426 P.3d 179
Or. Ct. App.2018Background
- Petitioner, a long‑time Oregon principal broker, purchased a 65‑acre property in 2004 that had been subject to a 1981 land exchange and was flagged by the county as an illegal division under then‑applicable zoning, preventing a new residence. He knew of the zoning issue when he sold the property in 2006.
- Petitioner hired a contractor (Casella) to remediate permitting and code issues and discussed remediation plans with Casella; purchaser group (including Donnelly) formed Skyline View LLC and bought the property for $650,000; petitioner omitted the zoning problem from the RMLS listing, the sale agreement, the seller disclosure (checked “No” for zoning violations), and signed a warranty deed stating the property was free of encumbrances.
- Buyers later received a county stop‑work/zoning determination; Skyline View prevailed in arbitration against petitioner for intentional fraud and obtained a roughly $666,450 award, later reduced to judgment.
- The Real Estate Agency charged petitioner with multiple violations (including ORS 696.301(4) and (14), ORS 696.805(2)(c), and a reporting rule violation) and the commissioner sought revocation; an ALJ found petitioner’s omissions were careless mistakes (not intentional) and recommended a one‑year suspension.
- The Commissioner modified the ALJ’s findings, concluding petitioner acted with intent to mislead (dishonesty) and knowingly/recklessly published misleading advertising; the commissioner revoked petitioner’s license. Petitioner sought de novo judicial review under ORS 183.650(4).
- The court conducted de novo review of the modified factual findings: it sustained that petitioner acted recklessly as to the RMLS omission and that substantial economic damage occurred, but rejected the commissioner’s finding of intent to deceive (finding carelessness more likely). The matter was reversed and remanded for the agency to reconsider ORS 696.301(14) and sanctions, applying the progressive discipline rule.
Issues
| Issue | Plaintiff's Argument (Petitioner) | Defendant's Argument (Commissioner/Agency) | Held |
|---|---|---|---|
| Whether petitioner had intent to mislead (dishonesty/ fraud under ORS 696.301(14)) | Omissions were mistakes/carelessness; no intent to defraud | Pattern of nondisclosures shows intent to deceive; licensee has independent duty to disclose | Court: petitioner more likely acted carelessly; reverses commissioner’s intent findings and remands for reconsideration of ORS 696.301(14) consequences |
| Whether omission in RMLS was reckless (ORS 696.301(4)) | No recklessness; was inadvertent | Knew of zoning issue and should have disclosed; omission materially misleading | Court: omission was reckless; upholds commissioner’s finding on reckless publication |
| Whether Donnelly/Skyline View suffered substantial economic damage | Argued limited harm given appraisals | Arbitration and judgment show nearly $700k damages | Court: petitioner more likely caused substantial economic damage; upholds commissioner’s finding of substantial damage |
| Whether progressive discipline rule (OAR 863‑027‑0020) applies to pre‑2006 acts investigated after 2006 | Rule should apply to investigations after Jan 1, 2006; applies here | Commissioner had construed rule as applying only to acts after Jan 1, 2006 | Court: rule applies to investigations occurring after Jan 1, 2006; commissioner erred and must apply rule on remand |
Key Cases Cited
- Augustus v. Board of Nursing, 284 Or. App. 420 (explains drawing facts from unchallenged agency findings on review)
- Bice v. Board of Psychologist Examiners, 281 Or. App. 623 (describes de novo factfinding duty when agency modifies ALJ historical facts)
- Weldon v. Board of Licensed Professional Counselors and Therapists, 266 Or. App. 52 (discusses limits of appellate review where agency modifies ALJ factual findings)
- Corcoran v. Board of Nursing, 197 Or. App. 517 (illustrates independent factfinding under ORS 183.650(4))
- Dixon v. Board of Nursing, 291 Or. App. 207 (clarifies standard of proof on review of administrative findings)
- Osuna‑Bonilla v. Teacher Standards and Practices Comm., 282 Or. App. 260 (factors for assessing witness credibility)