Office of Professional Regulation v. McElroy

Office of Professional Regulation v. McElroy (2002-192); 175 Vt. 507;
824 A.2d 567

2003 VT 31

[Filed 27-Mar-2003]

                                 ENTRY ORDER

                                 2003 VT 31

                      SUPREME COURT DOCKET NO. 2002-192

                             JANUARY TERM, 2003

  Office of Professional Regulation	}	APPEALED FROM:
                                        }
                                        }
       v.	                        }	Washington Superior Court
                                        }	
  David M. McElroy	                }
                                        }	DOCKET NO. 414-8-01 Wncv

                                                Trial Judge: Alan W. Cheever

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  This is an appeal from an order by the Real Estate Commission
  (R.E.C.) reprimanding appellant, David McElroy, for engaging in conduct as
  a real estate broker without a license.  After an Appellate Officer
  reversed the Commission's decision to reprimand, the State appealed to the
  Washington Superior Court pursuant to 3 V.S.A. § 130a(c).  The Superior
  Court reinstated the Commission's reprimand, and this appeal followed.  

       ¶  2.  McElroy contends that the stipulated facts do not support a
  finding that he was engaged as a real estate broker in a continuous course
  of conduct within this state without a license.  We agree.  We reverse the
  Superior Court's order and remand this issue for further findings of fact
  because the stipulated facts are insufficient to determine whether McElroy
  violated the statute as a matter of law.  McElroy further contends that he
  had a First Amendment right to advertise a Vermont property and may not be
  reprimanded for doing so without a license.  On this point, we agree with
  the trial court and affirm the finding that McElroy's First Amendment
  rights were not violated.

       ¶  3.  The stipulated facts state that McElroy "caused to be
  advertised and/or allowed his name to be used in the advertisement" of the
  sale of the Howard Johnson Inn in Rutland, Vermont between October 1999 and
  January 2000.  Although McElroy was a licensed broker in other states, he
  did not obtain a broker's license from Vermont until February 1, 2000. 
  Prior to obtaining his license, McElroy contacted potential purchasers and
  "was present" at the property in Rutland when the potential purchasers came
  to view the property.  On February 6, 2000, one of the contacts bought the
  property.  McElroy obtained his Vermont license before the closing, as he
  was "conscious of his obligation to receive a Vermont license prior to
  acting as a broker in Vermont."  
   
       ¶  4.  The R.E.C. found that McElroy had violated R.E.C. Rules
  2.1(a) and 2.1(b), which implement 26 V.S.A. § 2211-2212.  These statutes
  prohibit unlicensed individuals from acting as real estate brokers within
  Vermont.  The R.E.C. found that McElroy "advertised, negotiated, solicited
  and showed" the Vermont property, and therefore that his actions amounted
  to a continuous course of conduct within this state.  See 26 V.S.A. §
  2211(a)(4).  McElroy appealed to the Appellate Officer of the Vermont
  Secretary of State, Office of Professional Regulation, who reversed the
  R.E.C. on the ground that the legislative history of 26 V.S.A. § 2211(a)(4)
  indicated that actions taken in furtherance of a single act or transaction
  were exempt from regulation.  On appeal to the superior court, the court
  disagreed with the Appellate Officer's interpretation of the statute, which
  relied entirely on legislative history, because it was not based on the
  actual statutory language.  No exemption for single acts or transactions
  was specified in the statute; therefore, the court found that the principal
  acts committed within the state-advertising within the state and appearing
  at the property with the potential buyers-were sufficient to represent a
  continuing course of conduct, as required by § 2211(a)(4).  

       ¶  5.  We agree with the superior court that activities in
  furtherance of single transactions are not exempt from the statutory
  definition of real estate broker.  Id.  The statutory definition of real
  estate broker sets forth the regulated conduct that the State put in issue:

    (4) "Real estate broker" . . . shall mean any person who, for
    another, for a fee, commission, salary, or other consideration, or
    with the intention or expectation of receiving or collecting such
    compensation from another, engages in or offers or attempts to
    engage in, either directly or indirectly, by a continuing course
    of conduct, any of the following acts:

       (A) lists, offers, attempts or agrees to list real estate . . . .

       (C) offers to sell, exchange or purchase real estate . . . .

       (D) negotiates, or offers, attempts or agrees to negotiate 
       the sale. . . .

       (F) advertises or holds himself . . . out as being engaged in the
       business of buying, selling ... real estate. . . . 

  Id. § 2211(a)(4).

       ¶  6.  Nowhere in this section of the statute, or in § 2212, which
  prohibits actions taken by a "real estate broker . . . within this state,"
  is there an exemption for single transactions.  The statutory language is
  broad in the scope of conduct it reaches, limited only by the requirement
  that there be a continuing course of conduct.  The legislative history,
  which suggests that the Legislature were concerned about the scope of the
  statute reaching persons who were not actually in the real estate business
  and who might make only a single sale, is not necessarily inconsistent with
  the Legislature's plain language that the course of conduct must be
  continuing. 
      
       ¶  7.  The trial court applied a highly deferential standard of
  review.  The court noted that reviewing courts defer to an administrative
  agency's conclusions of law when these conclusions are "rationally derived
  from the findings and based on a correct interpretation of the law," Braun
  v. Bd. of Dental Exam'rs, 167 Vt. 110, 114, 702 A.2d 124, 126 (1997).  This
  is a correct statement of the law.  The trial court further found that
  additional deference is owed when, as here, "the action [arises] out of an
  administrative proceeding in which a professional's conduct [is] evaluated
  by a group of his peers."  Id.  We do not agree that the reasons that
  justified additional deference to the Board of Dental Examiners in Braun
  are present in this case.  The Board in Braun was determining whether a
  fellow dentist's treatment of a patient amounted to gross negligence.  Id.,
  167 Vt. at 113, 702 A.2d  at 126.  A group of professional dentists is
  likely to have the background and expertise to decide what degree of care a
  dentist should exercise; furthermore, the group of professional dentists
  making up the Board of Dental Examiners would themselves be subject to the
  Board's rules and had no incentive to make these rules excessively strict
  or arbitrary.  In contrast, the group of realtors comprising the R.E.C. in
  this case had no special competence in making the determination of whether
  McElroy's conduct was a continuing course of conduct under the statute, and
  because the R.E.C. is composed of realtors already having a Vermont
  license, the members of this regulatory board would not themselves be
  subject to the regulation that they were implementing.  Cf. Hughes v.
  Chapman, 272 F.2d 193, 196 (5th Cir. 1959) (finding that real estate
  licensing laws are "highly penal, and therefore should be strictly
  construed").  Therefore, we will accord no "additional deference" to their
  interpretation of the statute at issue.  The R.E.C., as an administrative
  body, is entitled to ordinary deference, however, meaning that we will
  accord deference to the R.E.C.'s interpretation of the real estate statutes
  where it represents a permissible construction of the statutes.  See
  Tarrant v. Dep't of Taxes, 169 Vt. 189, 195, 733 A.2d 733, 738 (1999); see
  also In re Agency of Admin., 141 Vt. 68, 76, 444 A.2d 1349, 1352 (1982)
  ("Where a statute is said to be susceptible of more than one meaning, and
  an agency seeks to define it, we will consult not only the bare statutory
  language, but will seek out the interpretation intended by the statute's
  drafters to assure that the statute is being construed, rather than
  constructed anew.").
        
       ¶  8.  The issue remains, however, whether or not McElroy's actions
  represented a continuing course of conduct within this State.  Although
  each party claims the stipulated facts entitle it to judgment, we conclude
  that the facts are insufficient to decide the legal issue.  See
  Becerra-Jimenez v. I.N.S., 829 F.2d 996, 1001-02 (10th Cir. 1987) (noting
  that a reviewing court has inherent power to remand a cause to an
  administrative agency for "further proceedings to permit further evidence
  to be taken or additional findings to be made on the essential points"). 
  The State argues (1) that McElroy listed the property within this state by
  advertising in a national magazine circulated in Vermont, (2) that in that
  advertisement, he held himself out as a broker engaged in the business of
  real estate in this state, and (3) that he was physically present in
  Vermont to show the property.  All of these allegations may be true, but
  one must draw a number of factual inferences from the stipulation to
  support the State's argument.  The advertisement in which McElroy was
  alleged to have held himself out as a broker is not in the record.  The
  number of times the advertisement appeared in Vermont is not in the record. 
  The stipulation attempts to hedge on the factual issue of what McElroy was
  doing in Vermont at the Howard Johnson Inn with the potential prospects,
  although the strong inference is that he was showing the property, which
  may have included negotiations with respect to the sale of the property.

       ¶  9.  At the same time, these factual omissions do not help
  McElroy.  He attempts to minimize his in-state conduct on appeal, arguing
  that he was not engaged in a continuous course of conduct.  For example,
  McElroy argues he admitted to being "present" at the Howard Johnson Inn as
  opposed to "showing" the property, but he added no facts to the stipulation
  that would have demonstrated that he was not engaged in a broker's role
  when he was at the property in Rutland.  Although he argues that
  advertising within the state and being "present" at the property are not
  sufficient to subject him to regulation, he readily concedes that he
  obtained a real estate broker's license so that he could close the deal. 
  In other words, he apparently concedes that one further act in this
  state-the closing-would have subjected him to the jurisdiction of the Real
  Estate Commission, and therefore he took steps to obtain the license. 
  According to the stipulation, what appears to have happened is that McElroy
  listed the property and then, because of a series of events over which he
  had no control, such as the availability of the necessary courses and
  examinations for licensure, his ability to be licensed was delayed. 
  Nevertheless, he did obtain a license, which subjected his pre-license
  conduct to scrutiny by the R.E.C.  3 V.S.A. § 129a.       

       ¶  10.  In view of the sparse stipulation, and the fact that this is
  a case of first impression, we decline to decide on the meaning of a
  continuous course of conduct until we have a more complete factual record. 
  Our holding is only that McElroy is not relieved of regulatory requirements
  by virtue of the fact that only one transaction was involved.

       ¶  11.  McElroy also argues that his advertisement in a nationally
  circulated trade journal available in this state does not qualify as a
  continuing course of conduct within the meaning of the statute because such
  a construction would restrain him from placing advertisements in violation
  of the First Amendment to the Constitution of the United States.  He
  contends that the state has unconstitutionally restricted his commercial
  speech in violation of the United States Supreme Court's decision in
  Metromedia, Inc. v. San Diego, 453 U.S. 490, 507 (1981) (citing Cent.
  Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n, 447 U.S. 557, 562-63 (1980))
  and our own decision in In re Deyo, 164 Vt. 613, 670 A.2d. 793, 794-95
  (1995) (mem.) applying the same analysis.  The difficulty with McElroy's
  argument is that he has posed the wrong question.  He is not being
  restrained from publishing advertisements; he is being restrained from
  publishing misleading statements about his own status as a broker.  The
  statute prohibits him from holding himself out as a Vermont broker engaged
  in the real estate business without a license.  If he has done so within
  this state, this action would contribute to a continuing course of conduct
  under the statute.  Again, we decline to decide at this time whether
  placing the advertisements in question alone or in concert with other
  action within the state violated the relevant statutes.  We find, however,
  that no constitutionally protected right has been violated.  

       Reversed and remanded for further proceedings consistent with this
  order.


                                       BY THE COURT:



                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice

                                       _______________________________________
                                       Frederic W. Allen, Chief Justice (Ret.)
                                       Specially Assigned