unpub. LEXIS 709 Court: Superior Court of New Jersey, Chancery Division, Somerset County NOTE: Issue involves facsimile messages and electronic mail, not regular mail as reported. – Page 20 –

  25. contractsConley v. Guerrero • Conley agreed to purchase property from Guerrero. • Attorney review clause allowed either party to cancel during review period. • Guerrero’s counsel sent notice of cancellation by facsimile and email during review period. The Cedars Bernards Township, NJ – Page 20 –

  26. contractsConley v. Guerrero Issue: Whether cancellation of a contract that required cancellation by personal service, certified mail, or telegram was effective when the cancellation was sent by facsimile and email. Standard NJ Attorney Review Provision: “If an attorney for the Buyer or the Seller reviews and disapproves of this contract, the attorney must notify the Broker(s) and the other party named in this contract within the three-day period. Otherwise this contract will be legally binding as written. The attorney must send the notice of disapproval to the Broker(s) by certified mail, by telegram, or by delivering it personally. The telegram or certified letter will be effective upon sending. The personal delivery will be effective upon delivery to the Broker’s office.” – Page 20 –

  27. contractsGoldman v. Olmstead Citation: 414 S.W.3d 346 Court: Texas Court of Appeals, 5th District Goldmans – Buyers • Hewett – Buyers’ agent Olmsteads – Sellers • Smith – Sellers’ agent • Smith is Mrs. Olmstead’s mother – Page 21 –

  28. contractsGoldman v. Olmstead 3813 Stanford “TREC may suspend or revoke a license . . . or take disciplinary action . . . if a license holder engages in misrepresentation dishonesty, or fraud when selling real property in the name of a person related to the license holder.” – Tex. Occ. Code Ann. § 1101.652(a)(3) – Page 21 –

  29. Fair housingKeller v. City of Fremont Citation: 719 F.3d 931 Court: U.S. Court of Appeals, 8th Circuit Fremont, Nebraska – Page 23 –

  30. Fair housingKeller v. City of Fremont Ordinance 5165: • “It is unlawful for any person or business entity to rent to, or permit occupancy by, an illegal alien, knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law.” • “An ‘illegal alien’ is an alien who is not lawfully present in the United States, according to [federal law.]” – Page 23 –

  31. Fair housingKeller v. City of Fremont Fremont Rental Process: • Prospective renter obtains occupancy license • provide $5 fee and citizenship information and immigration status • minors and temp. residents exempt • City issues occupancy license • Renter may begin tenancy and landlord must keep copy of renter’s occupancy license • Police ask federal government to verify immigration status. • If renter is unlawfully present, renter must establish lawful presence or occupancy license is revoked. – Page 23 –

  32. Fair housingKeller v. City of Fremont “We find no hint in the FHA’s history and purpose that such a law or ordinance, . . . violates the FHA if local statistics can be gathered to show that a disproportionate number of the adversely affected aliens are members of a particular ethnic group. In most cases today, that would of course be Latinos, but at various times in our history, and in various locales, the “disparate impact” might have been on immigrants from Ireland, Germany, Scandinavia, Italy, China, or other parts of the world. It would be illogical to impose FHA disparate impact liability based on the effect an otherwise lawful ordinance may have on a sub-group of the unprotected class of aliens not lawfully present in this country.” – Page 23 –

  33. Fair housingMiami Valley Hous. Ctr., Inc. v. Connor Group Citation: 725 F.3d 571 Court: U.S. Court of Appeals, 6th Circuit 599/1br — Great Bachelor Pad! (Centerville) Our one bedroom apartments are a great bachelor pad for any single man looking to hook up. This apartment includes a large bedroom, walk in closet, patio, gourmet kitchen, washer dryer hook up and so much more. . . . – Page 25 –

  34. Fair housingMiami Valley Hous. Ctr., v. Connor Group Chesapeake Landing Apartments Dayton, Ohio – Page 25 –

  35. Fair housingMiami Valley Hous. Ctr. v. Connor Group Connor Group Craigslist Headlines: • "No Matter What They Say, Size Does Matter!" • "Wanna Be on TOP?!!" • "Single?? . . . Mingle at The Greene!!" • "Hook-Up Here!" • "E-Harmony thinks we are a match!" • "Happy Hour!!" • "Size DOES Matter!! And We Measure Up!!" • "It's That Time of the Month Again . . . Feeling a Different Kind of Cramp Though?" – Page 25 –

  36. Fair housingMiami Valley Hous. Ctr. v. Connor Group Jury Instructions: “If an ordinary reader who is a member of a protected class would be discouraged from answering the advertisement because of some discriminatory statement or indication contained therein, then the fair housing laws have been violated.” “Focus on the message being conveyed by the advertisement at issue in this matter. Ask yourselves whether the message focuses on the suitability of the property to the renter, which is permissible, or whether it impermissibly focuses on the suitability of the renter to the owner.” – Page 25 –

  37. governmentBaumgart v. Mont. Dept. of Commerce Citation: 2014 MT 194 Court: Supreme Court of Montana – Page 26 –

  38. governmentBaumgart v. Mont. Dept. of Commerce – Page 26 –

  39. governmentBaumgart v. Mont. Dept. of Commerce – Page 26 –

  40. governmentKansas Bldg. Industry Workers Compensation Fund v. State of Kansas Citation: 49 Kan. App. 2d 354 310 P.3d 404 Court: Court of Appeals Kansas Legislature Swept Fee Funds: • Insurance Department • Bank Commissioner • Real Estate Commission – Page 28 –

  41. governmentKansas Fund v. State of Kansas Trade associations (including Kansas Association of Realtors) challenged the sweep alleging: • invalid exercise of police power because amount swept exceeded cost of services • was an unauthorized and unconstitutional tax intended to raise general fund revenue • unconstitutional taking in violation of the commerce clause and 5th and 14th amendment • denied equal protection rights – Page 28 –

  42. governmentKansas Fund v. State of Kansas • Status: Kansas Supreme Court granted State of Kansas’ request to review ruling on standing. • Court of Appeals suggested sweep may be unconstitutional under Panhandle Easter Pipe Line Co. v. Fadely, 332 P.2d 568 (Kan. 1958). – Page 28 –

  43. hearingsBobo v. State Real Estate Comm’n Citation: 2014 Tenn. App. LEXIS 266 Court: Court of Appeals of Tennessee Smith – purchased property with aid of her broker, Donna Bobo Bobo – real estate broker who represented Smith in the purchase and rental of property Global – Bobo’s partnership with Horton. Under agreement with Smith, took title to Smith’s properties and was responsible for paying Smith’s mortgage. – Page 30 –

  44. hearingsBobo v. State Real Estate Comm’n Global (Bobo’s company) “is acting as the principal owner in this transaction and plans to make . . . an unconscionable profit with this property.” – Broker’s agreement with her client, Ms. Smith Dungreen Avenue Memphis, TN – Page 30 –

  45. hearingsBobo v. State Real Estate Comm’n Bobo’s Contention: • Decision improperly based on complainant Smith’s hearsay statements. Court of Appeals: • Hearsay may be substantial evidence if corroborated by other competent evidence. • Bobo’sadmissions corroborated Smith’s hearsay statements. – Page 30 –

  46. hearingsBobo v. State Real Estate Comm’n Bobo’s Contention: • Lack of opportunity to confront complainant Smith was denial of due process. Court of Appeals: • Bobo had notice of the hearing and notice that Smith did not intend to testify, yet did not continue hearing or procure Smith’s testimony. – Page 30 –

  47. hearingsBobo v. State Real Estate Comm’n Bobo’s Contention: • Commission biased by its prior consideration of rejected consent order Court of Appeals: • Bobo failed to object. • Commission was required to serve in multiple, overlapping roles. Dual functions are inherent in administrative agencies and this structure does not, without other evidence, demonstrate bias. • No evidence any Commissioner was prejudiced by knowledge of rejected consent order. – Page 30 –

  48. hearingsPagel v. Iowa Real Estate Comm’n Citation: Cause No. CVCV037875 (2014). Court: Iowa District Court, Crawford County Jane Pagel– real estate broker who was preparing a BPO Jack Seuntjens – real estate broker who listed 1554 Oneida – Page 33 –

  49. hearingsPagel v. Iowa Real Estate Comm’n Pagel removed personal property. In a police report, she was quoted as saying: “no one realtor has exclusive right to show the house” and on repossessions, the personal property “is considered up for grabs.” Based, in part, on police report, Pagel’s testimony was deemed not credible. – Page 33 –

  50. licensingCurd v. Ky. State Bd. of Licensure for Prof’lEng’rs & Land Surveyors Citation: 433 S.W.3d 291 2014 Ky. LEXIS 226 Court: Supreme Court of Kentucky Southwoods (exp: CURD) Eadsville Highway Matthews Tract Denneys (exp: WEST) – Page 36 –