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Holcomb v. Arizona Department of Real Estate

Court of Appeals of Arizona, First Division

September 17, 2019

MICHELLE HOLCOMB; FORE PEAKS SALES GROUP L.L.C., Plaintiffs/Appellants,
v.
ARIZONA DEPARTMENT OF REAL ESTATE, Defendant/Appellee.

          Appeal from the Superior Court in Maricopa County No. LC2017-000208-001 The Honorable Patricia A. Starr, Judge.

          The Holper Group, PLLC, Bozeman, MT By Richard D. Holper Counsel for Plaintiffs/Appellants

          Arizona Attorney General's Office, Phoenix By Lynette J. Evans Counsel for Defendant/Appellee

          Chief Judge Peter B. Swann delivered the opinion of the court, in which Presiding Judge Kenton D. Jones and Judge David D. Weinzweig joined.

          OPINION

          Swann, Chief Judge.

         ¶1 Michelle Holcomb and Fore Peaks Sales Group, LLC (collectively, "Licensees"), appeal the superior court's decision affirming the Arizona Department of Real Estate ("Department") Commissioner's order revoking their real estate licenses. The Licensees contend that (1) they were denied procedural due process during the revocation proceedings, (2) insufficient evidence supports the Commissioner's conclusions that they violated multiple provisions of A.R.S. § 32-2153, and (3) the revocation of their licenses was excessive and disproportionate in light of the evidence. For reasons that follow, we affirm.

         FACTS AND PROCEDURAL HISTORY

         ¶2 Holcomb was a licensed real estate broker and the designated broker of Fore Peaks, a real estate brokerage in the Fountain Hills area.

         ¶3 In October 2016, an auditor from the Department contacted Holcomb to schedule an audit of Fore Peaks' records, explaining the scope of the audit and the documents Holcomb would need to make available. Ten days later, the auditor visited Fore Peaks' office to conduct the audit and found the brokerage's recordkeeping was "literally a mess," with records not stored in "any organized fashion." The auditor and a Department investigator randomly selected twenty sales transactions for review, but Holcomb could not locate the files for eight. Holcomb ultimately provided files for twenty transactions, but eighteen did not contain earnest money receipts, one was missing a purchase contract, and two were missing documentation of cancelled contracts. The auditor gave Holcomb ten days to produce the missing documents and reminded her of the deadline via voicemail and email, but no documents were provided. Unable to reach Holcomb, the auditor issued a subpoena for the missing documents, to which Holcomb did not respond.

         ¶4 The auditor then referred the matter to the Department's Enforcement and Compliance manager. The Enforcement and Compliance manager emailed and called Holcomb several times until he received a response, in which Holcomb promised to send the missing documents. A week later, Holcomb had not sent the documents, so the manager warned her via email that "[f]ailure to [cooperate with the Department's investigation] may result in disciplinary action." Then, approximately two weeks later, in December 2016, the manager sent the Licensees a cease and desist order demanding that neither Holcomb nor Fore Peaks engage in any real estate activity "without first demonstrating full compliance with all applicable laws."

         ¶5 In January 2017, the auditor and investigator visited Fore Peaks' office to find the Licensees continuing to operate in disregard of the cease and desist order. Holcomb told the Department officials she never received the cease and desist order. The auditor later confirmed that the order was delivered and signed for by a Fore Peaks employee, but had not been opened. Holcomb blamed the holidays and a funeral for her silence, admitting she should have responded to the Department's requests.

         ¶6 By February 2017, the Department still had not received the missing documents, and it sent the Licensees a notice of hearing and complaint for an administrative hearing in March. Holcomb did not appear for the hearing or send a representative. The Department presented testimony from a single witness-the auditor in charge of the case. The administrative law judge ("ALJ") ultimately found that the Licensees violated multiple provisions of A.R.S. § 32-2153 and recommended revocation of their licenses, which the Commissioner adopted in a final order. The Licensees filed a "Motion for Rehearing or Review of Commissioner's Final Order," and attached an affidavit from Holcomb with new facts. The Commissioner denied the motion, and the Licensees appealed for review to the superior court. The court heard oral argument, denied the Licensees' request for an additional evidentiary hearing, and ultimately affirmed the Commissioner's final order.

         ¶7 The Licensees now appeal the ...


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