Title: Mo. Real Estate Appraisers Comm'n v. Funk
Citation: N/A
Docket Number: SC95255
State: Missouri
Issuer: Missouri Supreme Court
Date: June 28, 2016

SUPREME COURT OF MISSOURI 
en banc 
 
MISSOURI REAL ESTATE APPRAISERS  
) 
COMMISSION, 
 
 
 
 
 
) 
 
 
 
 
 
 
 
 
) 
 
Respondent,  
 
 
 
 
) 
 
 
 
 
 
 
 
 
) 
vs. 
 
 
 
 
 
) 
No. SC95255 
 
 
 
 
 
 
 
 
) 
MARK A. FUNK,  
 
 
 
 
) 
 
 
 
 
 
 
 
 
) 
 
Appellant. 
 
 
 
 
 
) 
 
APPEAL FROM THE CIRCUIT COURT OF COLE COUNTY 
HONORABLE JON BEETEM, JUDGE 
 
Opinion issued June 28, 2016 
 
 
The Missouri Real Estate Appraisers Commission (“Commission”) sought review 
of the Administrative Hearing Commission’s (“AHC”) decision awarding attorney’s fees 
to Mark Funk under section 536.0871 for fees he incurred as the prevailing party in the 
underlying civil action arising from the Commission’s denial of his application for 
certification as a state-certified appraiser.  The AHC awarded the fees based on its 
determination that the Commission’s decision to appeal the AHC’s grant of appraiser 
certification to Mr. Funk was not substantially justified because a court is required to 
defer to the AHC’s factual and credibility findings.  The circuit court correctly reversed 
that decision, and its judgment is affirmed. 
                                              
1 All statutory references are to RSMo 2000 unless otherwise stated. 
 
2 
 
A prevailing party in an agency proceeding normally must apply for attorney’s 
fees from that agency within 30 days of its decision, and the fee request will be held in 
abeyance until final disposition of the case where, as here, the case is appealed. 
§ 536.087.3 and  .4.  Because Mr. Funk represented himself when he prevailed before the 
AHC, he did not incur attorney’s fees at the agency level, however, and the requirement 
to apply for attorney’s fees with the agency simply has no application.  Instead, he should 
have applied for fees with the court of appeals, which is the first forum in which he 
prevailed while represented by an attorney.  Because Mr. Funk wrongly submitted his 
application to the AHC within 30 days of the final and unreviewable decision rendered by 
the court of appeals, and only requested attorney’s fees from the court of appeals after 
that request was rejected by the AHC and the deadline for seeking fees from the court of 
appeals had expired, he failed to timely request attorney’s fees. 
 
This Court need not consider whether an exception to the 30-day deadline should 
be recognized in the unique circumstances just described, for, in any event, the 
application for attorney’s fees should have been denied.  The AHC erred in holding that 
the right to attorney’s fees depends on whether the Commission’s decision to appeal the 
AHC’s decision was substantially justified.  This Court held in Greenbriar Hills Country 
Club v. Director of Revenue, 47 S.W.3d 346, 354-58 (Mo. banc 2001), that under section 
536.087.3, attorney’s fees will be awarded to the prevailing party upon timely application 
unless the state’s position in denying relief based on the record in the initial agency 
proceeding is shown to be substantially justified.  Here, the record shows that the 
Commission’s position in the original proceeding was reasonably based on fact and law 
 
3 
and was substantially justified.  The AHC erred as to the law in considering evidence that 
was not before the Commission when it made the decision to deny Mr. Funk’s 
application and in considering whether the Commission should have appealed the AHC’s 
decision.  Those are not the issues that must be decided when determining substantial 
justification.  
I. 
FACTUAL AND PROCEDURAL HISTORY 
This case has a lengthy and somewhat tortured procedural history.  In January 
2007, Mark Funk applied to the Missouri Real Estate Appraisers Commission for state 
certification as a real estate appraiser pursuant to section 339.513.  As a required part of 
the application, Mr. Funk submitted a log.  Among the materials in Mr. Funk’s log were 
two appraisal reports that Mr. Funk had prepared during 2006.  
At the Commission’s request, Mr. Funk met with it to discuss the reports.  At that 
meeting, Commission members questioned Mr. Funk about their concerns as to the 
adequacy of his two 2006 appraisal reports.  The members’ questions focused on whether 
the reports contained adequate analyses of the leases; why neither report contained an 
explanation of the reasoning for the capitalization rate used; and why both reports 
determined the capitalization rate based on out-of-date data, failed to use proper units of 
comparison, lacked information supporting the adjustments made, used inconsistent 
rental amounts, and lacked other supporting data.  Mr. Funk disclosed during the meeting 
that he actually had based the capitalization rate used in one report on an undisclosed 
lease of a side property rather than on the data included in the report.    
In August 2007, the Commission notified Mr. Funk in writing that it denied his 
 
4 
application for state certification.  The notice stated that based on his appearance before 
the Commission, Mr. Funk had “not demonstrated a sufficient knowledge of appropriate 
appraisal methods and techniques.”  The notice also noted numerous deficiencies in     
Mr. Funk’s 2006 appraisal reports: 
[Mr. Funk] failed to correctly apply appraisal techniques that are necessary 
to produce a credible appraisal … failed to adequately analyze, support or 
develop [Mr. Funk’s] opinions of value. The report also did not include 
sufficient information, explanation or analysis to support [Mr. Funk’s] 
adjustments or subsequent value consideration. … For example, the 
Warrensburg Report revealed that [Mr. Funk] failed to adequately or 
properly complete, support or analyze the sales comparison and income 
approaches included in the appraisal report.  Additionally, [Mr. Funk] also 
failed to adequately or properly analyze comparable sales data in the 
appraisal report.  [Mr. Funk] also failed to adequately or properly analyze 
the current lease(s) and [his] determination of capitalization appears to be 
incorrect. … The Warrensburg report also failed to include sufficient 
information necessary to allow an intended user to understand the report 
properly. … As a result of the foregoing, the Warrensburg Report was 
potentially misleading … The Warrensburg report also failed to include 
sufficient information necessary to allow an intended user to understand the 
report properly.  
   
The notice finally informed Mr. Funk that the errors and deficiencies in the reports 
he submitted contained multiple violations of the Uniform Standards of Professional 
Appraisal Practice (USPAP) and gave it cause to deny his application pursuant to 
numerous statutes and regulations: 
• Section 339.532.1, which gives the Commission the authority to “refuse to 
issue or renew any 
certificate or 
license issued pursuant to 
sections 339.500 to 339.549 for one or any combination of causes stated in 
subsection 2 of this section[.]”  
 
• Section 339.532.2, subdivisions (2), (5), (6), (7), (8), (9), (10), and (14), 
which provides that issuance of a certificate can be refused for multiple 
 
5 
reasons the Commission found to be present.2 
 
• Section 339.535, which requires, “State-certified real estate appraisers … 
shall comply with the Uniform Standards of Professional Appraisal Practice 
….” 
 
• Section 339.511.3, which provides, “Each applicant for licensure as a … 
state-certified general real estate appraiser shall have demonstrated the 
knowledge and competence necessary to perform appraisals of residential 
and other real estate as the Commission may prescribe by rule ….” 
 
• Rule 4 CSR § 245-3.010(1), which states, “The Commission shall pass 
upon the granting of all certificates and licenses with due regard to the 
paramount interest of the public as to the honesty, integrity, fair dealing, 
and competency of applicants.” (Transferred to 20 CSR § 2245-3.010 
effective Aug. 28, 2006). 
 
In September 2007, Mr. Funk appealed the denial of his application to be certified 
as an appraiser to the AHC and represented himself pro se during the AHC proceedings.  
                                              
2 The Commission identified the following subdivisions of section 339.532.2 as causes 
for the refusal to issue the certificate: 
(2) Failing to meet the minimum qualifications for certification or licensure or renewal 
established by sections 339.500 to 339.549; 
(5) Incompetency, misconduct, gross negligence, dishonesty, fraud, or misrepresentation 
in the performance of the functions or duties of any profession licensed or regulated by 
sections 339.500 to 339.549; 
(6) Violation of any of the standards for the development or communication of real estate 
appraisals as provided in or pursuant to sections 339.500 to 339.549; 
(7) Failure to comply with the Uniform Standards of Professional Appraisal Practice 
promulgated by the appraisal standards board of the appraisal foundation; 
(8) Failure or refusal without good cause to exercise reasonable diligence in developing 
an appraisal, preparing an appraisal report, or communicating an appraisal; 
(9) Negligence or incompetence in developing an appraisal, in preparing an appraisal 
report, or in communicating an appraisal; 
(10) Violating, assisting or enabling any person to willfully disregard any of the 
provisions of sections 339.500 to 339.549 or the regulations of the Commission for the 
administration and enforcement of the provisions of sections 339.500 to 339.549; 
(14) Violation of any professional trust or confidence[.] 
§ 339.532.2. 
 
6 
In May 2008, the AHC held a “denial hearing” at which the Commission presented 
expert witness testimony concerning the errors in the 2006 appraisal reports.  Among the 
problems the expert identified were that Mr. Funk’s methods were not credible because 
he used out-of-date data; provided no support for, and purposely withheld information 
supporting, the capitalization rate that he used; failed to provide supporting data for his 
adjustments; failed to use the customary unit of comparison; and made multiple 
calculation or typographical errors.  The Commission’s expert also testified that           
Mr. Funk’s work violated several USPAP standards because, among other issues, he did 
not correctly employ appraisal methods and techniques; committed substantial errors that 
significantly affect an appraisal; rendered an appraisal in a careless or negligent manner 
as demonstrated by the calculation of the contract rents and expenses; and made 
typographical and calculation errors.  
Mr. Funk submitted three additional appraisals he completed in 2007.  Because 
Mr. Funk made all three of the 2007 appraisals after he applied for certification, he did 
not submit any of them to the Commission with his application or thereafter, and ipso 
facto the Commission did not and could not have considered them in considering his 
application for certification.  Mr. Funk nonetheless argued to the AHC that, because the 
2007 appraisals had been conducted more recently, they better represented his work and 
should be considered by it in determining whether the Commission erred in rejecting his 
application.   
Counsel for the Commission did not object to the admission of the 2007 appraisal 
reports or present expert testimony about them, apparently concluding that, because     
 
7 
Mr. Funk had failed to provide his work files for the 2007 appraisals to the Commission – 
files that would contain the various background information describing the comparable 
listings, sales or rentals considered, and the analysis, reasoning and calculations 
supporting the reports – the Commission’s expert would not have the factual basis needed 
to present an opinion concerning the competency of Mr. Funk’s work.  
Mr. Funk also chose not to present expert testimony as to whether the 2007 
appraisal reports complied with USPAP standards. The only evidence as to the 2007 
reports’ adequacy was given in answer to a question asked of Mr. Funk by an AHC 
commissioner as to whether Mr. Funk had prepared the 2007 appraisals in compliance 
with USPAP standards and without committing negligence or gross negligence.           
Mr. Funk answered that, although the reports were not in total compliance with 
applicable standards, they were a better sample of his competency and he did not commit 
negligence. 
The AHC found for Mr. Funk and granted his application for certification as a 
state-certified appraiser on November 5, 2008.  In so holding, it did not reject the 
Commission’s expert testimony or conclusions as to the inadequacy of the 2006 appraisal 
reports.  Rather, it said it decided to give greater weight to the 2007 appraisal reports, 
which it found “were done competently and in substantial conformity with USPAP.”   
Mr. Funk did not apply for attorney’s fees from the AHC because he had represented 
himself. 
In December 2008, pursuant to section 536.100, the Commission filed a petition 
for judicial review of the AHC’s decision in the circuit court.  At this point, Mr. Funk 
 
8 
hired counsel.  The trial court reversed the AHC decision granting Mr. Funk state 
certification, finding that the decision of the AHC was “arbitrary, unlawful, unreasonable 
and not supported by substantial and competent evidence on the record as a whole.”    
Mr. Funk did not apply for attorney’s fees because he was not the prevailing party.   
In May 2009, Mr. Funk appealed the trial court’s judgment.  On January 12, 2010, 
the court of appeals issued an opinion holding that the trial court erred in substituting its 
judgment as to Mr. Funk’s competency for that of the AHC.  The appeals court issued its 
mandate on February 3, 2010, reversing the judgment outright and ordering that the 
Commission provide Mr. Funk with his certification.  Mr. Funk did not at that time apply 
for attorney’s fees from the court of appeals even though he had prevailed in that court, 
and the court of appeals did not remand to the trial court or the AHC.   
On February 16, 2010, less than two weeks after the court of appeals ruled in his 
favor, Mr. Funk filed an application with the AHC for reasonable fees and expenses 
under section 536.087.3  The AHC initially rejected the application as beyond its 
jurisdiction because the case had been appealed.  But, as explained in further detail 
below, after remand from the circuit court, the AHC granted Mr. Funk’s application for 
                                              
3 Although Mr. Funk filed the application for attorney’s fees with the AHC under the 
same case number given his initial administrative action, that case had not been remanded 
to the AHC and was not pending before that body, but the AHC assigned a new case 
number to the application for attorney’s fees and treated it as a separate case.  Cf. Cooling 
v. State Department of Social Services, 446 S.W.3d 283, 287 (Mo. App. 2014) (statute 
“provides that the decision on a fee application is separate from the judgment or order 
that determined the prevailing party. The Hernandez case likewise makes a distinction 
between underlying case and the fee proceeding. Hernandez v. State Bd. of Registration 
for Healing Arts, 936 S.W.2d 894 (Mo. App. W.D. 1997)”). 
 
9 
attorney’s fees in the amount of $17,055 and costs in the amount of $2,379.92 on 
September 10, 2013.  It ordered the fees on the basis that “the Commission was not 
substantially justified in filing an appeal” because it should have known that the circuit 
court or appellate court would defer to the AHC’s factual and credibility findings and so 
the appeal had little chance of success.   
The Commission sought judicial review in the circuit court, which reversed, 
finding the Commission’s position was substantially justified.  Mr. Funk appealed.  
Following an opinion by in the court of appeals, this Court granted transfer.  MO. CONST. 
art. V., § 10.   
 
II. 
STANDARD OF REVIEW 
When a party appeals a circuit court’s judgment reviewing an agency decision, 
“the appellate court does not review the circuit court’s decision, but rather the agency 
decision, that is, the AHC’s findings and conclusions[.]” Bird v. Missouri Bd. of 
Architects, Prof'l Engineers, Prof'l Land Surveyors & Landscape Architects, 259 S.W.3d 
516, 520 (Mo. banc 2008).  “The reviewing or appellate court’s determination on any 
judicial review or appeal heard under this subsection shall be based solely on the record 
made before the agency or court below.”  § 536.087.7 . 
The court may modify, reverse or reverse and remand the determination of 
fees and other expenses if the court finds that the award or failure to make 
an award of fees and other expenses, or the calculation of the amount of the 
award, was arbitrary and capricious, was unreasonable, was unsupported 
by competent and substantial evidence, or was made contrary to law or in 
excess of the court’s or agency’s jurisdiction.  
 
§ 536.087.7 (emphasis added). 
 
10 
III. 
THE AHC ERRED IN AWARDING ATTORNEY’S FEES  
The issue on this appeal is a narrow one.  The question whether Mr. Funk should 
be a state-certified appraiser or whether the Commission erred in denying Mr. Funk’s 
application for that certification has been determined already and is not before this Court.  
The only issue on this appeal is whether the AHC erred in awarding Mr. Funk attorney’s 
fees and expenses.  To resolve this issue, this Court must determine whether Mr. Funk 
properly and timely filed his request for attorney’s fees and whether the AHC properly 
rejected the Commission’s claim that its position was substantially justified. 
A. Mr. Funk should have filed his application for attorney’s fees in the 
appellate court. 
 
Section 536.087 provides that a prevailing party may seek attorney’s fees from the 
agency or court before which the party prevailed: 
3.  A party seeking an award of fees and other expenses shall, within thirty 
days of a final disposition in an agency proceeding or final judgment in a 
civil action, submit to the court, agency or commission which rendered the 
final disposition or judgment an application which shows that the party is a 
prevailing party and is eligible to receive an award under this section. … 
  
4.  A prevailing party in an agency proceeding shall submit an application 
for fees and expenses to the administrative body before which the party 
prevailed. A prevailing party in a civil action on appeal from an agency 
proceeding shall submit an application for fees and expenses to the court. 
The filing of an application shall not stay the time for appealing the merits 
of a case. When the state appeals the underlying merits of an adversary 
proceeding, no decision on the application for fees and other expenses in 
connection with that adversary proceeding shall be made under this section 
until a final and unreviewable decision is rendered by the court on the 
appeal or until the underlying merits of the case have been finally 
determined pursuant to the appeal. 
 
 
11 
§ 536.087.3 and .4 (emphasis added).4   
These sections require a party who prevails before an agency to submit an 
application for attorney’s fees and expenses to that agency within 30 days of the final 
disposition of the agency proceeding.  Where, as here, the state appeals the agency 
determination, “the tribunal before which the fee application was properly brought will 
retain jurisdiction over that fee application, and the action will be held in abeyance until 
the adversary proceeding becomes final.”  Missouri Comm'n on Human Rights v. Red 
Dragon Rest., Inc., 991 S.W.2d 161, 172 (Mo. App. 1999);  accord State ex rel. Div. of 
Transp. v. Sure-Way Transp., Inc., 948 S.W.2d 651, 658 (Mo. App. 1997); § 536.087.4.  
The prevailing party is not required to continue filing attorney’s fee applications at each 
succeeding level of the process to recover attorney’s fees expended on appeal in defense 
of the AHC decision in the party’s favor.  Once the proceeding becomes final through an 
unreviewable decision by a court on appeal, or once the underlying merits of the case are 
finally determined on appeal, the agency can then determine the attorney’s fees 
awardable, if any, and that award can include fees incurred in the trial and appellate 
courts in defending the agency decision.5 
                                              
4 Under section 536.087.1 an applicant for attorney’s fees must also prove it is a “party” 
who “prevailed[ed]” in an “agency proceeding” or civil action arising therefrom brought 
by or against the “state,” as those terms are defined in section 536.085.   
5 Greenbriar Hills Country Club v. Director of Revenue, 47 S.W.3d 346, 359 n.42 (Mo. 
banc 2001) (considering the prevailing party’s application for fees including fees 
incurred on appeal of the underlying action and in defending the fee award); Hernandez 
v. State Bd. Of Registration for Healing Arts, 936 S.W.2d 894, 901-02 (Mo. App. 1997) 
(holding that the administrative body before which the party prevailed retained authority 
to award fees including “compensation … for all aspects of a litigation… including fees 
 
12 
Although Mr. Funk was the prevailing party in the AHC, he did not file an 
application for attorney’s fees and expenses with the AHC within 30 days of its ruling in 
his favor for a very simple reason:  He represented himself and, therefore, had no 
attorney’s fees.  He later incurred attorney’s fees and expenses because he hired an 
attorney to represent him when the Commission appealed the AHC decision to the circuit 
court and then when he appealed the circuit court decision to the court of appeals and 
ultimately prevailed.  Because he had initially prevailed before the AHC, Mr. Funk filed 
his application for attorney’s fees with the AHC within 30 days of prevailing in the court 
of appeals. 
The Commission moved to dismiss the application for attorney’s fees.  Citing 
section 536.087, it argued that even though Mr. Funk had no attorney’s fees when he first 
prevailed before the AHC on November 5, 2008, section 536.087 is unequivocal that he 
was required to file his request for fees within 30 days of that 2008 decision, even if he 
had to request $0.  Because he failed to do so, the Commission argued, his attorney’s fee 
request should be denied.  
The AHC properly rejected this argument.  While on its face section 536.087.4 
requires the party to apply for attorney’s fees in the forum in which the party first 
                                                                                                                                                  
and expenses incurred in seeking fees[.]”); State ex rel. Div. of Transp. v. Sure-Way 
Transp., Inc., 948 S.W.2d 651, 658-59 (Mo. App. 1997) (“[W]hen the underlying case is 
appealed by the agency, the fee application will wait in abeyance until the appeals 
process ends.  If at the end of that appeals process the citizen’s status as a prevailing party 
is left undisturbed, the fee application is revived and leave to modify the application 
should be made and granted by that tribunal which would then include those fees incurred 
in the appeals process.”) 
 
13 
prevailed, the statute does not require a futile act.  Had Mr. Funk incurred attorney’s fees 
in that initial AHC proceeding in which he prevailed, section 536.087.3 and .4 would 
have required him to file his application for attorney’s fees with the AHC.  Because he 
did not incur attorney’s fees in that AHC proceeding, however, he was not required to 
seek reimbursement for non-existent fees.   
Reading subsections 3 and 4 together, and in light of the intent of the legislature to 
allow a party who prevails to recover the attorney’s fees incurred in prevailing in the 
forum in which those fees first were incurred, this Court holds that where, as here, a party 
does not incur attorney’s fees at the agency level at which the party first prevails, the 
party is not required to file an application with the agency to recover such non-existent 
fees. 
But Mr. Funk is also incorrect.  He says that, because he first won before the 
AHC, he was entitled to file an application for attorney’s fees with the AHC once he 
actually later incurred those fees on appeal and prevailed.  But section 536.087.4 provides 
that “a prevailing party in a civil action on appeal from an agency proceeding shall 
submit an application for fees and expenses to the court.”  Section 536.087.3 provides 
that the party who seeks such fees “shall, within thirty days of a … final judgment in a 
civil action, submit to the court, agency or Commission which rendered the final 
disposition or judgment an application ….”   Again, reading subsections 3 and 4 together, 
the intent of the statutes is that the prevailing party seek attorney’s fees in the forum in 
which the party first prevailed and incurred those attorney’s fees.  Mr. Funk, having first 
prevailed and incurred fees before the appellate court, therefore, was required to file his 
 
14 
application for attorney’s fees with the court of appeals. 
For this reason, the AHC initially denied Mr. Funk’s application for attorney’s 
fees and granted the Commission’s motion to dismiss, correctly holding that Mr. Funk 
should have filed his application for attorney’s fees with the court of appeals.  By the 
time the AHC so ruled, more than 30 days had passed since the court of appeals had 
finally disposed of his appeal.  Mr. Funk, therefore, proceeded on a second front.         
Mr. Funk filed an application for attorney’s fees with the court of appeals and, 
acknowledging the otherwise untimely nature of that filing, asked the court of appeals to 
recall its mandate and reissue its decision so that, given the unique circumstances, his 
application for attorney’s fees from the court of appeals would be timely.  In support, he 
cited Greenbriar, in which this Court noted the unfairness of the fact that the mandate in 
Greenbriar had issued before the time had run for the prevailing party in that case to seek 
attorney’s fees.  47 S.W.3d at 354.  To avoid this unseemly inconsistency, this Court sua 
sponte chose to treat Greenbriar’s otherwise untimely application for attorney’s fees as a 
motion to recall the Court’s mandate and granted it.  The mandate then was reissued and 
the prevailing party could timely be awarded attorney’s fees based on the new mandate.  
Id. 6  
                                              
6 An appellate court can, and usually will, remand the case to the trial court or to the 
agency with directions to determine the award of attorney’s fees or remand for entry of a 
judgment consistent with the court’s opinion. For example, in Berry v. Volkswagen 
Group of Am., Inc., 397 S.W.3d 425, 433 (Mo. banc 2013), this Court remanded to the 
trial court to determine the amount of attorney’s fees.  Accord, Rosehill Gardens, Inc. v. 
Luttrell, 67 S.W.3d 641, 648 (Mo. App. 2002) (same).   See also Red Dragon, 991 S.W.2d 
at 173 (court reversed Commission’s award of complainant’s litigation costs and 
 
15 
 
Here Mr. Funk did not file either his motion to recall mandate or an application for 
attorney’s fees with the court of appeals within 30 days of the time that court’s decision 
in his favor became final and unreviewable.  His application was not timely. 
Proceeding on a second front, at the same time as Mr. Funk sought to have the 
appellate court recall its mandate, he appealed the AHC’s dismissal of his application for 
attorney’s fees, arguing that the application had been properly filed with the agency.  The 
circuit court reversed and remanded to the agency without opinion, which Mr. Funk 
interpreted to mean that the AHC should consider the merits of his attorney’s fee claim.  
Mr. Funk, therefore, filed an amended application for attorney’s fees, which the AHC 
considered on the merits and granted following an evidentiary hearing held on November 
30, 2011.  This AHC holding was error.  For the reasons just noted, Mr. Funk should 
have sought attorney’s fees in the court of appeals, where he first prevailed and incurred 
such fees, not before the AHC, where he did not incur attorney’s fees when prevailing. 
This Court need not consider whether, in light of the unique nature of the 
procedural issues and the lack of precedent addressing where to file when the prevailing 
party did not incur any fees in the forum in which the party first prevailed, this Court has 
authority to recognize an exception to the normal timing requirements (much as 
Greenbriar did).  For the reasons discussed below, even if Mr. Funk’s application were 
considered to be timely, he should not have been awarded attorney’s fees. 
                                                                                                                                                  
“remanded the case to the circuit court for remand to the [Commission] for entry of an 
amended order”).   
 
16 
B. The position taken by the Commission in rejecting the application for 
certification was substantially justified, precluding the award of attorney’s 
fees. 
 
Section 536.087.1 provides that: 
A party who prevails in an agency proceeding or civil action arising 
therefrom, brought by or against the state, shall be awarded those 
reasonable fees and expenses incurred by that party in the civil action or 
agency proceeding, unless the court or agency finds that the position of the 
state was substantially justified or that special circumstances make an 
award unjust.   
 
(Emphasis added).  “The burden is on the [state] to establish substantial justification.”  
Greenbriar, 47 S.W.3d at 354.  The Commission asserts its decision denying Mr. Funk’s 
application for certification was substantially justified and the AHC decision to award 
fees and costs is arbitrary and capricious, unreasonable, unsupported by competent and 
substantial evidence, and contrary to law.  
1. 
The record before an agency at the time of its decision is 
examined to determine whether the agency position is 
substantially justified. 
 
The Commission argues that the AHC applied the wrong standard in determining 
Mr. Funk’s right to attorney’s fees and expenses.  The AHC based its grant of attorney’s 
fees on its belief that “the Commission was not substantially justified in filing an appeal” 
of the initial AHC decision because the AHC decision was based on the credibility and 
weight of the evidence presented to the AHC as to the 2007 appraisals and “credibility 
determination and the weighing of evidence are this Commission’s sole prerogatives … 
[so s]uch an appeal had no realistic chance of succeeding.”  
This was error.  Although the attorney’s fees that Mr. Funk sought were those he 
 
17 
incurred while defending his judgment on appeal, his right to those attorney’s fees does 
not depend on whether the Commission’s position in its briefs on appeal was meritorious 
or stood a good chance of success.  Every party has a right to appeal so long as the appeal 
is not frivolous, and the remedy for frivolous appeals is a sanction under Rule 55.03 or 
Rule 84.19, not the rejection of a “substantially justified” defense. 
 
 Section 536.087.3 specifically sets out the standard for determining whether an 
agency position is substantially justified:   
Whether or not the position of the state was substantially justified shall be 
determined on the basis of the record … which is made in the agency 
proceeding or civil action for which fees and other expenses are sought, and 
on the basis of the record of any hearing the court or agency deems 
appropriate to determine whether an award of reasonable fees and expenses 
should be made, provided that any such hearing shall be limited to 
consideration of matters which affected the agency’s decision leading to the 
position at issue in the fee application. 
 
(Emphasis added).   
“Section 536.087.3 specifically provides that the determination on the issue of 
substantial justification shall be based on the record made in the agency proceeding for 
which fees are requested, not on the determination of a higher court when reviewing the 
agency action for error.” Greenbriar, 47 S.W.3d at 357-58.  In other words, the agency 
position, which must be shown to be substantially justified, is the Commission’s position 
before the AHC defending its denial of Mr. Funk’s initial application for certification as a 
real estate appraiser because it reasonably believed, based in the record made before the 
Commission, that he did not meet the competency requirements and standards for state 
appraiser certification, not the Commission’s arguments on appeal.   
 
18 
Dishman v. Joseph, 14 S.W.3d 709, 711, 713-14 (Mo. App. 2000) (Dishman I), 
provides a good example of the application of this standard.  In Dishman I, the Personnel 
Advisory Board erroneously reconsidered already litigated facts regarding a nurse’s 
suspension when determining whether the agency’s position was substantially justified.  
Id. at 718.  The appellate court held that this was error because, when hearing an 
application for attorney’s fees and costs, the Board “could only determine whether the 
agency’s position was substantially justified when it suspended [the nurse] in light of the 
underlying record in the case which was decided in her favor and in light of the facts and 
investigation which the agency showed it considered in deciding to suspend her and in 
trying to uphold that suspension.”  Id. (Emphasis added).  In other words, when 
considering whether the nurse was entitled to attorney’s fees and expenses after 
prevailing on an appeal of her suspension, the reviewing agency “could only determine 
whether the agency’s position was substantially justified when it suspended [the 
nurse]….”  Id. (Emphasis added).   
Similarly, in Greenbriar, the country club applied to this Court for attorney’s fees 
after winning a tax appeal.  47 S.W.3d at 349-50.  While the fees sought by Greenbriar 
included those it incurred on appeal, the determination of whether it was entitled to those 
fees did not depend on the merits of the Department of Revenue’s position on appeal.  
Rather, this Court considered whether “the Director’s position in the original AHC 
proceeding had a reasonable basis in fact and law” to determine whether the Director’s 
position was substantially justified.  Id. at 358 (emphasis added); accord Pulliam v. State, 
96 S.W.3d 904, 907 (Mo. App. 2003) (“In reaching a fee decision, the agency may 
 
19 
consider the facts as determined in the underlying action, how those facts reasonably may 
have appeared at the time the action was initiated, and the thoroughness of the 
investigation preceding the action.”). 
 
The AHC failed to follow this standard here.  Rather than properly limiting itself 
to considering whether the Commission’s position in the original proceeding was 
substantially justified, it considered whether the appeal from that decision was 
substantially justified and determined that, under the deferential standard of review, it 
was not.  That was not the correct analysis.     
2. 
The Commission’s position was reasonably based in law and 
fact. 
 
This Court finds that the AHC’s decision that the Commission’s denial of          
Mr. Funk’s application for state appraiser certification was not substantially justified was 
unsupported by competent and substantial evidence and is contrary to law.  “Missouri 
courts have interpreted the term ‘substantially justified’ to mean there must be 
‘reasonable basis both in law and fact’ for the government’s actions.”  Greenbriar, 47 
S.W.3d at 354.   
In State ex rel. Pulliam v. Reine, 108 S.W.3d 148, 158-59, 161 (Mo. App. 2003), 
the court held that there was substantial justification for the Missouri Board of Nursing 
Home Administrators’ discipline of a nursing home administrator because an 
investigation of alleged wrongdoing provided a factual basis for the proceedings and the 
Board had statutory authority to enforce licensure provisions.   
By contrast, in Hyde v. Department of Mental Health, 200 S.W.3d 73, 77 (Mo. 
 
20 
App. 2006), the court found that the agency denied services based on “emergency 
criteria” but did not show “that its criteria was reasonable and was applied appropriately.”  
In Joseph v. Dishman, 81 S.W.3d 147, 151, 153 (Mo. App. 2002) (Dishman II), decided 
after Dishman I remanded the case, the court held the agency decision to discipline the 
nurse was not substantially justified because the agency did not come forward with any 
testimony explaining the investigation or defending the reasonableness of the action but 
instead “contented itself with the perfunctory filing of two affidavits offering little in the 
way of substance.”   
The evidence of substantial justification presented by the Commission differs from 
the evidence presented in cases such as Dishman II and Hyde, in which the agency did 
not present substantial evidence that its decision was substantially justified.  This case is, 
rather, like the evidence in Pulliam in which the agency position was substantially 
justified.  Here, the Commission submitted evidence that showed the factual basis for the 
denial of Mr. Funk’s application and presented evidence of the Commission’s statutory 
criteria for issuing state appraiser certifications, its investigation into Mr. Funk’s 
knowledge and understanding of appraisal methods, its application of the statutory 
standards to Mr. Funk’s work, and its expert testimony explaining how Mr. Funk’s 2006 
appraisals violated the standards and gave cause to deny his application.   
The AHC denial hearing record was stipulated to be a part of the attorney’s fee 
hearing record.  It showed that the Commission based its denial of Mr. Funk’s application 
on the errors and violations of appraiser standards the Commission found in the 2006 
appraisal reports and the lack of understanding of appraisal methods Mr. Funk 
 
21 
demonstrated at the meeting with the Commission.  Mr. Funk did not claim that the 2006 
reports were prepared correctly (although he did claim their inadequacy did not justify 
the denial of his application) but, rather, argued to the AHC at that denial hearing that the 
2007 reports were a more accurate representation of his competence and constituted 
substantial evidence supporting certification.   
The AHC agreed with Mr. Funk as to the adequacy of the 2007 appraisal reports.  
But the 2007 reports were not in evidence before the Commission when it made its 
decision.  Mr. Funk introduced them for the first time at the AHC hearing.  Assuming the 
AHC properly considered those unobjected-to 2007 reports in reaching its decision in 
favor of Mr. Funk at the denial hearing (an issue not now before the Court), because 
those reports were not before the Commission when it made its decision, the AHC  
should not have considered them in determining whether the Commission’s rejection of 
his application was substantially justified.  To again quote Dishman I, the Commission 
“could only determine whether the agency’s position was substantially justified … in 
light of the underlying record in the case … and in light of the facts and investigation 
which the agency showed it considered ….”  14 S.W.3d at 718 (emphasis added). 
In determining attorney’s fees and costs, the AHC should have considered whether 
the Commission’s rejection of Mr. Funk’s application was substantially justified based on 
the information before the Commission when it rejected the application.  The record 
before the Commission included the 2006 appraisal reports and the information the 
Commission gained in its meeting with Mr. Funk, and the AHC should have considered 
“how these facts reasonably may have appeared” to the Commission when it denied    
 
22 
Mr. Funk’s application. 7 
Section 536.087.3 explicitly states that the fact “that the state has lost the agency 
proceeding or civil action creates no legal presumption that its position was not 
substantially justified.”  This is because even if the agency “was determined in the 
underlying case to be wrong … [it] does not necessarily mean that the State’s position 
was not well-founded in law and fact.”  Dishman I, 14 S.W.3d at 718-19.  Rather, it 
means that the burden is on the agency to show that the basis for the agency’s position 
was “clearly reasonable, although not necessarily correct.”  Id. at 717.  This standard is 
particularly appropriate here, where the basis of the AHC reversal was evidence that 
never was put before the Commission.   In other words, the AHC did not reject the basis 
of the Commission’s decision because it found the denial of certification was 
unreasonable or not well-founded based on the evidence before the Commission.  The 
AHC simply found that the certification should have been granted based on additional 
evidence first presented only once the case was appealed to the AHC. 
For these reasons, the AHC award of attorney’s fees and costs based on its 
determination that the Commission’s position was not substantially justified is 
                                              
7 Mr. Funk argues that whether the Commission was substantially justified in its initial 
decision to deny the state appraiser certification is not germane because he incurred no 
fees until the appeal of the AHC decision reversing the denial.  The fact that Mr. Funk 
did not incur attorney’s fees until the appeal is relevant to the determination of the 
amount of the award, but, as discussed above, the position at issue is substantial 
justification for the Commission’s denial of his state appraiser certification. The statutory 
language is clear that “matters which affected the agency’s decision leading to the 
position at issue in the fee application” are germane to the question whether a position is 
substantially justified.  § 536.087.3.               
 
23 
unsupported by competent and substantial evidence and is contrary to law.  Taking the 
facts as found by the Commission in its initial decision and in light of the statutes and 
rules governing the grant of certification, the Commission’s denial of Mr. Funk’s 
application for state certification was “clearly reasonable, well-founded in law and fact, 
solid, although not necessarily correct.” Dishman I, 14 S.W.3d at 719.   
IV. 
CONCLUSION 
The judgment of the circuit court reversing the decision of the AHC is affirmed.8 
 
 
 
 
 
 
 
 
 
 
______________________________   
 
 
 
 
 
 
 
     LAURA DENVIR STITH, JUDGE 
Breckenridge, C.J., Fischer, Draper, Wilson  
and Russell, JJ., concur; Teitelman, J., concurs  
in part in separate opinion filed. 
 
                                              
8 As this Court determines that Mr. Funk is not entitled to attorney’s fees and costs, this 
Court overrules as moot his motion for reasonable fees and expenses on appeal. 
 
SUPREME COURT OF MISSOURI 
en banc 
 
MISSOURI REAL ESTATE APPRAISERS 
) 
COMMISSION, 
 
 
 
 
) 
 
 
 
 
Respondent,  
) 
 
 
 
 
 
 
 
) 
vs. 
 
 
 
 
 
 
) 
No. SC95255 
 
 
 
 
 
 
 
) 
MARK A. FUNK,  
 
 
 
) 
 
 
 
 
 
 
 
) 
 
 
 
 
Appellant. 
 
) 
 
OPINION CONCURRING IN PART 
 
I concur in sections I through III(A) of the principal opinion.  The fact that Mr. 
Funk did not timely file his application for attorney fees in the proper forum is 
dispositive.  I express no opinion regarding the dicta pertaining to whether the 
commission’s decision was substantially justified.  
 
 
 
 
 
 
 
_________________________________  
 
 
 
 
 
 
 
Richard B. Teitelman, Judge