Court Opinion

ID: 4427601
Source: CourtListenerOpinion
Date Created: 2019-08-20 18:53:30.440962+00
Date Added: 2024-06-11T14:50:46.804313
License: Public Domain

IN THE MISSOURI COURT OF APPEALS
                   WESTERN DISTRICT
MISSOURI REAL ESTATE          )
COMMISSION,                   )
                 Respondent, )
                              )              WD81769
v.                            )
                              )              FILED: May 28, 2019
WILLIAM L. HELD,              )
                   Appellant. )
                 Appeal from the Circuit Court of Cole County
                    The Honorable Jon E. Beetem, Judge
             Before Division Two: Cynthia L. Martin, P.J., and
                     Alok Ahuja and Gary D. Witt, JJ.
      William Held applied for a real estate salesperson license in October 2015.

The Missouri Real Estate Commission denied his application because Held had a

number of felony criminal convictions for offenses involving dishonesty and moral

turpitude. Held applied for review by the Administrative Hearing Commission

(“AHC”). Following an evidentiary hearing, the AHC granted Held’s application for

licensure, subject to a three-year term of probation. The Real Estate Commission

petitioned for judicial review in the Circuit Court of Cole County. The circuit court

reversed the AHC’s decision, finding that it was in excess of the AHC’s statutory

authority, and that it was unsupported by competent and substantial evidence.

Held appeals. We reverse the circuit court’s judgment and reinstate the AHC’s

decision granting Held a probated license.
                               Factual Background
      Held began working for Camden Properties, LLC, d/b/a Keller Williams

Realty West, in July 2015. He worked under a real estate agent in the office,

handling the agent’s administrative duties and marketing. In October 2015, Held

applied to the Real Estate Commission for a real estate salesperson license. Before

applying, Held had passed the Missouri real estate salesperson examination and

had completed all of the required coursework to obtain a license.

      Held has an extensive criminal history. Between 1998 and 2014, he pleaded

guilty to, and was convicted of, twenty-one felonies. The felonies included drug

possession and trafficking offenses; stealing; receiving stolen property; unlawful

possession of a weapon; and resisting arrest. He was on probation for several of

those offenses at the time he applied for his real estate salesperson license.

      On February 23, 2016, the Real Estate Commission denied Held’s license

application. Based on his numerous criminal convictions, the Commission

concluded that Held lacked the requisite moral character, reputation for honesty,

integrity and fair dealing, and competency to transact the business of a real estate

salesperson in a manner which protected the interests of the public.

      On February 26, 2016, Held filed a complaint with the AHC, seeking review

of the Real Estate Commission’s decision. A hearing was held before an AHC

Commissioner on March 15, 2017. At the hearing, Held testified that all of his

criminal convictions were related in some manner to his substance abuse problems,

which began when he was prescribed opioid pain medication following an injury

playing college football. Held testified that he had been drug-free since July 2013,

and described the various drug treatment programs in which he had participated,

and in which he continued to participate. At the time of the hearing, Held remained

on probation for several of his criminal convictions, which was scheduled to end in

                                           2
November 2017. (After the hearing, Held successfully completed probation and was

discharged from supervision.)

       The AHC issued its decision granting Held a probated license on December 1,

2017. With respect to Held’s character, the AHC found:

       We believe Held’s criminal past does indicate a disrespect for the law
       and the rights of others, tending to show a lack of good moral
       character. However, there is no evidence that he has failed to comply
       with the terms of his supervised probation, and we must take into
       account that over three years have passed since his most recent
       conviction. Held not only participated in mandatory restorative justice
       and addiction treatment during his incarceration, but also sought out
       an immersive yearlong voluntary program to address substance abuse
       and modify the behaviors he acknowledged to be a problem. Upon
       completion, his success allowed him the opportunity to become a
       facilitator in the program in order to pass on what he had learned.
       After his release, Held participated in a three-month intensive after-
       care program that included regular drug testing. He continues to
       attend Alcoholics Anonymous meetings weekly. Held does not consider
       himself to be “cured” of his substance abuse: “I know that’s a process
       that I do daily. It will be the process that I have to do the rest of my
       life. I take pride in that.” We believe Held has accepted responsibility
       for his past, and taken affirmative steps to improve his life despite
       significant adversity. In sum, he has shown that he is presently a
       person of good moral character.
(Record citations omitted.) The AHC also found that Held has a good reputation for

honesty, integrity, and fair dealing, based on the testimony of Held’s sponsoring
broker, as well as Held’s own testimony. Finally, because Held had passed the

necessary examinations and completed the coursework required for licensure, the

AHC found that he was competent to transact the business of a real estate

salesperson in a manner which safeguarded the public interest.

       The AHC concluded that Held met the mandatory qualifications for a real

estate salesperson’s license under § 339.040.1 It also found, however, that

discretionary grounds existed to deny Held a license under §§ 339.080.1 and

      1       Statutory citations refer to the 2016 edition of the Revised Statutes of
Missouri, as updated through the 2018 Cumulative Supplement.

                                              3
339.100.2(18), because (1) his criminal convictions were reasonably related to the

functions and duties of a real estate salesperson; (2) his stealing convictions

involved dishonesty; and (3) his convictions included offenses involving moral

turpitude. Despite the fact that grounds existed to deny Held a license, the AHC

concluded that it had discretion under § 324.038 to issue him a probated license.

Exercising this statutory discretion, the AHC granted Held’s application for

licensure as a real estate salesperson subject to three years’ probation. The AHC

specified that

      [t]he conditions of [Held’s] probation should include Held’s employer
      maintaining electronic records of his entering and leaving homes of
      prospective sellers and making them available for inspection by [the
      Real Estate Commission] at any time. Held should not be permitted to
      enter a home unaccompanied when no system is in place to create such
      an electronic record (as with properties listed with brokers who use a
      combination lockbox for entry). Held should also be required to report
      any arrest to [the Real Estate Commission] within 48 hours, and
      submit to drug screening at the discretion of [the Commission].
      The Real Estate Commission appealed the AHC’s decision to the circuit court.

The circuit court reversed the AHC’s decision, finding that the AHC did not have

statutory authority to issue Held a probated license, and that the AHC lacked

competent and substantial evidence to find that Held possessed the requisite moral
character and reputation for honesty, integrity, and fair dealing.

      Held appeals.

                                Standard of Review
             On an appeal from the trial court’s review of an AHC decision,
      we review the decision of the AHC, not the judgment of the trial court.
      The AHC’s decision will be upheld unless it is not supported by
      competent and substantial evidence upon the whole record; it is
      arbitrary, capricious, or unreasonable; it is an abuse of discretion; or it
      is otherwise unauthorized by law or in violation of constitutional
      provisions. We review the AHC’s conclusions on the interpretation and
      application of the law, however, de novo.

                                           4
Atwell v. Fitzsimmons, 452 S.W.3d 670, 675–76 (Mo. App. W.D. 2014) (citations and

internal quotation marks omitted).

      Because our analysis focuses on the correctness of the AHC’s decision, Rule

84.05(e) provides in these circumstances that “[t]he party aggrieved by the agency

decision”—here the Real Estate Commission—”shall file the appellant’s brief and

reply brief.” Although we review the decision of the AHC, our mandate “reverses,

affirms or otherwise acts upon the judgment of the trial court.” Bird. v. Mo. Bd. of

Architects, 259 S.W.3d 516, 520 n.7 (Mo. banc 2008) (citing Rule 84.14).

                                      Analysis
                                          I.
      In its first Point on appeal, the Real Estate Commission argues that the AHC

does not have the statutory authority to issue an applicant a probated license after

the Commission has refused to issue the applicant a license. The Real Estate

Commission argues that the AHC only has the authority to issue an applicant a full,

non-probated license if the applicant shows entitlement to licensure, but that the

AHC lacks the discretion to issue an applicant a probated license. We disagree.

      Section 339.040.1 provides that a real estate salesperson license

      shall be granted only to persons who present . . . satisfactory proof to
      the [Real Estate Commission] that they:
             (1)   Are persons of good moral character; and
            (2)    Bear a good reputation for honesty, integrity, and fair
      dealing; and
            (3)    Are competent to transact the business of a . . .
      salesperson in such a manner as to safeguard the interest of the public.
See also Harris v. Hunt, 122 S.W.3d 683, 688 (Mo. App. E.D. 2003). Applicants

must also be over the age of eighteen, have satisfactorily completed the real estate

salesperson license examination, and have completed the prescribed educational
requirements. §§ 339.040.3, .4, .6.

                                          5
      Even if an applicant satisfies the requirements of § 339.040, § 339.080.1

provides that the Commission “may refuse to . . . issue a license to any person

known by it to be guilty of any of the acts or practices specified in subsection 2 of

section 339.100.” Section 339.100.2 sets forth twenty-six grounds on which the Real

Estate Commission may file a disciplinary complaint against an existing licensee

with the AHC. One of those grounds, § 339.100.2(18), provides that the Real Estate

Commission may file a complaint against a licensee who has

      [b]een finally adjudicated and found guilty, or entered a plea of guilty
      or nolo contendere, in a criminal prosecution . . . for any offense
      reasonably related to the qualifications, functions or duties of any
      profession licensed or regulated under this chapter, for any offense an
      essential element of which is fraud, dishonesty or an act of violence, or
      for any offense involving moral turpitude, whether or not sentence is
      imposed.
      Where the Real Estate Commission has discretionary grounds to deny a

license application under §§ 339.080.1 and 339.100.2, the Commission is authorized

to instead issue the applicant a probated license. Section 324.038 provides that:

      Whenever a board within or assigned to the division of professional
      registration,[2] including the division itself when so empowered, may
      refuse to issue a license for reasons which also serve as a basis for
      filing a complaint with the [AHC] seeking disciplinary action against a
      holder of a license, the board, as an alternative to refusing to issue a
      license, may, at its discretion, issue to an applicant a license subject to
      probation.
      Reading § 339.080.1, § 339.100.2(18), and § 324.038 together, the Real Estate

Commission had the discretion to issue Held a probated license in this case, rather

than denying him a license outright, after finding that he had the type of criminal

convictions described in § 339.100.2(18). Although the Real Estate Commission had

the discretionary authority to issue Held a probated license, it contends that the

AHC lacks similar authority when it reviews a license denial by the Commission.

       2      The Real Estate Commission is an agency within the Division of Professional
Registration. 20 C.S.R. 2250-1.010(1).

                                            6
We therefore turn to the scope of the AHC’s remedial authority in review

proceedings involving professional licensing decisions.

      A license applicant may file a complaint with the AHC to review a

Commission decision denying the applicant a license. § 339.080.2. The authority of

the AHC to review the Real Estate Commission’s license-refusal decisions is set

forth in § 621.045.1, which provides:

      The administrative hearing commission shall conduct hearings and
      make findings of fact and conclusions of law in those cases when,
      under the law, . . . any of the following agencies . . . refuses to permit
      an applicant to be examined upon his or her qualifications or refuses to
      issue or renew a license of an applicant who has passed an
      examination for licensure or who possesses the qualifications for
      licensure without examination:
             ....
      Missouri Real Estate Commission.
“If at the hearing the applicant shall show that under the law he is entitled to

examination for licensure or licensure or renewal, the administrative hearing

commission shall issue an appropriate order to accomplish such examination or

licensure or renewal, as the case may be.” § 621.120.

      In a number of cases, this Court has held that, in its review of professional

licensing decisions, the AHC acts in lieu of the licensing agency, and exercises the
statutory authority otherwise vested in the licensing agency. Like this case, State

Board of Registration for the Healing Arts v. Trueblood, 368 S.W.3d 259 (Mo. App.

W.D. 2012), involved a licensing agency’s challenge to a decision of the AHC which

granted a probated license to an applicant with a significant history of substance

abuse-related criminal offenses. As in this case, the AHC in Trueblood conducted

its review pursuant to § 621.045. The AHC also chose to issue a probated license,

and impose particular conditions of probation, based (in part) on the same statute at
issue here: § 324.038. The licensing agency argued that the AHC erroneously

                                          7
considered whether to grant the applicant a probated license de novo, when it

should instead have deferred to the decision of the licensing agency. We disagreed.

      [T]he General Assembly mandated that the commission [(referring to
      the AHC)] have the power to review the department’s decision. In
      fulfilling this role, the commission’s decision becomes the decision of
      the department. The commission’s function is to render the
      administrative decision of the agency. The commission actually
      steps into the department’s shoes and becomes the department
      in remaking the department’s decision. This includes the
      exercise of any discretion that the department would exercise.
             ....
              [T]he function of the AHC in administrative review proceedings
      is to render the agency’s final decision, exercising the same authority
      as the underlying agency.
            While §§ 324.038 and 334.100 may have given the Board the
      original discretion to decide whether to impose probation on [the
      applicant]’s license, and to establish the terms of that probation, once
      an application for review was filed, the decision became one for
      the AHC. In making its decision, the AHC properly exercised the
      full measure of discretion initially vested in the Board, without
      deference to the Board’s decision.
Id. at 265–67 (citations, brackets, and footnote omitted; emphasis altered); see also,

e.g., Dep’t of Social Servs. v. Mellas, 220 S.W.3d 778, 782–83 (Mo. App. W.D. 2007);

State Bd. of Registration for Healing Arts v. De Vore, 517 S.W.2d 480, 485 (Mo. App.

1974); State Bd. of Registration for Healing Arts v. Finch, 514 S.W.2d 608, 615 (Mo.

App. 1974); and additional cases cited in Trueblood, 368 S.W.3d at 266–67 & n.4.

      Under Trueblood and the substantial body of caselaw on which it relied, once

Held filed a complaint seeking review of the Real Estate Commission’s licensing

decision, the AHC “step[ped] into the [Commission’s] shoes,” and was entitled to

“exercise[ ] the full measure of discretion initially vested in the [Commission].” This

included the discretionary authority to issue Held a probated license, on conditions

the AHC determined to be appropriate to protect the public’s interests. The AHC
was not required to exercise the discretionary authority given by § 324.038 in the

                                          8
same manner as the Real Estate Commission, nor was it required to defer to the

Commission’s exercise of its discretion.

      The Real Estate Commission conceded at oral argument that the AHC could

exercise the discretion afforded by § 339.080.1—namely, to decide whether or not to

issue an applicant a license where a basis for discipline existed under § 339.100.2.

While the Commission concedes that the AHC had the discretion to make an “up or

down” licensing decision under § 339.080.1, it argues that the AHC had no

authority to adopt the middle course permitted by § 324.038: to issue a license, but

impose conditions of probation on the licensee. We fail to see any basis for the

distinction the Commission seeks to draw. Having found that “under the law [Held]

is entitled to . . . licensure,” the AHC “issue[d] an appropriate order to accomplish

such . . . licensure,” as § 621.120 specifically authorizes.

      The Commission argues that the AHC lacks the subject-matter expertise to

decide whether probation is appropriate, or to decide on probation conditions. In

making this argument, the Commission essentially seeks to apply to licensing

decisions the bifurcated approach which the legislature has applied to the discipline

of existing licenses (where the AHC determines only whether grounds for discipline

exist, but the licensing agency determines what discipline to impose). See
§ 621.110. As we explained in Trueblood,

      [s]ection[ ] 324.038 . . . contain[s] no similar bifurcated procedure with
      respect to new or renewal licenses, however, even though the decision
      to probate a new license is based upon the same grounds . . . which can
      justify disciplining an existing license. The fact that the legislature
      explicitly preserved the [licensing agency]’s ultimate discretionary
      authority with respect to the discipline of existing licenses, but failed
      to include similar provisions in connection with the imposition of
      probation on new licenses, confirms that the [licensing agency]’s
      discretionary authority was not similarly retained in this context.
368 S.W.3d at 268 (citing Finch, 514 S.W.2d at 615).

                                            9
      The Real Estate Commission also argues that § 324.038.2 expressly provides

for review by the AHC when a licensing agency issues an applicant a probated

license. Under § 324.038.2, the applicant may file a complaint alleging “that the

applicant . . . is qualified for nonprobated licensure pursuant to the laws and

administrative regulations relating to his or her profession”; upon the filing of such

a complaint “[t]he burden shall be on the [licensing agency] to demonstrate the

existence of the basis for imposing probation on the licensee.” Section 324.038.2 is

irrelevant here, however, since it provides for AHC review only where a licensing

agency exercises its discretion and issues the applicant a probated license. That is

not what occurred in this case. Here, the Real Estate Commission denied Held any

license, probated or otherwise. AHC review of such license denials is provided by

§§ 339.080.2 and 621.045. The caselaw interpreting those provisions holds that the

AHC steps into the shoes of the licensing agency, and conducts a fresh inquiry into

the license application, exercising the same authority as the licensing agency itself.

      The AHC exercised the statutory authority granted to it when it issued Held

a probated license. Point I is denied.

                                          II.
      In its second Point the Real Estate Commission argues that the AHC’s
finding that Held has the requisite moral character and reputation for honesty,

integrity, and fair dealing was arbitrary, capricious, or unreasonable.

      “An administrative agency acts unreasonably and arbitrarily if its decision is

not based on substantial evidence.” Jefferson City Apothecary, LLC v. Mo. Bd. of

Pharmacy, 499 S.W.3d 321, 330 (Mo. App. W.D. 2016) (citation and internal

quotation marks omitted). “Substantial evidence is competent evidence that, if

believed, has probative force upon the issues.” Id. (citation and internal quotation

marks omitted). “Likewise, the agency’s failure to consider important aspects or
factors of the issue can support a finding that the decision was arbitrary and

                                          10
capricious.” Hundley v. Wenzel, 59 S.W.3d 1, 8 (Mo. App. W.D. 2001) (citation

omitted).

      First, the Real Estate Commission argues that the AHC acted arbitrarily and

capriciously in finding that Held is a person of good moral character. “Good moral

character is generally defined as honesty, fairness, and respect for the rights of

others and for the laws of the state and nation.” Hernandez v. State Bd. of

Registration for Healing Arts, 936 S.W.2d 894, 899 n.1 (Mo. App. W.D. 1997)

(citations omitted). We conclude that competent evidence supports the AHC’s

decision that Held is a person of good moral character. As discussed above, Held

accepted responsibility for his past criminal conduct, and has taken numerous,

sustained, affirmative steps to prevent the recurrence of similar behavior in the

future. He has done this by participating and being a facilitator in a series of

different substance abuse treatment programs, by participating in intensive after-

care programs, and by attending weekly Alcoholics Anonymous meetings. The AHC

also found Held to be credible when he testified that he viewed his recovery from

substance abuse as an ongoing process requiring ongoing participation in substance

abuse prevention programs. See Trueblood, 368 S.W.3d at 268–69 (finding that

sufficient competent evidence supported AHC’s decision to issue applicant a
probated license despite applicant’s significant history of substance abuse-related

crimes, where evidence indicated that the applicant had experienced an extended

period of sobriety, exhibited an awareness of her need for ongoing treatment, and

applicant was participating in ongoing programs designed to minimize risk of

relapse). We also note that, by statute, the AHC could not find Held to be lacking

good moral character based solely on his extensive history of felony criminal

convictions.3 Rather, those statutes required the AHC to consider the nature of

      3      Section 314.200 provides:

                                          11
Held’s criminal convictions, and his conduct thereafter, as well as other evidence of

his character—precisely the inquiry the AHC conducted.

       The Real Estate Commission argues that the AHC’s finding that Held is a

person of good moral character conflicts with the AHC’s decision to issue Held a

probated license “for the protection of the public.” According to the Commission, the

AHC effectively found that Held “remained a danger to the public,” which is

inconsistent with a finding that he possessed a good moral character. The

Commission’s argument proves too much: under that argument, no applicant

issued a probated license could ever be considered to have a good moral character,

for the simple reason that the license-issuing agency concluded that probation was

warranted. The AHC did not impose conditions of probation on Held because it

believe he constituted a present danger to the community. Instead, it imposed

those conditions merely to verify, on an ongoing basis, that Held did not present a

danger to the public.

       The Real Estate Commission also argues that the AHC’s finding that Held

bears a good reputation for honesty, integrity, and fair dealing was arbitrary and

capricious, because it relied upon the testimony of Held’s sponsoring broker, who

              No board or other agency created pursuant to laws of the state of
       Missouri . . . for the purpose of licensing applicants for occupations and
       professions may deny a license to an applicant primarily upon the basis that
       a felony or misdemeanor conviction of the applicant precludes the applicant
       from demonstrating good moral character, where the conviction resulted in
       the applicant’s incarceration and the applicant has been released by pardon,
       parole or otherwise from such incarceration, or resulted in the applicant
       being placed on probation and there is no evidence the applicant has violated
       the conditions of his probation. The board or other agency may consider the
       conviction as some evidence of an absence of good moral character, but shall
       also consider the nature of the crime committed in relation to the license
       which the applicant seeks, the date of the conviction, the conduct of the
       applicant since the date of the conviction and other evidence as to the
       applicant’s character.
See also § 324.029 (“Except as otherwise specifically provided by law, no license for any
occupation or profession shall be denied solely on the grounds that an applicant has been
previously convicted of a felony.”).

                                            12
only testified regarding his personal experience with Held’s work ethic and conduct

in the office. “Reputation is based on the opinion of the community as a whole,

rather than the personal estimate of an individual.” Jenkins v. Revolution

Helicopter Corp., 925 S.W.2d 939, 944 (Mo. App. W.D. 1996) (citations omitted).

Held’s sponsoring broker did not testify only to his positive personal experience with

Held, but also testified that no one in the office had told him anything that would

cause him to question Held’s honesty or integrity. In addition, Held’s own

testimony was relevant to his reputation. Id. at 944 (“Just as an individual may

know the reputation of another, so may one know one’s own reputation.” (citation

omitted)). At the hearing, Held testified that he believes he has a reputation “in the

community of being an honest person.” The AHC could rely on this testimony from

Held and his sponsoring broker to support its finding regarding Held’s reputation

for honesty, integrity, and fair dealing—particularly when the Real Estate

Commission made no objection to any of that testimony when it was offered.

                                    Conclusion
      We reverse the circuit court’s judgment, and reinstate the AHC’s decision

granting Held a license subject to three years’ probation.

                                              ___________________________________
                                              Alok Ahuja, Judge
All concur.

                                         13