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Late answer to charges, due to her attorney’s death, not basis for disciplining appraiser

Credit: https://pixabay.com/en/clock-time-watch-hours-minutes-407101/

An Illinois appellate court, in a March 23 ruling, overturned a decision by the state's Department of Financial and Professional Regulation to revoke the license of a real estate appraiser after an administrative law judge held the appraiser in default for her failure to file a timely answer to disciplinary charges against her. The appraiser's original attorney had died and his partner had retired the last business day before that answer was due.

Credit: https://pixabay.com/en/clock-time-watch-hours-minutes-407101/

(Engle v. Department of Financial and Professional Regulation)

In 2015, shortly after Elizabeth Engle received a real estate appraiser license, the Illinois Real Estate Appraisal Administration and Disciplinary Board filed 127 counts of charges against her, alleging that her license application contained hundreds of false assertions regarding her work experience hours.

Unfortunately, Engle had procedural difficulties maintaining a defense to the charges. In July 2015, potentially due to confusion after an attorney handling her case passed away earlier in the month, she failed to make an appearance at a preliminary hearing. Then, when the remaining attorney in that firm retired a day before the deadline for Engle to file an answer to the charges, although a successor firm took on the case, no timely answer was filed due amid this lawyerly tumult.

This led the administrative law judge handling the case to rule Engle in default, passing the case along to the board for a final decision.

Although Engle’s new counsel, noting the extraordinary circumstances, requested leniency and asked for a vacation of the default order and a remand for a new hearing, the board declined to address those requests and recommended that Engle’s license be revoked. The Division of Real Estate of the Illinois Department of Financial and Professional Regulation revoked Engle’s license in March 2016, noting Engle’s requests for a rehearing and vacation but not stating whether the Department had considered those motions.

Engle appealed, and the case went up to the Court of Appeals. She made several arguments, including that the Department had violated her constitutional right to due process by denying her motions for a rehearing.

The court agreed. Noting that the default order issued against Engle for missing her original deadline was not the same as a final default judgment in the case as a whole, and that Engle’s attorney had made the requests before such a final judgment, Judge Bertina Lampkin wrote that the Department was required— but had failed—to address and make a decision on Engle’s requests.

In addition, Judge Lampkin noted that the Department, in violation of agency rules, failed to file a motion with either the Board or the administrative law judge to find that Engle’s failure to timely answer the charges constituted an admission of the allegations against her. Because the Department had the burden of proof in the case but had failed to make that motion, no legitimate finding regarding those allegations had thus been made and Engle could not be said to have admitted the allegations.

Last, although Engle had made technical errors in her motions for rehearing, Judge Lampkin noted that the Director of the Department’s Real Estate Division had the discretion to grant variances from those requirements and wrote that, “Given the severity of the recommended discipline of license revocation at issue in this case, Engle should have been allowed to cure any technical defect in her answer or motion to vacate with the appropriate verification or affidavit.”

“Engle filed a detailed and lengthy, albeit late, answer alleging facts showing a meritorious defense to the many allegations against her. However, no fact-finding hearing was held, and defendants issued a default judgment against her without fully complying with the agency’s rules about considering and adjudicating motions to vacate orders and, in situations involving default orders, obtaining a ruling finding a licensee’s failure to file a timely answer to be an admission of the truth of the allegations contained in the agency’s complaint,”

“The agency’s interest in protecting the public by ensuring that licensed appraisers are competent and honest is substantial,” Judge Lampkin wrote. ” But allowing Engle to present evidence and cross-examine witnesses at a hearing does not impose any additional procedures that would increase the agency’s administrative and fiscal burdens. This is not a matter where defendants had expended time and resources to prepare for and attend a scheduled hearing on the merits but the licensee failed to appear.”

On similar grounds, the court also found that the Department’s decision to deny Engle’s late request for a hearing was an abuse of discretion, considering the trying circumstances surrounding her defense. “Under Engle’s alleged facts showing good cause [for her late reply], it was unreasonable to conclude that she was actually or sufficiently represented by counsel during the chaotic period when cases were being transferred to the successor law firm that the failure to file an answer by the November 2 deadline was a matter well within her control.”

The court remanded Engle’s case to the Department for a hearing on the merits.