Bales v. State ex rel. Okla. Real Estate Appraiser Bd.

492 P.3d 625

Matthew BALES and Garret Pearce, Respondents/Plaintiffs/Appellants,

v.STATE of Oklahoma EX REL. OKLAHOMA REAL ESTATE APPRAISER BOARD, Defendant/Appellee.

Case No. 117,238

Court of Civil Appeals of Oklahoma, Division No. 2.

FILED DECEMBER 3, 2020

Rehearing Denied: February 24, 2021

Mandate Issued: May 19, 2021

Daniel J. Gamino, DANIEL J. GAMINO & ASSOCIATES, P.C., Oklahoma City, Oklahoma, for Appellants

Stephen L. McCaleb, DERRYBERRY & NAIFEH, LLP, Oklahoma City, Oklahoma, for Appellee

OPINION BY DEBORAH B. BARNES, PRESIDING JUDGE:

¶1 Matthew Bales and Garret Pearce (Appellants) appeal from the trial court's order affirming the decision of the Oklahoma Real Estate Appraiser Board to, among other things, suspend Appellants' appraiser credentials for a period of thirty days. Based on our review, we affirm.

BACKGROUND

¶2 Appellants are certified residential appraisers in Oklahoma. Mr. Bales was first licensed with the Board in 2007, and Mr. Pearce was first licensed with the Board in March 2017. In fact, this matter arises from the filing, in December 2016, of Mr. Pearce's application for an original license as a certified residential appraiser, a license which requires a minimum of 2,500 hours of appraisal-related experience hours.

¶3 As asserted by the Board on appeal, Mr. Pearce, with the assistance of his supervisor, Mr. Bales, "altered real life experience reports [subsequently submitted] to the Board and therefore the State was asked to [review the license application] with false information[.]" The Board, in its order dated March 7, 2018, stated as follows:

5.... [Mr. Pearce, as part of his application,] identified appraisal reports he worked on to obtain his 2,500 hours of appraisal-related experience. Among these were three reports that were reviewed by the [Board] as follows: a report [dated in October 2016] for a property located ... in Edmond ...; another appraisal report [dated in September 2016] for a property located ... in Coweta ...; and an appraisal report [dated in November 2016] for a property located ... in Tulsa ....

....

8.... [Mr.] Pearce was cleared for licensure after secondary reviews of the three reports.

9. A test card was issued to [Mr. Pearce] and he subsequently passed the examination.

10.... All three appraisal reports ... were [subsequently] found to be different from the materials submitted to the Board [i.e., compared with those submitted to the applicable lenders] for [the] work product review. The modifications included changes to the neighborhood description, market conditions, summary of sales comparison approach, and in one instance, the site value was changed in the cost approach.

....

17. Despite the testimony of [Mr. Bales] to the contrary that the changes he made in the amended appraisal report ... were not material or substantive, upon review of the appraisal reports in the files of the Board ..., the Cost Approach [in one of the reports, prior to being amended by Mr. Bales,] ... indicates a significantly higher site value of $37,000.00 than [Mr. Bales'] site value of $25,000.00 for the subject property located [in Coweta] ....

18. Despite the testimony of [Mr. Bales] to the contrary that the changes he made in the amended appraisal report he submitted to the Board were not material or substantive, upon review [of the report for the property located in Tulsa] ..., the Market Conditions Form [in one of the reports, prior to being amended by Mr. Bales,] indicates a significantly higher market value analysis (neighborhood value range) than [Mr. Bales'] concluded opinion of value ....

¶4 The Board also identified other discrepancies between the three original reports submitted to the applicable lenders and the three reports submitted as part of the license application process: i.e., the fourteen comparable sales in one of the original reports were increased to seventy comparable sales in the report submitted as part of the application process; a value-changing adjustment in one of the appraisals submitted as part of the license application process was not present in the report submitted to the applicable lender; one comparable sale was removed in one of the reports and replaced with one at a lower sales price; and removal of "quality of construction adjustments" from one of the reports submitted to the Board. The Board concluded that "[t]hese facts lead to the conclusion that [Mr. Bales] improved the appraisal reports[.]"

¶5 The Board set forth the following conclusions of law in its order:

1. [Appellants] have violated 59 O.S. § 858-723(C)(6) through 59 O.S. § 858-726, in that [Appellants] violated:

A) The Ethics, and Conduct Sections of the Uniform Standards of Professional Appraisal Practice Ethics Rule;

B) The Record Keeping Rule of the Uniform Standards of Professional Appraisal Practice.

2. [Appellants] have violated 59 O.S. § 858-723(C)(1) : "Procuring or attempting to procure a certificate pursuant to the provisions of the Oklahoma Certified Real Estate Appraisers Act by knowingly making a false statement, knowingly submitting false information, refusing to provide complete information in response to a question in an application for certification or through any form of fraud or misrepresentation."

3. [Appellants] have violated 59 O.S. § 858-723(C)(5) : "An act or omission involving dishonesty, fraud, or misrepresentation with the intent to substantially benefit the certificate holder or another person or with the intent to substantially injure another person."

4. [Appellants] have violated 59 O.S. § 858-723(C)(6) : "Violation of any of the standards for the development or communication of real estate appraisals as provided in the Oklahoma Certified Real Estate Appraisers Act."

¶6 As to Mr. Bales, the Board suspended his "appraiser credential" for a period of thirty days, and also placed him on probation for a period of one year beginning on the end date of the suspension, during which Mr. Bales "shall provide [a monthly] appraisal log ... detailing all his appraisal activity during the preceding month" and from which "[t]he Board may select and require samples of work product ... [to] be sent for review ...." In addition, the Board ordered Mr. Bales to pay a portion of the costs incurred by the Board for legal fees and travel costs in this matter, and Mr. Bales was ordered to pay two administrative fines in the amount of $500 each. Finally, Mr. Bales was ordered "not [to] serve as a Trainee Supervisor for any person" for a period of three years.

¶7 Mr. Pearce similarly had his appraiser credential suspended for thirty days, was ordered to be placed on one year of probation, and was ordered to pay a portion of the costs incurred by the Board for legal fees and travel costs in this matter. Mr. Pearce was also ordered to pay an administrative fine in the amount of $500. Because, in order to be a Trainee Supervisor, one must be certified for at least three years, the Board ordered that Mr. Pearce (who did not become certified until 2017) not serve as a Trainee Supervisor for any person for a period of five years.

¶8 Appellants filed an administrative appeal from the Board's order in the district court, which affirmed the Board's order. Appellants then filed an appeal from the district court's order, and also filed an "Emergency Application for Stay" which was granted by order of the Oklahoma Supreme Court.¹

STANDARD OF REVIEW

¶9 We review the Board's order pursuant to the Oklahoma Administrative Procedures Act (OAPA), 75 O.S. 2011 §§ 250 - 323, which provides for review of final agency orders. See also 59 O.S. 2011 §§ 858-725(C) ("Any final decision or order of the Board shall be reviewable by a court of appropriate jurisdiction in accordance with the provisions of the [OAPA]."). Under the OAPA, "the district court and this Court apply the same review standard for agency actions[.]" Taylor v. Okla. Water Res. Bd. , 2015 OK CIV APP 99, ¶ 19, 368 P.3d 436 (citations omitted). Pursuant to the OAPA,

An appellate court may not substitute its judgment for that of the agency on the latter's factual determinations. An agency's order will be affirmed if the record contains substantial evidence in support of the facts upon which the decision is based, and if the order is otherwise free of error. An order is subject to reversal if an appealing party's substantial rights were prejudiced because the agency's findings, inferences, conclusions or decisions were entered in excess of its statutory authority or jurisdiction, were arbitrary or capricious, or were clearly erroneous in view of the reliable, material, probative and substantial competent evidence.

Okla. Dep't of Pub. Safety v. McCrady , 2007 OK 39, ¶ 10, 176 P.3d 1194 (footnotes omitted). The Oklahoma Supreme Court has further explained as follows:

Great weight is to be accorded the expertise of an administrative agency, and a presumption of validity attaches to the exercise of expertise when the administrative agency is reviewed by the judiciary. A court of review may not substitute its own judgment for that of an agency, particularly in the area of expertise which the agency supervises. The rationale for this rule is that courts do not possess the specialized knowledge, training, experience or competency to substitute opinions for the judgment of qualified experts. The legislature has recognized that the expertise in some cases of legislative authority is better left to those who have refined abilities in narrow areas, controlled only by general guidelines established by the legislature. If the facts determined by the administrative agency are supported by substantial evidence, and the order is otherwise free of error, the decision of the agency must be affirmed.

Tulsa Area Hosp. Council, Inc. v. Oral Roberts Univ. , 1981 OK 29, ¶ 10, 626 P.2d 316 (footnotes omitted). See also City of Hugo v. State ex rel. Pub. Employees Relations Bd. , 1994 OK 134, ¶ 10, 886 P.2d 485 ("[G]reat weight is accorded the expertise of an administrative...