A. Count I (Alleged Role as Licensed Assistant to Bartos)
The first count of the accusation is premised on the allegation that Lori Schooley continued to function as Hank Bartos's "licensed assistant" at Century 21 after she became the broker at Coldwell Banker in April of 2004. (As will be discussed in part IV-A-2-(a), a "licensed assistant" is a real estate licensee who acts as a subordinate assisting another licensee with transactions by performing duties for which a license is required.) The division contends that such an arrangement existed in two transactions one involving 389 Kendrick Court and one involving a condominium at Sprucewood Court—and that Ms. Schooley's role in those transactions placed her in violation of five different legal provisions.
21 of Lori Schooley in Support of Supplement to Motion for Summary Adjudication (Jan. 10, 2010), 118-11.
22 Id. at ijij 5-7.
23 See Wilson v. State, 756 P.2d 307, 311 (Alaska App. 1988).
24 Her counsel also did not argue laches in his final argument.
25 AS 44.62.360, made applicable by AS 44.62.330(11).
26 AS 44,62.460(e)(1).
27 State v. King, 1994 WL 16196208, *1 n.1 (Alaska App. 1991).
I. Facts
(a) Sprucewood Court Transaction
Lori Schooley registered as broker of the Coldwell Banker Gold Country office on April 7, 2004.28 The Division proved that on one occasion in August of 2004, Lori Schooley filled in for Hank Bartos on a transaction involving a condominium at Sprucewood Court. Her substitution lasted only a short time, while Bartos was out of town at a dog show. She met with the client and wrote up and presented an offer on Bartos's behalf, and she did so; he then completed the rest of the transaction.29 Coldwell Banker was already the listing office in the transaction. There is no evidence that Schooley shared in the Century 21 commission for the transaction.30°
(b) Kendrick Court Transaction
Ms. Schooley became involved in a mid-2005 transaction involving 389 Kendrick Court in Fairbanks, even though Coldwell Banker Gold Country was neither the listing nor selling office for the property. She acted on behalf of Century 21 Gold Rush, the listing office. The Kendrick Court property was one that had come into the Century 21 inventory before Schooley went to Coldwell Banker, and so she was familiar with it.31
389 Kendrick Court was a Cendant Corporation relocation property. Cendant was then the owner of the master franchises for both Century 21 and Coldwell Banker.32 Cendant relocation properties required unique procedures and paperwork, for which Schooley had special training.33 Cendant knew her and wanted to work with her.34 389 Kendrick Court had permafrost problems and seems to have been a difficult property to market, and Cendant appears to have been a disgruntled client.35
Schooley was extensively involved in the transaction, working closely with Cendant over a period of several months,36 making herself available to discuss a pending offer,37 presenting a counteroffer,38 reviewing a settlement statement,39 and taking other steps.49 In correspondence with Cendant, Century 21 staff referred to her as Hank Bartos's "assistant."'" Her work was not limited to occasions when Bartos was absent or unavailable.42
It is a close question whether the role was compensated. Schooley was not separately paid for this work, but she did draw a salary from Hank Bartos Realty, Inc., of which Bartos was president. Given the lengthy and systematic nature of her work on the transaction, it is more likely than not, based on the overall context, that Ms. Schooley performed this work as one of the work duties covered by her salary rather than as a favor to Bartos. Bartos and Schooley made a business decision that on this particular area of work Ms. Schooley should continue to function, for all practical purposes, as a Century 21 licensee.
28 Ex. 16 at REC 2008.
29 Cross-exam of Schooley; Ex. 10. This is the Sprucewood Court transaction, discussed at more length in connection with Count III.
30 Depending how commissions were distributed, there could have been some indirect benefit to Schooley from a Century 21 commission, in that she was a minority shareholder in the company that owned the Century 21 franchise. The Division did not explore this issue at the Schooley hearing.
31 Cross-exam of Schooley in Bartos.
32 Direct exam of Schooley in Bartos.
33 Id.; redirect exam of Schooley in Bartos.
34 Cross-exam of Schooley in Bartos.
35 Ex. 12 at REC 1360-61.
36 Ex. 12.
37 Ex. 12 at REC 1378; cross-exam of Schooley in Bartos. When testifying on cross-exam in the present case,Ms. Schooley said she believed Hank Bartos was unavailable when she took this step. This testimony was not credible because on REC 1378 she provides a telephone contact for Bartos.
38 Id. at REC 1375.
39 Id. at REC 1329.
40 At times it is difficult to tell exactly what Schooley did and what others did, because she apparently permitted a number of people to use her Broker Center log-in and generate messages in her name. In Bartos, a finding of fact was made that Schooley had stated on one occasion that "I [Schooley] will be happy to reassign this property to another agent within Century 21 Gold Rush." Id. at REC 1360. It now appears that this promise was entered by Noelle Childress under Schooley's log-in, and a close review of the context suggests that Childress was making the promise on Bartos's behalf, not Schooley's (the third possibility, that Childress was speaking on her own behalf, seems unlikely in light of Childress's junior position). The new evidence regarding the use of the log-in comes from the direct and cross-exam of Schooley in this case.
41 ex. 12 at REC 1368. Schooley denied on cross-exam that the word "assistant" in the 07/08/2004 entry refers to her. In fact, the context of the entry makes it clear that the word is indeed used to refer to her.
42 See, e.g., Ex. 12 at REC 1378.
2. Analysis
The Division has pursued this count under five different legal theories. As will be seen, two of them apply and the others are wide of the mark. They are addressed individually below.
(a) 12 AAC 64.075(a)
The Division contends that Lori Schooley served as Hank Bartos's "licensed assistant" at Century 21 after she became broker at Coldwell Banker. Alaska real estate law refers to "licensed assistants," but does not define the term.43 From the context, the term denotes a person who, in a subordinate role, assists another person who also holds a real estate license with transactions by performing duties "for which a license is required."44
In the Kendrick Court transaction Schooley functioned as, and was held out as, Hank Bartos's "assistant" as she performed functions, including some requiring licensure, over the course of several months. Bartos was not unavailable during this entire period and she was not serving as his substitute.
The Division contends that Schooley's licensed assistant role violated 12 AAC 64.075(a). This regulation prohibits an individual from being involved in "activities requiring licensure under AS 08.88 until the individual's employing broker signs and delivers to the commission a notice of employment of the individual and the individual's license certificate is delivered to the broker by the licensee or the commission." The prohibition is directed at individuals who have "employing brokers." Thus, there are two elements that must be established to show a violation of this regulation:
FIRST, that Schooley was employed by Bartos in connection with Kendrick Court, AND SECOND, that at least one of two prerequisites had not been attended to, viz,
> the employing broker had not signed and delivered to the Commission a notice
of employment, OR
> the license certificate had not been delivered to the employing broker.
The Division has established the first element. In In re Bartos, the Commission held:
Although the Commission recognizes that the word "employed" has several definitions, the Commission interprets the word "employed" in AS 08.88.291(a) and 12 AAC 64.110(e)(6) to mean "to commission or entrust with the performance of certain acts or functions or with the management of one's affairs" (see Black's Law Dictionary, 5th ed.), as the meaning most in keeping with the purpose of that statute and that regulation.45
The Commission thus rejected an interpretation of the word "employed" that would have required a compensated or paid arrangement.46 This reasoning carries over to 12 AAC 64.075(a); Schooley's brief ad hoc substitution in the Sprucewood Court transaction, though perhaps uncompensated, is nonetheless employment for purposes of the regulation. Her longer term role in the Kendrick Court transaction, which probably was compensated, meets any reading of the regulation.
The Division has also established the second element. Testimony from Nancy Harris showed that the Division maintained a complete file of notices received from Mr. Bartos and that Mr. Bartos had not submitted the required notice of employment to the Commission.47
Accordingly, the Kendrick Court and Sprucewood Court transactions each represented violations of 12 AAC 64.075(a) as the Commission has recently interpreted that provision.
43 See AS 08.88.398.
44 See id.; 12 AAC 64.140(b) ("unlicensed assistant" may not be assigned duties "for which a license is required").
45 In re Banos, OAH No. 08-0054-REC, Decision and Order at 40 (adopted June 18, 2009).
(b) AS 08.88.321(b)
AS 08.88.321(b) requires that "the license certificate of each licensee working in the broker's principal office shall be displayed in that office." Since Schooley was performing activities requiring licensure in and for Bartos's Century 21 brokerage, it follows that her license should have been hung there when she was doing that work. It was not.48 This violation is essentially another facet of the 12 AAC 64.075(a) violations discussed above.
(c) AS 08.88.291(a)
The Accusation alleges that the conduct at issue in this count violated the first sentence of AS 08.88.291(a), which provides that a "person licensed as a real estate broker shall, by registering with the commission, inform the commission of the person's principal office and of any branch offices of the person's real estate business and include in the information the names of the real estate licensees who are employed at each office." In the context of the above facts, this provision placed an obligation on Bartos as Schooley's "employing broker." In the Bartos enforcement action, the Commission indeed found that Schooley was "employed at" the Century 21 office and that Bartos therefore violated this provision. The provision does not place an obligation on the employees, however; it is only addressed to the employing broker, in this case, Hank Bartos. Ms. Schooley's role in the Kendrick Court and Sprucewood Court transactions did not represent a violation of this particular provision by Ms. Schooley. In light of this holding, AS 08.88.398 cannot support a violation in this context, and that aspect of the Division's first count was dismissed prior to the hearing.
(d) AS 08.88.398
Another provision the Division relies on in Count I is AS 08.88.398. In Bartos, the Commission held:
AS 08.88.398 only regulates the circumstances under which associate brokers and salespeople can act as licensed assistants; it speaks to the consensual arrangement between supervising brokers that must accompany such an arrangement. Lori Schooley was neither an associate broker nor a salesperson, but rather was a broker in her own right. AS 08.88.398 does not address or regulate the circumstance where a broker acts as licensed assistant to another broker. This does not mean that it is always permissible for brokers to enter into such an arrangement, but any illegality does not flow from AS 08.88.398.
46 See id. at 11 (AU had recommended a narrower interpretation of "employed," limiting the term to paid assistance).
47 Direct exam of Harris.
48 Cross-exam of Schooley.
(e) AS 08.88.171(a)
The Accusation also alleges that the conduct described in this count violated a sentence of AS 08.88.171(a) that, at the time in question, read as follows:
If the broker stops being an owner of a real estate business or stops being employed as a real estate broker by a foreign or domestic corporation, partnership, limited partnership, or limited liability company, the broker's license is suspended from the time the broker stops until (1) the broker again become an owner of a real estate business or is again employed as a real estate broker by a foreign or domestic corporation, partnership, limited partnership, or limited liability company; or (2) the broker is employed by another broker as an associate broker, in which case the real estate broker license shall be returned to the commission by the broker, and the commission shall issue the broker an associate real estate broker license.
This language is not a prohibition that one can "violate," and the suspension it imposes is not a disciplinary suspension. In any event, the evidence is clear that Lori Schooley never stopped being an owner of a real estate business during 2004-2005, and so the provision does not apply to her situation.
(f) Summary Regarding Count I
Ms. Schooley's role in the Kendrick Court and Sprucewood Court transactions was contrary to 12 AAC 64.075(a) and AS 08.88.321(b) as the Commission has interpreted the language in those provisions.
B. Count II (Role of Noelle Childress)
Count II focuses on an arrangement by which a real estate salesperson at the Coldwell Banker office conducted Century 21's property management business for a time. The Division contends that Lori Schooley's responsibility for this arrangement placed her in violation of five statutes and regulations.
1. Facts
From early 2005 until approximately December of 2006, Noelle Childress was a licensed real estate salesperson who hung her license at Coldwell Banker Gold Country, under the supervision of Lori Schooley.49 Nonetheless, beginning in December of 2005 and continuing for the ensuing year, she performed property management duties for the Century 21 franchise.5° The Coldwell Banker franchise did no property management work; all property management work Ms. Childress did was Century 21 work.51
It is undisputed that Ms. Childress physically performed this work at and from the Coldwell Banker office, not at or from the Century 21 office.52 She began doing the work when Century 21 lost its property manager and no licensees in that office wanted to take over the task, with the expectation that it would be a temporary arrangement.53 Either before or quite soon after she took over, Bartos and Schooley made a business decision to phase out the property management work. During the phase-out period, the work consumed about ten hours per week of Ms. Childress's time.54 At least some of the work that Ms. Childress did on these Century 21 properties was work requiring a real estate license.55
49 Ex. 9. See also Ex. 4 at REC 801 (Childress under Schooley's supervision "at all times" while performing property management work).
50 Cross-exam of Schooley in Bartos; see also Ex. 4 at 801
51 Direct testimony of Schooley; cross-exam of Schooley in Bartos.
52 E.g., direct testimony of Schooley; cross-exam of Schooley in Bartos.
53 Id.; Ex. 6 at REC 926 (used to explain Schooley testimony only).
54 Redirect exam of Schooley in Banos.
55 A license is required to collect rent, collect property management fees, or practice "property management," a defined term that includes such activities as marketing and leasing rental property. AS 08.88.161(3), (5); AS 08.88.990(7) [as of 2005]. That Ms. Childress performed at least some such activities is inferred from the general testimony of Ms. Schooley about property management duties in both proceedings and her admission at Ex. 4, REC 800, as well as from Ex. 14 at 1802 and Ex. 13 at 1735 (description of property manager duties at Century 21 and Coldwell Banker offices), as these items are further explained in Ex. 6 at 926 (needed a licensee in position) and Ex. 4 at 801.
2. Analysis
The Division has suggested five legal provisions that, in its view, Ms. Schooley violated by her involvement in the property management arrangement.
(a) 12 AAC 64.550(a)
Since 1994, a Board regulation, 12 AAC 64.550, has required that "[a] licensee engaged in property management shall conduct property management activity in the registered name of the real estate company with which the licensee is affiliated."56 There are no exceptions to this requirement for short-term assignments, part-time work, winding down a business, or any other circumstance (these circumstances may affect how much discipline, if any, should be imposed, but they do not bear on the underlying legality of the conduct). In 2005-2006, the "registered name" of the real estate company with which Noelle Childress was affiliated was Coldwell Banker Gold Country.57 Accordingly, Noelle Childress was prohibited by regulation from doing Century 21's property management work—and working in name of Century 21—while she hung her license at Coldwell Banker.
In this discipline case the sole respondent is Lori Schooley, and therefore the question is whether Ms. Schooley's conduct in this arrangement, as opposed to that of Noelle Childress, was contrary to 12 AAC 64.550(a). The first question is whether that regulation applies to Schooley at all, since she is a broker and would not in common parlance be referred to as a real estate "licensee," and the regulation only restricts "licensees." In the real estate statutes and their implementing regulations, the term "licensee" encompasses brokers "unless the context clearly excludes brokers."58 The context of 12 AAC 64.550, the regulation requiring licensees to "conduct property management activity in the registered name of the real estate company with which the licensee is affiliated" does not clearly exclude brokers, and therefore Lori Schooley was subject to the regulation's restrictions.
Lori Schooley caused the property management activities contracted to a different office, Century 21 Gold Rush, to be managed by Noelle Childress at the Coldwell Banker office. Had Childress managed them in the name of Coldwell Banker, there might be no violation of this regulation by Schooley. But Childress managed them in the name of Century 21, which was not the "registered name of the real estate company with which" Ms. Schooley was affiliated. Thus, in her supervisory role, Schooley indirectly conducted property management activity in the registered name of a real estate company other than the one with which she was affiliated. Hence, the circumstances proved by the Division represent a violation of 12 AAC 64.550 by Ms. Schooley.
56 12 AAC 64.550(a).
57 See Ex. 26 at REC 2008, 2017-8; Ex. 28; 12 AAC 64.112.
58 AS 08.88.990(10) [cited as of 2005-2006; now renumbered AS 08.88.990(12)].
(b) 12 AAC 64.110(e)(6)
12 AAC 64.110(e) requires brokers, "before operating any office or branch office, [to] register the office or branch office with the commission on a form provided by and approved by the commission." The Commission has already found that Hank Bartos violated this provision through his use of Noelle Childress for his property management work. This case is about a different broker occupying a different role in the arrangement, however, and it requires a slightly different analysis.
Subparagraph (6), the provision the Division alleges that Ms. Schooley violated, requires the broker to place on that form the "name and license number of all licensees employed by the broker at the office." The Division's sole explanation of how Ms. Schooley may have violated this provision is its assertion that she is subject to discipline under 12 AAC 64.110(e)(6) "because she did not remove Childress as being 'employed' by her during the time Childress was in fact working for Century 21."59 There are two problems with this theory. Most fundamentally, it overlooks the extensive evidence that Ms. Childress was working for the Coldwell Banker office at the same time that she was doing the Century 21 property management work. In other words, she was doing a mixture of work, some for one franchise and some for the other.6° If this is so, it would be factually correct for Ms. Schooley to list Childress as a licensee employed by the Coldwell Banker office. Second, 12 AAC 64.110(e)(6) has no requirement about removal of licensees from the registration form when they become temporarily or permanently inactive in their work for that office. Thus, the Division has fallen far short of proving a violation of this particular regulation by Ms. Schooley. That the arrangement was illegal, and that it could give rise to significant discipline against the non-reporting broker, Bartos, has already been decided in another case.
59 Supplemental Motion at 8.
60 No finding is made here that this is a permissible arrangement under the many legal provisions that may apply to it. The ALJ addresses only Ms. Schooley's liability under the theories articulated by the Division.
(c) AS 08.88.291(a)
The Division says that Ms. Schooley violated AS 08.88.291(a), a lengthy provision covering several subjects, "by failing to inform the Commission that Childress was performing property management duties for Century 21."61 The Division did not initially say what aspect of AS 08.88.291(a) Ms. Schooley allegedly violated, but after some motion practice the Division did, in its prehearing brief, narrow the allegation down to the first sentence of that provision.
The first sentence of AS 08.88.291(a) reads: "A person licensed as a real estate broker shall, by registering with the commission, inform the commission of the person's principal office and of any branch offices of the person's real estate business and include in the infoimation the names of the real estate licensees who are employed at each office." Ms. Schooley's real estate office was the Coldwell Banker office. She appears to have correctly designated Ms. Childress as a licensee working for her at that office. The Commission has found that Mr. Bartos violated this sentence by failing to list Ms. Childress for his office, but it does not follow that Ms. Schooley, who was not the broker for the Century 21 office, would likewise be in violation of this particular provision.
The Division protests that so interpreting § 291(a) results in a broker being able to intentionally misrepresent to the Commission (and to the public) the licensees employed by the broker, because "Leivery time Childress performed property management duties for the Century 21 franchise, she was no longer 'employed' at Coldwell Banker."62 This is wrong on two levels. First, when an arrangement is illegal for all three people participating in it—in this case, for Childress and Bartos under this legal provision, and for Schooley under a different legal provision—the arrangement is illegal. Recognizing that it does not happen to be a violation of a particular statute by one of the three necessary participants does not make people "able" to pursue such arrangements with impunity. Second, the Division's reasoning is like saying that a part-time realtor who does hairdressing on the side is "no longer employed" by her broker on every day of the week that she does the other occupation. It is not sensible to say that Childress was "no longer employed" by Schooley every time she picked up the phone to do a property management duty, and to accuse Schooley of "misrepresentation" for maintaining her on the Coldwell Banker registration. It may have been entirely illegal for Childress and Bartos to do what they were doing, but it was illegal precisely because Childress was still employed at Coldwell Banker, and Schooley committed no misrepresentation by so reporting.
61 Id. at 7.
62 Division's Hearing Brief at 12.
(d) 12 AAC 64.075(a)
This is a regulation that was found in Bartos to be aimed solely at licensees who have employing brokers, not aimed at brokers. In motion practice regarding this count prior to the hearing, the Division conceded that the Commission's interpretation of this regulation in Bartos was inconsistent with liability for Schooley under the Count II facts, and this aspect of Count II was therefore dismissed.
(e) AS 08.88.321(b)
This statute requires that the "license certificate of each licensee working in the broker's principal office shall be displayed in that office." Ms. Childress was working in the Coldwell Banker office during the relevant period, and her license certificate was displayed there.63 That is the end of the matter.
(f) Summary Regarding Count II
Ms. Schooley's role in directing Noelle Childress to perform property management work in the name of a different office was contrary to 12 AAC 64.550(a).
C. Count III (Sprucewood Court Disclosures)."
1. Nature of Summary Adjudication
Prior to the scheduled hearing in this matter, the Division moved for summary adjudication on Count III. Summary adjudication in an administrative proceeding is the equivalent of summary judgment in a court proceeding.65 It is a means of resolving disputes without a hearing when the central underlying facts are not in contention, but only the legal implications of those facts. If facts that are undisputed establish that one side or the other must prevail, the evidentiary hearing is not required.66 Thus, if the Division presented by motion admissible evidence sufficient to support a finding in its favor on each required element of a violation, and there was no contrary evidence in the record at that time creating a dispute of material fact on any of those elements, the violation would be established and there would be no need to proceed to a hearing on that particular violation.
A dispute of material fact is not created by a party merely asserting, in argument, that one exists. If the moving party has laid out a set of facts and supported them with evidence, the party resisting summary adjudication must likewise support any competing version of the facts with evidence.67
63 Cross-exam of Schooley.
64 The discussion in the text relates to the main set of allegations in Count III. Count Ill also contained a stray
sentence that appeared to raise an independent allegation about a website. The website allegation was handled, and rejected, as a separate claim in Bartos. In this case, the Division has expressly conceded that the sentence is "merely illustrative" and should not be treated as a purported independent basis for discipline. Division's Opposition to Motion for Summary Adjudication at 5-6. This concession is accepted, and the website allegation will not be adjudicated in this decision.
65 See, e.g., Schikora v. State, Dept. of Revenue, 7 P.3d 938, 940-41, 946 (Alaska 2000).