Wednesday, April 16, 2014

SC Administrative Law Court Decisions

CAPTION:
H. Jackson Gregory vs. SCDLLR

AGENCY:
South Carolina Department of Labor, Licensing and Regulation

PARTIES:
Appellant:
H. Jackson Gregory

Respondents:
South Carolina Department of Labor, Licensing and Regulation, South Carolina Real Estate Commission
 
DOCKET NUMBER:
01-ALJ-11-0238-AP

APPEARANCES:
n/a
 

ORDERS:

ORDER

STATEMENT OF THE CASE

Pursuant to S.C. Code Ann. §§ 40-1-160 (2001) and 1-23-380(B) (Supp. 2000), Appellant H. Jackson Gregory appeals the South Carolina Real Estate Commission's order of April 14, 2001 which denied his request to sit for the real estate broker's examination. The Commission refused Appellant's application on three grounds:

(1) the Commission denied Appellant's application under S.C. Code Ann. § 40-57-145(A)(1) (2001), having found that Appellant made substantial misrepresentations involving a real estate transaction in that he was disbarred from the practice of law in South Carolina for misappropriating client funds in a real estate closing;

(2) the Commission found that because Appellant was disbarred from the practice of law, the Commission was authorized pursuant to S.C. Code Ann. § 40-1-110(b) (2001) to preclude him from receiving a real estate broker's license on the grounds that he had a license to practice a regulated profession revoked; and

(3) the Commission denied Appellant's application under S.C. Code Ann. § 40-1-110(f) (2001), having found that Appellant had committed a dishonorable, unethical, or unprofessional act that is likely to deceive, defraud, or harm the public.

Upon careful consideration of the record, the briefs filed, (1) and the applicable law, the Commission's refusal to allow Appellant to sit for the real estate broker's examination is affirmed.

BACKGROUND

Appellant was first denied the opportunity to sit for the South Carolina real estate broker's examination in July of 1999. At that time, Appellant's license to practice law in South Carolina was on interim suspension by order of the South Carolina Supreme Court dated May 28, 1998. The Commission received additional evidence that on or about July 20, 1998, the Appellant was given a thirty-day suspension from the practice of law for a violation unrelated to the interim suspension; Appellant omitted this fact from his application to the Commission.

In an order dated August 20, 1999, the Commission denied Appellant's application, as it found that Appellant had failed to reveal a material fact on his application and he was under interim suspension from the practice of law.

Subsequently, on May 30, 2000, the South Carolina Supreme Court disbarred Appellant from the practice of law in this state for misappropriating client funds in a real estate closing. See In re H. Jackson Gregory, 340 S.C. 413, 532 S.E.2d 605 (2000). The Supreme Court stated:

The evidence respondent misappropriated complainant's funds is clear and convincing. Moreover, the evidence supports the conclusion respondent's conduct was intentionally fraudulent, and not merely poor judgment. Respondent's misconduct is exacerbated by his recent disciplinary history for misconduct including failure to promptly disburse client funds. Id. at 418, 532 S.E.2d at 606.

Appellant reapplied to take the broker's examination in February 2001, and a contested case hearing ensued. On April 14, 2001, the Commission issued its order denying Appellant's application to take the real estate broker's examination. Appellant timely appealed the Commission's order on May 7, 2001.

STANDARD OF REVIEW

The provisions of the South Carolina Administrative Procedures Act (APA) govern an appeal from an action of the Commission. Lark v. Bi-Lo, Inc., 276 S.C. 130, 276 S.E.2d 304 (1981). Under the APA, this tribunal "shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact." S.C. Code Ann. § 1-23-380(A)(6) (Supp. 2000). This tribunal, however, may reverse or modify a decision if substantial rights of an appellant have been prejudiced because the administrative findings or decisions are "clearly erroneous in view of the reliable, probative and substantial evidence on the whole record" or "arbitrary or capricious." Id.

Substantial evidence is that evidence which, in considering the record as a whole, would allow reasonable minds to reach the conclusion of the administrative agency. E.g., Jennings v. Chambers Development Co., 335 S.C. 249, 516 S.E.2d 453 (Ct. App. 1999). The possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence. Id. Where there is a conflict in the evidence, the administrative agency's findings of fact are conclusive. Id. This tribunal cannot substitute its judgment for that of the Commission upon a question as to which there is room for a difference of intelligent opinion. E.g., Chemical Leamen Tank Lines v. S.C. Pub. Service Comm'n, 258 S.C. 518, 189 S.E.2d 296 (1972). While a decision of an administrative agency will normally be upheld, the findings may "not be based upon surmise, conjecture, or speculation, but must be founded on evidence of sufficient substance to afford a reasonable basis for it." Mullinax v. Winn-Dixie Stores, Inc., 318 S.C. 431, 458 S.E.2d 76 (Ct. App. 1995).

The burden is on the Appellant to show convincingly that the Commission's order is without evidentiary support or is arbitrary or capricious as a matter of law. (2) See Hamm v. American Telephone & Telegraph Co., 315 S.C. 119, 432 S.E.2d 454 (1993); Hamm v. Pub. Service Comm'n of South Carolina, 310 S.C. 13, 425 S.E.2d 28 (1992).

ISSUES ON APPEAL

I. Did the Commission abuse its discretion in denying licensure to Appellant as a real estate

broker because he is likely to deceive, defraud, or harm the public while working as a real estate broker?

II. Did the Commission abuse its discretion in denying licensure to Appellant as a real estate broker because he was disbarred from the practice of law in May of 2000?

III. Did the Commission violate Appellant's constitutional right to due process by acting in restraint of trade by denying Appellant the opportunity to sit for the broker's examination and to pursue his chosen profession on the basis of his misconduct and disbarment?

ANALYSIS

I. Appellant first contends that the Commission abused its discretion when it denied him the opportunity to sit for the real estate broker's examination based on his earlier misappropriation of client funds during a real estate closing.

An abuse of discretion occurs when an agency makes a decision and there is no rational basis to support its finding. Ledford v. Pennsylvania Life Ins. Co., 267 S.C. 671, 675, 230 S.E.2d 900, 902 (1976). Here, the record is replete with evidence that Appellant committed dishonorable, unprofessional, and unethical conduct in misappropriating client funds in a real estate closing. It is also worth noting that the Commission made a finding that the Appellant failed to disclose a material fact in his initial application when he made no mention of his thirty-day suspension from the practice of law for a violation unrelated to his interim suspension referenced in his application. Additionally, and more telling, is the South Carolina Supreme Court's finding that Appellant's conduct relating to the real estate closing was "intentionally fraudulent, and not merely poor judgment," and that his misconduct was "exacerbated by his recent disciplinary history for misconduct including failure to promptly disburse client funds." Gregory, 340 S.C. at 418, 532 S.E.2d at 606.

The Commission properly acted within its authority in refusing to allow Appellant to sit for the real estate broker's examination. Pursuant to S.C. Code Ann. § 40-57-10 (2001), the Commission is charged with regulating the real estate industry and protecting the public's interest when the public is involved in real estate transactions. Specifically, with respect to licensure in the industry, the Commission is authorized to determine the standards for qualifications and eligibility of applicants for licensure. S.C. Code Ann. § 40-57-60(1) (2001). In this regard, the Commission, under its authority prescribed in Section 40-1-110(f), may deny a license to an individual who "has committed a dishonorable, unethical, or unprofessional act that is likely to deceive, defraud, or harm the public." Appellant's conduct in misappropriating a client's funds clearly constitutes such dishonest and unethical conduct.

Further, the Commission properly acted within its discretion in denying Appellant the opportunity to sit for the licensure examination under Section 40-57-145(A)(1). This section



provides:

(A) In addition to Section 40-1-110, the commission may deny issuance of a license to an applicant or may take disciplinary action against a licensee who:

(1) makes a substantial misrepresentation involving a real estate transaction. S.C. Code Ann. § 40-57-145(A)(1).

The Supreme Court's language is unequivocal; the Court stated not only that Appellant misappropriated funds in the context of a real estate closing, but also that his conduct was intentionally fraudulent. (3)

The Commission acted rationally and within the scope of its statutory authority in refusing Appellant's application to sit for the real estate broker's examination on account of his prior misconduct in real estate transactions.

II. Appellant next asserts that the Commission abused its discretion when it denied him the opportunity to sit for the broker's examination on account of his disbarment from the practice of law in South Carolina.

It is undisputed that Appellant was disbarred from the practice of law in this state. Pursuant to Section 40-1-110(b), the Commission is authorized to preclude Appellant from being licensed as a real estate broker because of his disbarment. Section 40-1-110(b) provides:

A board may cancel, fire, suspend, revoke, or restrict the authorization to practice of an individual who: . . .

(b) has had a license to practice a regulated profession or occupation in another state or jurisdiction canceled, revoked, or suspended or who has otherwise been disciplined. S.C. Code Ann. § 40-1-110(b).

The practice of law is a regulated profession; it is regulated by the South Carolina Supreme Court. S.C. Code Ann. § 40-5-10 (2001). The Commission therefore acted rationally and within the scope of its authority in denying Appellant's request to sit for the real estate broker's examination because of his disbarment from the practice of law. (4)

III. Appellant's final assertion is that the Commission violated Appellant's constitutional due process rights by improperly restraining him from pursuing his chosen occupation when it denied him the opportunity to sit for the real estate broker's examination.

This argument is without merit. While the United States Supreme Court has noted that an individual's liberty interest under the Fourteenth Amendment's Due Process clause does include "some generalized due process right to choose one's field of private employment," Conn v. Gabbert, 526 U.S. 286, 291-92, 119 S.Ct. 1292, 1295-96 (1999), the Court further emphasized that this is a right "which is nevertheless subject to reasonable government regulation." Id. at 292, 119 S.Ct. at 1296. Here, the authority of the South Carolina Real Estate Commission to deny real estate broker's licenses to individuals who have committed fraudulent acts in prior real estate transactions is plainly a "reasonable government regulation" of the real estate brokerage industry such that Appellant's due process rights are not implicated by the Commission's decision to refuse his application to take the real estate broker's examination.

For the foregoing reasons, Appellant's arguments must be rejected and the Commission's denial of Appellant's application to sit for the broker's examination must be affirmed.

ORDER

IT IS THEREFORE ORDERED that the Commission's decision of April 14, 2001 is affirmed.

AND IT IS SO ORDERED.

______________________________

JOHN D. GEATHERS

Administrative Law Judge

August 23, 2001

Columbia, South Carolina

1. Pursuant to the discretion granted under ALJD Rule 39, this tribunal determined that it was not necessary to hear oral arguments in this appeal.

2. While Appellant did not specifically cite to the grounds for appeal enumerated in Section 1-23-380(A)(6), it is evident from the arguments presented in his brief that Appellant seeks review of the Commission's decision under Section 1-23-380(A)(6)(e) & (f) on the grounds that the Commission acted arbitrarily and without substantial evidence to support its findings.

3. See Gregory, 340 S.C. at 417-18, 532 S.E.2d at 606 (noting that the Appellant violated nine Rules of Professional Conduct).

4. While one could read § 40-1-110(b) to apply only when the applicant has had a license suspended or revoked in another state, this tribunal finds the Commission's interpretation of that section to apply to the suspension and revocation of other professional licenses in South Carolina to be a fair and reasonable reading of the statute. Further, Appellant's reliance on the decision of the South Carolina Department of Consumer Affairs to permit Appellant to register as a prepaid legal services representative is misplaced; the licensing decisions of the Department of Consumer Affairs and the South Carolina Real Estate Commission are governed by separate statutes.