In re Consolidated Delaware Real Estate Commission Appeals. ( 2024 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
In re Consolidated Delaware Real Estate :
Commission Appeals. : Cons. C.A. No. K23A-09-001 JCC
Submitted: September 9, 2024
Decided: November 25, 2024
OPINION & ORDER
Upon Appeals from the Delaware Real Estate Commission – AFFIRMED.
Charles Slanina, Esquire and David L. Finger, Esquire, Finger & Slanina, LLC.,
Wilmington, DE, Attorneys for Appellants.
A. Zachary Naylor, Deputy Attorney General Department of Justice, Dover,
Delaware, Attorney for Appellee.
Clark, R. J.
Three licensees (the “Licensees”) pursue a consolidated appeal of Delaware
Real Estate Commission (“DREC” or the “Commission”) decisions assessing civil
penalties against them and publicly reprimanding them.1 The Licensees allegedly
failed to ensure that their subordinates, who were also licensed by DREC, completed
the continuing education requirements necessary to renew their licenses.
The Licensees raise several issues in support of their appeal, some of which
are novel. They fall into four principal categories, which include: (1) the
constitutionality of the portion of DREC’s enabling statute which gives DREC the
power to assess a civil penalty against the Licensees; (2) whether a DREC regulation
that holds supervisory brokers vicariously liable for a subordinate’s failure to meet
continuing education requirements exceeds DREC’s statutory authority; (3) whether
DREC unlawfully assessed a civil penalty in a default amount without considering
the Licensees’ individual circumstances; and (4) whether DREC had the authority
to impose a public, as opposed to only a private, reprimand.
For the reasons that follow, DREC constitutionally penalized the Licensees, acted
within the parameters of the State’s statutes, and did not abuse its discretion. As a
result, DREC’s decision must be affirmed.
I. FACTS AND PROCEDURAL HISTORY
As background, the Court will address relevant portions of 24 Del. C. Ch.
29 (hereinafter DREC’s “Enabling Statute”), the challenged regulations that DREC
promulgated under the Enabling Statute, and DREC’s processes applicable to the
Licensees’ appeal. The Court will then discuss the individual circumstances relevant
1
Pursuant to Superior Court Civil Rule 42(a), “[w]hen actions involving a common question of
law or fact are pending before the Court, it may . . . order all the actions consolidated[.]” As such,
this consolidated appeal retains the civil action number of the first filed appeal. K23A-09-001
JJC. All docket item (“D.I.”) citations infra refer to this civil action number unless otherwise
noted.
2
to the proceedings below because the Licensees’ appeal requires, in part, reviews
of the records from the two cases below for substantial evidence.
A. Relevant Statutory, Regulatory, and Procedural Background
The Delaware General Assembly prescribed DREC’s purpose, powers, and
duties in the Enabling Statute.2 There, it defined DREC’s primary objective as one
“to protect the general public, specifically those persons who are the direct recipients
of services regulated by this chapter, from unsafe practices and from occupational
practices which tend to reduce competition or fix the price of services rendered.”3
To meet those objectives, the General Assembly requires DREC to develop
standards to assure professional competence, to adjudicate formal hearings, to
promulgate rules and regulations, and to impose sanctions, when necessary, against
licensees who provide real estate services.4 More specifically, the General Assembly
requires DREC to:
(1) [f]ormulate rules and regulations, with appropriate notice to those
affected; all rules and regulations shall be promulgated in accordance
with the procedures specified in the Administrative Procedures Act,
Chapter 101 of Title 29. Each rule or regulation shall implement or
clarify a specific section of this chapter[;]
. . .
(3) [e]stablish the qualifications for licensure and evaluate the
credentials of all applicants for a license to practice real estate
services[;]
(4) [g]rant licenses to, and renew licenses of, all individuals who meet
the qualifications for licensure and renewal[;]
. . .
(6) [e]stablish by rule and regulation prelicensing and continuing
education standards required for licensure and license renewal[;]
2
See generally 24 Del. C. §§ 2900, 2906.
3
Id. § 2900(a). Germane to this appeal, DREC’s secondary objective is to “maintain minimum
standards of licensee competency” and certain standards in the delivery of services to the public.
Id. § 2900(c).
4
Id. § 2900(c).
3
(7) [p]erform random audits of continuing education credits submitted
by licensees for license renewal[;]
. . .
(10) [c]onduct hearings and issue orders in accordance with procedures
established pursuant to Chapter 101 of Title 29[; and]
(11) [d]esignate and impose the appropriate sanction or penalty where
it has been determined after a hearing that penalties or sanctions should
be imposed.5
DREC regulates licensees and non-licensees by tiers as required by the
Enabling Statute. The licensing tiers include the categories of real estate brokers,
associate brokers, salespersons, and non-licensees who perform real estate services
without authority to do so.6 A “broker” is responsible for maintaining the office and
escrow account for the brokerage organization.7 Both “associate brokers”8 and
“salespersons”9 must be licensed under a broker and work within a broker’s office
and brokerage organization.10
Central to this appeal, the Enabling Statute defines a real estate broker as
follows:
any individual who holds a broker license from the Commission and
who for a compensation or valuable consideration, is self-employed or
is employed directly or indirectly by a brokerage organization to sell or
5
See generally id. § 2906(a)(1)–(13).
6
Id. § 2900(c).
7
24 Del. C. §§ 2902(a)(2), 2923(a).
8
An associate broker is defined as,
any individual who holds an associate broker license from the Commission and
who is licensed under a broker to sell or offer to sell, or to buy or to offer to buy,
or to negotiate the purchase, sale, or exchange of real estate, or to lease or rent or
offer for rent any real estate, or to negotiate leases or rental agreements thereof or
of the improvements thereon for others. Id. § 2902(a)(1).
9
A salesperson is defined as,
any individual who holds a salesperson license from the Commission and who is
licensed under a broker to sell or offer to sell, or to buy or to offer to buy, or to
negotiate the purchase, sale, auction or exchange of real estate, or to lease or rent
or offer for rent any real estate, or to negotiate leases or rental agreements thereof
or of the improvements thereon for others. Id. § 2902(a)(23).
10
Id. § 2902(2)–(3).
4
offer to sell, or to buy or offer to buy, or to negotiate the purchase, sale,
or exchange of real estate, or to lease or rent or offer for rent any real
estate, or to negotiate leases or rental agreements thereof or of the
improvements thereon for others. The broker is responsible for
providing real estate services and is primarily responsible for the day
to day management and supervision of a brokerage organization as it
relates to this chapter.11
Also central to this appeal is DREC’s Regulation 1.3.1 which provides:
[i]t is the responsibility of the employing Broker to ensure that the
Broker’s Licensees comply with the Commission's Rules and
Regulations. Every Broker is responsible for making certain that all of
the Broker’s Salespersons and Associate Brokers are currently
licensed, make timely application for license renewal, and meet the
Commission's continuing education requirements. The Broker shall co-
sign continuing education logs and shall maintain copies of continuing
education certificates for the Broker’s Salespersons and Associate
Brokers for at least three years after the conclusion of each renewal
period.12
DREC Regulation 12.0 requires licensees to renew their licenses every two
years.13 When applying for renewal, licensees must complete continuing education
(“CE”) modules in seven subject areas for a total of twenty-one hours within a two-
year span.14 The Commission prorates the requirements for those who were licensed
less than two years during a renewal period.15 Furthermore, if a licensee faces a
hardship during the renewal period, he or she can seek a waiver or postponement.16
11
Id. § 2902(a)(2) (emphasis added).
12
24 Del. Admin. C. § 2900–1.3.1 (emphasis added) [hereafter “DREC Regulation 1.3.1”]. To
remain consistent with DREC’s usage, the Court adopts the term “DREC Regulation __” to refer
in the body of the Opinion to the corresponding section of the Delaware Administrative Code.
13
24 Del. Admin. C. § 2900–12.0; 24 Del. C. § 2910.
14
24 Del. C. § 2910(d); 24 Del. Admin. C. § 2900–14.0.
15
24 Del. Admin. C. § 2900–14.0.
16
Id. § 14.8.
5
When a licensee applies for renewal, he or she must “attest to completion of
the required CE” during the two-year renewal period.17 DREC regulations further
provide that the attestation of the subordinate licensee does not relieve a supervisory
broker of the responsibility to ensure that the subordinate completed the CE
requirements.18
In the briefing, DREC represents that it has over 7,000 licensees.19 Any
licensee who applies late for a renewal is subject to a CE audit.20 Apart from that,
DREC randomly selects licensees to audit for CE compliance as authorized by the
Enabling Statute. Those audited must supplementally verify their attendance for the
required number of CE hours.21
A licensee who is included in the audit who demonstrates compliance faces
no administrative action.22 If the licensee fails to demonstrate CE compliance,
however, a Division of Professional Regulation hearing officer holds an
Administrative Procedures Act (the “APA”) compliant hearing to determine if the
failure was justified.23 The hearing officer considers mitigating factors and
extenuating circumstances during that hearing.24 To that end, DREC considers only
unjustified noncompliance to be violative of 24 Del. C. § 2912(a)(9).25 An offending
licensee is then subject to disciplinary sanctions by DREC.26
17
Id. § 14.4.
18
Id. § 14.5.
19
Answering Br. at 7 (D.I. 15).
20
Id. (citing 24 Del. Admin. C. § 2900–14.6.8).
21
Id.
22
Id. (citing 24 Del. Admin. C. § 2900–14.6.6).
23
Id.; see also 24 Del. C. § 2913(a)–(b); 24 Del. Admin. C. § 2900–14.6.6.
24
24 Del. Admin. C. § 2900–14.6.6.
25
In full, it provides that, “[a] licensee shall be subject to disciplinary sanctions set forth in § 2914
of this title if after a hearing, the Commission finds that the licensee: . . . (9) Has violated a
provision of this chapter, any of the rules and regulations established thereunder, or any order of
the Commission[.]” 24 Del. C. § 2912(a)(9).
26
24 Del. C. § 2914; Pursuant to one of the challenged regulations adopted by DREC, a first
offense results in a minimum fine of $250, in combination with any other sanctions available. A
6
After the hearing, an aggrieved licensee can submit exceptions, comments,
and arguments to the Commission to contest the hearing officer’s conclusions of law
and recommended penalties.27 While DREC is bound by the hearing officer’s
findings of fact, it may affirm or modify the hearing officer’s conclusions of law and
recommended penalty.28 The Commission deliberates, takes a vote, and then issues
its final decision.
If the Commission finds that a licensee violated 24 Del. C. § 2912(a),29 the
Enabling Statute permits it to impose any of the following disciplinary sanctions,
whether singularly or in combination:
(1) [i]ssue a letter of reprimand;
(2) [p]lace the licensee on probationary status and require the licensee
to:
a. [r]eport regularly to the Commission upon the matters which
are the basis for the probation; and/or
b. [l]imit real estate services activities to those areas prescribed
by the Commission.
(3) [i]mpose a monetary penalty not to exceed $5,000 for each
violation;
(4) [s]uspend any licensee’s license[;or]
(5) [r]evoke or permanently revoke any licensee’s license.30
An aggrieved licensee then has the right of appeal to the Superior Court.31
B. The Facts of Record and Decisions Below
The Licensees raised common issues of law and fact in their appeals. The
parties then stipulated to consolidation. Most issues involve the constitutionality of
second offense on unjustified noncompliance results in a $1,000 minimum fine. 24 Del. Admin.
C. § 2900–14.6.7
27
29 Del. C. § 8735(v)(1)(d).
28
Id.
29
24 Del. C. § 2912(a) (providing that “[a] licensee shall be subject to [the] disciplinary actions
set forth in § 2914 . . . if after a hearing, the Commission finds that the licensee” has engaged in
any of the enumerated grounds for discipline within this section).
30
24 Del. C. § 2914(a)(1)–(5).
31
24 Del. C. § 2913(b).
7
a portion of the Enabling Statute and the lawfulness of DREC regulations and
processes under the Enabling Statute. Those matters require no fact specific inquiry.
One of the Licensees’ contentions, however—that DREC did not consider the
individual facts and circumstances of their cases when deciding the appropriate
penalty amounts—requires the Court to consider the individual facts of record in
each case so it can perform substantial evidence reviews.
1. John D’Ambrosia32
John D’Ambrosia is a Delaware licensed real estate broker.33 He is also the
broker responsible for Ho Jun Mun, a Delaware licensed real estate salesperson.34
DREC randomly selected Mr. Mun for an audit to examine his CE compliance from
May 1, 2020, through April 30, 2022 (the “renewal period”).35 The audit revealed
that Mr. Mun failed to complete CE requirements during the renewal period and, as
a result, potentially violated DREC Regulations 1.3.1 and 1.3.2 (hereinafter
collectively the “Regulations”).36
A hearing regarding the allegations followed.37 There, in a combined hearing
with Mr. Mun, Mr. D’Ambrosia was required to show cause why he should not be
disciplined by DREC for Mr. Mun’s failure to satisfy his CE requirements. 38 Both
acknowledged that they violated the Regulations at the hearing.39 In mitigation, Mr.
32
The facts contained herein are taken from the Certified Record of the underlying DREC
proceeding involving Mr. D’Ambrosia, Civil Action Number K23A-09-001 JJC. [hereinafter
referred to as “D’Ambrosia Certified Record, Tab __, at __.”].
33
D’Ambrosia Certified Record, Tab 1, at 1.
34
Id.
35
Id.
36
Id. at 2. DREC Regulation 1.3.2 provides for potential disciplinary sanctions when a broker
fails to ensure his or her subordinate meets CE requirements. Specifically, it provides that a
“[b]roker’s failure to satisfy the requirements set forth in subsection 1.3.1 may result in
disciplinary action and possible disciplinary sanctions pursuant to 24 Del. C. §2914.” Id.
37
D.I. 15, Ex. 3.
38
Id. at 3:24–4:8.
39
Id. at 27:10–13.
8
D’Ambrosia testified that, “we thought it was 12 hours. And we expected to be told
everything is fine. And then, we were told we picked the wrong date. And it should
have been 6 more hours. So, it is a mistake. I can’t change that.”40
After the hearing, the hearing officer found the following by a preponderance
of the evidence: Mr. Mun was an active salesperson licensee of DREC; DREC
randomly selected him for an audit; Mr. Mun was deficient by three CE hours during
the renewal period; but, Mr. Mun had completed the required hours after the renewal
period by March 2023.41 The hearing officer then recommended that the
Commission fine Mr. D’Ambrosia five hundred dollars and report the discipline
publicly on the Commission’s online data base.42
On July 13, 2023, DREC considered the hearing officer’s recommendations.43
Mr. D’Ambrosia declined to file written exceptions to his recommendations. The
Commission then provided a written decision accepting the hearing officer’s
recommendations in their entirety.44
2. Kyree Stein & Catherine York45
The second matter in this consolidated appeal involves DREC’s actions taken
after a hearing examining similar allegations against Kyree Stein and Catherine
York. Ms. York is a Delaware licensed real estate broker; she is also the broker
responsible for Kyree Stein, a Delaware licensed real estate associate broker.46 In
April 2023, DREC held a joint hearing to examine their CE compliance.
The hearing record demonstrates that DREC had randomly selected Ms. Stein
40
Id. at 27:17–20.
41
D’Ambrosia Certified Record, Tab 3, at 4.
42
Id. at 15.
43
D’Ambrosia Certified Record, Tab 2.
44
D’Ambrosia Certified Record, Tab 1, at 3.
45
The facts contained herein are taken from the Certified Record of the underlying DREC
proceeding involving Ms. Stein and Ms. York, Civil Action Number K23A-09-002 NEP.
[hereinafter referred to as “Stein & York Certified Record, Tab __, at __.”].
46
Stein & York Certified Record, Tab 1, at 1.
9
for an audit.47 The audit examined the renewal period, while noting that she had
been licensed in Delaware for less than two years during that period.48 Again,
Regulation 1.3.1 required Ms. York to ensure that Ms. Stein complied with CE
requirements during the renewal period because Ms. York was Ms. Stein’s
responsible broker.49 The audit revealed that Ms. Stein did not complete the required
CE hours.50
The matter then proceeded to a hearing.51 There, Ms. Stein testified that she
had mistakenly believed she needed to complete twelve CE hours only.52 On that
point, she testified as follows: “I’m currently licensed in 9 States [sic]. So, the
[c]ontinuing [e]ducation courses can get a little mixed up. But it was just an
oversight on my part.”53
For Ms. York’s part, she also admitted to violating the Regulations. She
testified as follows:
Just to kind of explain our understanding of what the CE requirements
were … [w]e understood it to be 12 hours. And that’s how we read it
on the website for Ms. Stein.
. . .
[U]pon reviewing that Audit Notice, it was brought to our attention that
one course was not completed. We understood that we did not read that
correctly.
. . .
[w]e acknowledge that we did not meet the requirements and
incorrectly read the requirements.54
The hearing officer followed with written findings. As to Ms. Stein, he found
47
Stein & York Certified Record, Tab 5, at 10:16–11:1.
48
Id. at 10:11.
49
24 Del. Admin. C. § 2900–1.3.1.
50
Stein & York Certified Record, Tab 1, at 1.
51
Stein & York Certified Record, Tab 5.
52
Stein & York Certified Record, Tab 1, at 1.
53
Stein & York Certified Record, Tab 5, at 20:7–10.
54
Id. at 21:5–22:11.
10
her to be a licensed real estate salesperson during the renewal period.55 Furthermore,
he found that Ms. Stein completed eighteen out of twenty-one CE requirements and
failed to complete a training module during the renewal period.56 The hearing officer
also found Ms. York to be Ms. Stein’s responsible broker during the renewal
period.57 He further found Ms. York accountable under the Regulations for failing
to ensure that Ms. Stein fulfilled her CE requirements.58
The hearing officer then recommended that DREC sanction Ms. Stein and Ms.
York as follows:
• a letter of reprimand to both: as to Ms. Stein, for falsely attesting at
her license renewal that she had completed the CE requirements. As
to Ms. York, because she was responsible for Ms. Stein’s failure to
comply;
• for Ms. Stein, that her now-completed CE hours and modules be
retroactively credited to her account and that she be audited for the
next license renewal period;
• for both, a $500 fine payable within 90 days; and
• for both, in the event of non-compliance with DREC’s ensuing
order, then suspension of license without further notice.59
Ms. Stein and Ms. York filed objections with DREC arguing that their spotless
disciplinary records justified lower sanctions.60 There, Ms. York urged the
Commission to consider a reduced sanction because of the innocent nature of the
mistake and that the penalty imposed was disproportionately harsh.61 Both objected
to the Hearing Officer’s characterization of Ms. Stein’s attestations as “false.”62
Finally, both contended that their states of mind mitigated their conduct, that the
55
Stein & York Certified Record, Tab 1, at 1–2.
56
Id. at 1.
57
Id.
58
Id. at 1–2.
59
Id. at 2.
60
Id.
61
Id. at 2–3.
62
Id. at 2.
11
transgression involved only a small number of CE hours, and that they quickly
remediated the matter.63
DREC considered the hearing officer’s conclusions of law and
recommendations, and Ms. Stein and Ms. York’s objections.64 DREC accepted them
and also recognized Ms. York’s contrition and that she had instituted new procedures
to prevent further occurrences.65 As to the penalty assessment, DREC noted that
“[a]ll of these factors have been considered in forming the recommended
discipline.”66 Nevertheless, the Commission found that “its policy of maintaining
consistency in its monetary penalties and issuance of letters of reprimand for
violation of the [DREC]’s CE requirements outweighs any factors presented in this
case that otherwise might favor reduction of the recommended sanctions and
penalties.”67
C. The Licensees’ Superior Court Appeal
The Superior Court has jurisdiction to hear appeals from DREC pursuant to
24 Del. C. § 2913(b).68 Mr. D’Ambrosia appealed DREC’s adverse decision.69 On
the same day, Ms. Stein and Ms. York filed their joint appeal.70 At the request of
the parties, the Court approved a stipulated order consolidating the two appeals as
In re: Consolidated Delaware Real Estate Commission Appeals and set a briefing
schedule.71 Oral argument followed, and the parties provided written supplements
63
Id.
64
Id. at 3.
65
See generally id. at 1–5.
66
Id. at 10.
67
Id. at 3.
68
See 24 Del. C. § 2913(b) (providing that, “[w]here the licensee is in disagreement with the action
of the Commission, the licensee may appeal the Commission's decision to the Superior Court[.]”).
69
Notice of Appeal (D.I. 1, Sep. 14, 2023).
70
Notice of Appeal (D.I. 1, Sep. 14, 2023) in civil action number K23A-09-002 NEP (Stein &
York).
71
Consolidation Order (D.I. 8).
12
regarding issues raised during the argument.
Collectively, the Licensees contend that: (1) 24 Del. C. § 2914(a)(3) is
unconstitutional because it violates the doctrine of separation of powers by
improperly delegating to DREC the power to impose monetary penalties without
providing guidance regarding how to exercise that discretion; (2) the Regulations
exceed DREC’s statutory authority when imposing strict liability on supervisory
brokers; (3) the Commission’s practice of imposing standard civil penalties of $500
for like offenses is an abuse of discretion; and (4) DREC exceeded its statutory
authority when publicly reprimanding the Licensees.
DREC argues the opposite. It contends that the General Assembly
constitutionally delegated the challenged authority to DREC, that DREC is acting in
furtherance of express authorization supplied by the General Assembly, that it did
not abuse its discretion when fining the Licensees $500 each, and that the
Commission possessed statutory authority to issue a public reprimand.
II. STANDARDS
The scope of review in an administrative appeal to the Superior Court is
generally limited to whether the agency’s ruling is supported by substantial evidence
and free from legal error.72 Substantial evidence is the degree of evidence which “a
reasonable mind might accept as adequate to support a conclusion.”73 The Court
does not reweigh the evidence, reassess credibility, or make its own factual findings
or conclusions.74 Rather, the Court must “search the entire record to determine
whether, on the basis of all the testimony and exhibits before the agency, it could
fairly and reasonably reach the conclusion that it did.”75
72
Prunckun v. Del. Dep’t of Health and Soc. Servs., 201 A.3d 525, 540 (Del. 2019) (quoting Stoltz
Mgmt. Co. v. Consumer Affairs Bd., 616 A.2d 1205, 1208 (Del. 1992)).
73
Id. (citing Lehto v. Bd. of Educ., 962 A.2d 222, 225–26 (Del. 2008)).
74
Christiana Care Health Servs. v. Davis, 127 A.3d 391, 394 (Del. 1988).
75
Nat’l Cash Register v. Riner, 424 A.2d 669, 674–75 (Del. Super. 1980).
13
The Licensees constitutional and statutory challenges raise questions of law,
however. The Court considers questions of law—which require reviews for legal
error—de novo.76
III. ANALYSIS
As explained below, the Enabling Statute constitutionally delegates authority
to DREC to impose a civil penalty. Furthermore, the Enabling Statute provided the
Commission the power to lawfully promulgate the Regulations. The Commission
also did not abuse its discretion in this case when it placed emphasis on the
consistency of penalties imposed against these Licensees and others. Finally, DREC
acted within its statutory authority when issuing a public, as opposed to a private,
reprimand.
A. The provision in the Enabling Statute that grants DREC the authority
to impose a monetary penalty for CE violations does not violate the
separation of powers doctrine.
The concept of separation of powers is as fundamental an underpinning of
Delaware Constitutional law as in Federal Constitutional law, even though the
Delaware Constitution has no express provision that provides for it.77 Delaware
courts have nevertheless long acknowledged the appropriateness of the General
Assembly’s delegation of regulatory authority to administrative agencies.78 As our
Supreme Court has recognized, “a strict adherence and complete separation of
governmental departments is neither desirable nor intended [and] a certain degree of
pragmatic flexibility in the application of the Doctrine is essential [to permit] newly
76
Prunckun, 201 A.3d at 540 (citing Del. Dep’t of Nat. Res. & Env’t. Control v. Sussex Cnty., 34
A.3d 1087, 1090 (Del. 2011)).
77
Opinion of the Justices, 380 A.2d 109, 113 (Del. 1977); Joseph v. C.C. Oliphant Roofing Co.,
711 A.2d 805, 808 (Del. Super. 1997) (quoting Evans v. State, 872 A.2d 539, 547 (Del. 2005)).
78
State v. Durham, 191 A.2d 646, 649 (Del. Super. 1963) (citing Hoff v. State, 197 A. 75 (Del.
Super. 1938)).
14
perceived needs and practical exigencies.”79
Accordingly, there is a tension between impermissible delegation and the
need to defer to the expertise of administrative agencies in modern society. The
Delaware Supreme Court accounted for that tension in the following standard it set
for unlawful delegations claims under Delaware’s Constitution:
[a] statute or ordinance vesting discretion in administrative officials
without fixing any adequate standards for their guidance is an
unconstitutional delegation of legislative power. But a qualification to
that rule is that where the discretion to be exercised relates to
police regulation for the protection of public morals, health, safety, or
general welfare, and it is impracticable to fix standards without
destroying the flexibility necessary to enable the administrative
officials to carry out the legislative will, the legislation delegating such
discretion without such restrictions may be valid. Adequate safeguards
and standards to guide discretion must be found in or be inferable from
the statute, but the standards need not be minutely detailed, and the
whole [statute] may be looked into in light of its surroundings and
objectives for purposes of deciding whether there are standards and if
they are sufficient.80
Paragraph 2914(a)(3) of Title 24 of the Delaware Code (hereafter “Paragraph
2914(a)(3)”) authorizes the Commission to impose a monetary penalty not to exceed
$5,000 for violations of any DREC rule or regulation authorized by the Enabling
Statute.81 The Licensees contend that this portion of the Enabling Statute is facially
“unconstitutional on the ground that the [General Assembly] violated the Separation
of Powers doctrine by failing to provide any criteria for DREC to use in imposing
penalties.”82 They further argue that Paragraph 2914(a)(3) provides DREC with
79
Opinion of the Justices, 380 A.2d at 114.
80
Atlantis I Condo. Ass'n v. Bryson, 403 A.2d 711, 712–13 (Del. 1979) (quoting Durham, 191
A.2d at 649–50); accord State v. Braun, 378 A.2d 640 (Del. Super. 1977).
81
24 Del. C. § 2914(a)(3); see also 24 Del. C. § 2912(a)(9) (providing that a licensee is subject to
disciplinary sanctions set forth in § 2914 if he or she violates “a provision of [the Enabling Statute],
any of the rules and regulations established thereunder, or any order of the Commission.”).
82
Opening Br. at 6 (D.I. 13). Tellingly, the Licensees cite no Delaware case law to support their
15
“unfettered and unguided discretion to affix monetary penalties” for anything below
$5,000. 83 In other words, they assert that it is unconstitutional because the Enabling
Statute does not contain granular factors restricting DREC’s discretion. The
Licensees contend that there should have been parameters to require the Commission
to consider circumstances such as: (i) the willfulness of the violation; (ii) the gravity
of the violation; (iii) past violations; (iv) the amount of violations; (v) whether the
violator obtained an economic benefit; and (vi) other factors that justice may
require.84
Conversely, DREC contends that it “followed the legislative policy directions
of the General Assembly to create rules for continuing education enforcement by
creating a framework in its regulations to make the possible consequences of
noncompliance clear for those affected by the rules.”85 DREC emphasizes APA
strictures imposed upon it when promulgating regulations. The Commission also
arguments. The Licensees do, however, cite several out-of-state cases that, on balance, do not tip
the scale in their favor given Delaware Supreme Court benchmarks regarding delegation. See e.g.
Cnty. Council for Montgomery Cnty. v. Invs. Funding Corp., 312 A.2d 225, 246 (Md. 1973)
(holding that a state commission’s discretion to fix civil penalties in any amount up to $1,000 was
unconstitutional because of a complete lack of any legislative safeguards or standards, but
nevertheless recognizing that “the authority to impose a civil monetary penalty is not a power
beyond constitutional delegation to an administrative agency”); Miller v. Pollution Control Bd.,
642 N.E.2d 475, 482 (Ill. App. Ct. 1994) (rejecting an appellant’s argument that an administrative
citation procedure violated the separation of powers principle because the state board in question
only imposed an established fine and had no discretion in determining the amount of the penalty
to be assessed); U.S. Steel Corp. v. State, 397 P.2d 440, 442 (Wash. 1964) (holding that a statute
granting a tax commission exclusive and unrestricted discretion to determine the amount of
interest, not to exceed six per cent per annum, as a penalty for delinquent taxes was “an
unconstitutional delegation of legislative authority in the absence of a declared legislative purpose
and of accompanying [standards] . . . whereby exercise of discretion might be measured”); Matter
of Civ. Penalty, 379 S.E.2d 30, 34–37 (N.C. 1989) (holding, inter alia, the North Carolina
legislature was not prohibited “from conferring on administrative agencies the power to exercise
discretion in determining civil penalties within an authorized range, provided that adequate guiding
standards accompany that discretion”).
83
Id. at 10.
84
Id. at 11.
85
D.I. 15, at 13.
16
stresses APA procedural requirements imposed on the case decision process which
provide further safeguards. Finally, the Commission points to its regulations that
recognize the potential for justified violations and set parameters regarding penalties
as additional safeguards.
There are two general principles that guide the Court’s analysis when deciding
whether Paragraph 2914(a)(3) unconstitutionally delegates authority to the
Commission. First, at the highest level, when evaluating the constitutionality of any
statutory provision, any reasonable doubt regarding the constitutionality of an act
should be resolved in favor of finding the legislation constitutional.86 In other words,
if there is a possible constitutional construction of the law, then the law facially
passes constitutional muster.87 Second, when narrowing the focus to the more
specific—the question of the General Assembly’s ability to delegate functions to
administrative agencies—the General Assembly is free to “establish basic policy and
vest in others the power to administer the declared legislative policy.”88 As the
Delaware Supreme Court explained,
[t]he authority granted to an administrative agency should be construed
so as to permit the fullest accomplishment of the legislative intent or
policy. An expressed legislative grant of power or authority to an
administrative agency includes the grant of power to do all that is
reasonably necessary to execute that power or authority.89
With those principles in mind, the focus narrows further to examining
DREC’s Enabling Statute. At the outset, the Enabling Statute defines DREC’s
primary objective as being one “to protect the general public, specifically those
persons who are the direct recipients of services regulated by this chapter, from
86
Atlantis I, 403 A.2d at 714.
87
Id.
88
Schweizer v. Bd. of Adjustment of City of Newark, 980 A.2d 379, 384 (Del. 2009).
89
Atlantis I, 403 A.2d at 713 (citing Kreshtool v. Delmarva Power and Light Co., 310 A.2d 649(Del. 1973)).
17
unsafe practices and from occupational practices.”90 Furthermore, the Statute
requires DREC to “develop standards assuring professional competence; . . .
adjudicate at formal hearings; . . . promulgate rules and regulations; [and] impose
sanctions where necessary against licensees and non licensees engaged in the
practice of providing real estate services.”91 The General Assembly expressly tasks
DREC in the Enabling Statute with establishing the qualifications for licensure,92
and adopting rules and regulations that control licensure and license renewal.93
Using these benchmarks to garner legislative intent, the Court must construe
Paragraph 2914(a)(3) in a manner that provides the Commission the authority to do
what is reasonably necessary to accomplish the General Assembly’s intent—i.e.,
protecting the public by requiring competent real estate services for the citizens of
Delaware, which includes setting standards for professional competency.
The Delaware Supreme Court decision in State v. Durham94 is instructive.
There, the defendant used the title of registered engineer without being licensed or
registered pursuant to 24 Del. C. Ch. 28.95 The defendant contended, inter alia, that
the General Assembly violated separation of powers principles by delegating
legislative power to the Council of the Delaware Association of Professional
Engineers, an administrative body.96 The Supreme Court disagreed. It found the
delegation appropriate because it was necessary to protect the health, safety, and
90
24 Del. C. § 2900(a). The DREC’s secondary objective is to “maintain minimum standards of
licensee competency” and certain standards in delivery of services to the public. Id. § 2900(c).
91
Id. § 2900(c).
92
24 Del. C. §2906(a)(3).
93
Id. § 2906 (a)(6).
94
191 A.2d 646 (Del. 1963).
95
Id. at 648. At the time of the Durham decision, professional engineers were regulated under
Chapter 27 of Title 24.
96
Id. at 649. The appellant in Durham also challenged the statute at issue on the grounds of
vagueness. Id. The Court denied the appeal on that basis as well for similar reasons as those used
to address the appellant’s unconstitutional delegation argument. Id.18
welfare of the State’s citizens. The Court further explained that the delegation was
appropriate because it required the Council to determine whether individuals were
fit to practice in that licensed profession.97 Tellingly, the Supreme Court found
licensing authority to fall “within the police power of the State to establish
reasonable standards to be complied with as a prerequisite to engaging in such
pursuits.”98 The Supreme Court’s recognition that licensing regulation should be
considered an aspect of the State’s police power becomes important in the Court’s
analysis that follows.
The principal authority in Delaware that sets the standards for evaluating
whether the General Assembly unconstitutionally delegated too much discretion to
an agency is Atlantis I Condominium Association v. Bryson.99 There, the Supreme
Court examined whether the Beach Preservation Act of 1972 (the “Act”) permissibly
delegated authority to the Department of Natural Resources and Environmental
Control (“DNREC”) to deny a permit to build on three beachfront lots.100 That Act
provided DNREC only general authority: namely, the authority to adopt regulations
governing residential construction on private beach property.101 The Act did not
address permitting.
The Atlantis I decision, which followed Durham, is important because, in it,
the Supreme Court articulated the standard necessary to delineate between where
regulated conduct and consequences must be defined by statute and when an agency
can lawfully address matters through regulation.102 In Atlantis I, the Court
highlighted the deferential nature of the test as follows:
[a]dequate safeguards and standards to guide discretion must be found
97
Id. at 650.
98
Id. at 648 (emphasis added).
99
403 A.2d 711 (Del. 1979).
100
Id.; see generally 7 Del. C. Ch. 68.
101
7 Del. C. §§ 6801, 6803.
102
Atlantis I, 403 A.2d at 712.
19
in or be inferable from the statute, but the standards need not be
minutely detailed, and the whole ordinance may be looked into in light
of its surroundings and objectives for deciding whether there are
standards and if they are sufficient.103
The Supreme Court then examined the provisions in the Act that explained
the General Assembly’s intent and applied an expansive view of DNREC’s powers.
When doing so, the Court recognized DNREC’s authority to issue permits (and deny
them) even though the Act did not address permitting.104 The Court found the
delegation lawful because the Act provided DNREC such broad authority over the
subject matter.105 In that way, the Court relied upon statements of legislative intent
that deferred to DNREC’s expertise as a substitute for specific guidelines.106
Similarly, the Enabling Statute provides DREC broad authority to regulate
realtor licensing issues. Significant deference is due the General Assembly’s
findings that DREC’s expertise in licensing is an essential tool necessary to meet
legislative goals.
The Licensees focus too narrowly on what granular safeguards they contend
are necessary to curtail unfettered discretion. Namely, the Atlantis I decision looked
to the totality of protections offered property owners when deciding whether the
safeguards were adequate.107 Delegation questions do not turn solely on whether
there are minute statutory restrictions that constrain agency discretion within the
Enabling Statute itself. Furthermore, as in Durham which addresses engineer
licensing, DREC’s licensing authority over the real estate profession falls within the
police power of the State. Expanded deference is due the General Assembly’s
delegation to this case because it represents an exercise of the police power. To that
103
Id. at 713 (quoting Durham, 191 A.2d at 649–50) (emphasis added).
104
Id. at 717.
105
Id. at 715.
106
Id.
107
Id. at 713.
20
end, the deference due the Enabling Statute, from a police power’s perspective,
recognizes that “the presence of procedural safeguards may compensate
substantially for the lack of precise statutory standards.”108
The provisions of Delaware’s Administrative Procedures Act rank high
among relevant procedural safeguards. In fact, the Enabling Statute expressly
incorporates those procedures. Namely, Paragraph 2906(a)(1) of the Enabling
Statute provides that “all rules and regulations shall be promulgated in accordance
with the procedures specified in the [APA].”109 Here, the Commission complied
with the APA when it adopted the Regulations after publishing notice and providing
the opportunity for public comment.110 In this case, after two public hearings, no
interested party objected to or criticized the strengthening of DREC Regulation 1.3
or the adoption of Regulation 14.6.7.111
Turning from the protections afforded licensees during the rule making
process, Subsection 2900(c) of the Enabling Statute provides DREC the authority
to “adjudicate at formal hearings.”112 The APA defines what process is due during
case decision proceedings by including mechanisms to ensure an aggrieved
licensee’s right to notice and opportunity to be heard.113 DREC regulations further
provide for a hearing “to determine if there are any extenuating circumstances
justifying noncompliance with the [CE] requirements.”114 Accordingly, the hearing
108
Id. (citing State v. Boynton, 379 A.2d 994 (Me. 1977)) (emphasis added).
109
24 Del. C. § 2906(a)(1).
110
D.I. 15, at 16; see generally 29 Del. C. §§ 10111–118.
111
D.I. 15, at 17.
112
24 Del. C. § 2900(c).
113
See 24 Del. C. § 2906(a)(1) (providing that hearings be conducted as required by the APA);
see also 29 Del. C. §10161(a)(4) (including the Real Estate Commission in the list of agencies
falling, inter alia, under the case decision provisions of the APA); 29 Del. C. Ch. 101, Subchapter
III (providing the full range of rights afforded to an aggrieved party during the agency case decision
process under the APA).
114
24 Del. Admin. C. § 2900–14.6.6 (“The hearing will be conducted to determine if there are any
extenuating circumstances justifying noncompliance with the [CE] requirements. Unjustified
21
officer and the Commission must hold an APA-compliant hearing to consider the
individual circumstances of each individual case.
DREC regulations then provide further notice and protections that include the
requirement that the Commission consider extenuating circumstances before issuing
a penalty. Such extenuating circumstances include “evidence to the satisfaction of
the [DREC] of an illness, injury, financial hardship, family hardship, or other similar
extenuating circumstances.”115 Moreover, DREC permits both the waiver or
postponement of CE requirements—the licensee need only submit a written request
to trigger that review.116 Furthermore, the audit that starts the process is random; it
is not targeted or calculated.117 Aggrieved parties also have the right to challenge
the hearing officer’s recommendations before the Commission.118 DREC then may
issue the final decision only upon an affirmative vote.119 Finally, if licensees remain
unsatisfied with DREC’s decision, they have a further appeal to this Court.
For the reasons above, DREC’s processes do not violate separation of powers
principles because (1) the General Assembly defined DREC’s licensing role so
broadly; (2) the APA separately provides sufficient procedural safeguards; and (3)
DREC’s promulgated regulations bolster those protections. On balance, Paragraph
2914(a)(3) does not leave unguided, uncontrolled, and unbridled discretion with
DREC. The provision is constitutional on its face. Furthermore, the $500 civil
penalties assessed against the Licensees, at the lower end of the statutory civil
penalty range of “up to $5,000,” do not violate separation of powers principles as
noncompliance with the [CE] requirements . . . shall constitute a violation of 24 Del. C. §
2912(a)(9).”).
115
Id. § 14.8.
116
Id.
117
Of note, however, if there has been a proven, unjustified noncompliance in one renewal period,
then the licensee is subject to an audit for the next renewal period. In that case, it would be targeted.
118
See 24 Del. C. § 2913(a) (providing that the APA applies).
119
24 Del. C. § 2904(c) (providing that, “no licensee shall be disciplined without the affirmative
vote of at least 5 members.”).
22
applied.
B. The Regulations, which impose vicarious liability on brokers for the
CE violations of their subordinates, do not exceed the Commission’s
statutory authority.
The Licensees contend that Regulation 1.3.1120 “neither protects the public
from improper occupational practices nor maintains standards of licensee
competency or otherwise maintain standards for brokers.”121 They submit that
pursuant to DREC Regulations 12.3.2122 and 14.3.3,123 “those goals are satisfied by
requiring licensees to satisfy CE requirements and attesting to same.”124 Simply put,
the Licensees suggest that vicariously subjecting brokers to liability for the failures
of their subordinates does not advance those goals.125
120
Once again, Regulation 1.3.1 imposes strict liability on supervising brokers for the failures of
their subordinates to meet CE requirements as follows:
[i]t is the responsibility of the employing Broker to ensure that the Broker’s
Licensees comply with the Commission's Rules and Regulations. Every Broker is
responsible for making certain that all of the Broker’s Salespersons and Associate
Brokers are currently licensed, make timely application for license renewal, and
meet the Commission's continuing education requirements. The Broker shall co-
sign continuing education logs and shall maintain copies of continuing education
certificates for the Broker’s Salespersons and Associate Brokers for at least three
years after the conclusion of each renewal period.
121
D.I. 13, at 13.
122
Regulation 12.3.2 provides:
A licensee shall satisfy the continuing education requirements, set forth in Section 14.0,
within the two year renewal period, which ends on April 30 of even numbered years.
123
Regulation 14.3.3 provides:
For more than twenty-four months after course completion, twenty-one (21) hours of CE
are required for each biennial renewal period, in compliance with the requirements of
subsection 14.1.2.
124
D.I. 13, at 13. Here, the Licensees concede, however, that the General Assembly has provided
DREC the primary objective of protecting “the general public, specifically those persons who are
the direct recipients of services regulated by this chapter, from unsafe practices and from
occupational practices which tend to reduce competition or fix the price of services rendered.” Id.
(citing 24 Del. C. § 2900(a)).
125
Id. Further, Licensees argue that, because no other State administrative licensing agency has a
similar requirement, DREC Regulation 1.3.1 is beyond the statutory authority provided to DREC
by the General Assembly. Licensees cite no Delaware caselaw on this issue, however.
23
It is true that an “administrative agency has no right to incorporate substantive
matters or drastic remedies into its regulations which are not implied, necessary or
incidental to the powers granted to it by the statute under which it operates.”126
Moreover, a regulation must be consistent with the provisions of the act that created
it.127 An administrative agency’s sanction is lawful if the agency (1) does not exceed
its statutory authority, and (2) substantial evidence supports its decision.128
Here, the Regulations are consistent with the Enabling Statute. Namely, a
broker is “responsible for the day to day management and supervision of a brokerage
organization[.]”129 An associate broker and salesperson are both “licensed under a
broker.”130 The Regulations make the broker jointly responsible with the
subordinate to ensure, through supervision, that the subordinate complies with CE
requirements. DREC’s regulations are also internally consistent. Namely, DREC
Regulation 14.5 provides that “[t]he Licensee’s attestation as to completion of CE
does not relieve the Broker of the Broker’s duty to ensure that the Licensee has
completed the required CE during the licensure renewal period.”131
In essence, the General Assembly tasks DREC with overseeing a tiered
licensing system and monitoring CE compliance within that system. The
Regulations, which hold a supervisory broker responsible for a subordinate’s failure
to meet CE requirements, do not exceed DREC’s statutory authority.
126
Carroll v. Tarburton, 209 A.2d 86, 90 (Del. Super. 1965).
127
Am. Ins. Ass’n v. Del. Dept. of Ins., 2006 WL 3457623, at *3 (Del. Super. Nov. 29, 2006) (citing
Matter of Dep't of Nat. Res. & Env't Control, 401 A.2d 93, 96 (Del. Super. 1978)).
128
Cary v. Del. Sec’y of State, 2022 WL 951262, at *4 (Del. Super. Mar. 28, 2022).
129
24 Del. C. § 2902(a)(2).
130
Id. § 2902(a)(1) (providing that an “associate broker” is “licensed under a broker”); id. §
2902(a)(23) (providing that a “salesperson” is “licensed under a broker”).
131
24 Del. Admin. C. § 2900–14.5. Furthermore, even if a violation causes no harm, an
administrative agency, pursuant to lawfully promulgated regulations, may impose disciplinary
sanctions. Cooper v. Del. Bd. of Nursing, 264 A.3d 214 (Del. 2021) (TABLE).
24
Finally, the Licensees argue that scienter is required before the Commission
can lawfully impose a penalty. They cite no authority, however, to support the
premise that DREC cannot set CE requirements that do not turn on a licensees’ state
of mind. Scienter is a criminal concept; here, the Licensees faced no criminal
exposure such as a fine, imprisonment, or indicia of arrest. Rather, the sanction is a
civil penalty which falls within the powers of an agency provided the delegation of
that authority is lawful.132 Again, here it is.
C. DREC did not abuse its discretion when issuing what the Licensees
contend to be a $500 default penalty.
Here, the General Assembly requires DREC to “develop standards assuring
professional competence” and to “promulgate rules and regulations.”133 DREC
promulgated Regulations 14.6.6 and 14.6.7 pursuant to that authority. Under the
Regulations, if a licensee is found to be in unjustified noncompliance, the following
potential civil penalty range applies:
[t]he minimum penalty for the first finding of unjustified
noncompliance shall be a $250.00 monetary penalty and any of the
additional penalties specified in 24 Del. C. Section 2914. The
minimum penalty for the second finding of unjustified noncompliance
shall be a $1,000 monetary penalty and any of the additional penalties
specified in 24 Del. C. Section 2914.134
Accordingly, Regulation 14.6.7 provides adequate notice to Licensees regarding the
potential disciplinary sanctions for CE noncompliance. In addition, DREC
Regulation 14.6.6 provides a licensee the opportunity for a hearing to address his or
her individual circumstances.135 Accordingly, Regulations 14.6.6 and 14.6.7
132
See Schultz v. Delaware Bd. of Architects, 2018 WL 948624, at *3 (Del. Super. Feb. 16, 2018)
(recognizing that at a licensee may be appropriately disciplined by a professional regulatory
agency without regard to the licensee’s state of mind).
133
24 Del. C. § 2906(c).
134
24 Del. Admin. C. § 2900–14.6.7.
135
Id. § 14.6.6.
25
recognize the right to a hearing, the consideration of a licensee’s individual
circumstances, and provide sufficient notice of potential penalties.
The Licensees argue that the Commission acted arbitrarily by (1) setting a
minimum penalty for violations, and (2) imposing a uniform penalty regardless of
the circumstances.136 They advance the first of these arguments in an attempt to
demonstrate that DREC’s regulations exceed its statutory authority. To that end,
they contend that because the General Assembly did not include a minimum penalty
in the Enabling Statute, the General Assembly intended that there not be one.137 The
Licensees identify no authority in support of this point, however.
A regulation such as this is the product of agency decision making that the
courts have traditionally deferred to. Namely, it “is well settled that a Legislature,
in enacting a law, complete in itself, for the regulation of particular matters, may
expressly authorize an administrative body, within definite limits, to provide rules
and regulations for the complete operation and enforcement of the law within its
expressed general purpose.”138 When the Commission set a presumptively minimum
penalty it did not violate the Enabling Statute. Nor did it act arbitrarily when
promulgating Regulation 14.6.7.
Turning from the Licensees’ argument regarding the minimum penalty, the
Court next focuses on the Licensees’ claim that the Commission abused its discretion
when it penalized the Licensees uniformly. As explained earlier, there is such an
abuse of discretion only if there is not substantial evidence on the record to support
the penalty imposed on each of the Licensees.
On this point, the Licensees contend that DREC failed to exercise any
136
D.I. 13, at 10 (citing 24 Del. Admin. C. § 2900–14.6.7).
137
Id.
138
Hoff v. State, 197 A. 75, 79 (Del. Super. 1938).
26
discretion when imposing a “standard” flat penalty of $500.139 DREC counters that
argument by emphasizing Delaware Supreme Court authority that stresses the
importance of agency consistency in penalties.140 DREC further highlights cases
where it deviated from the alleged default amount when the circumstances require
it.141
In Delaware Board of Medicine License & Disclosure v. Grossinger,142 the
Supreme Court addressed the need for consistency in penalties when recognizing
that for “notice to be adequate, [the administrative agency] must give reasonable
persons clarity as to what conduct is proscribed. To that end, consistency is key.”143
Conversely, it is axiomatic that agency case decisions must consider the individual
circumstances of each case. Thus, there is a need in administrative law to balance
(1) the requirement for consistency in penalties, with (2) the need that an agency
consider the individual circumstances of each case. Here, the General Assembly
entrusted that balancing to DREC. An agency does not abuse its discretion if it
chooses to place controlling weight on consistency as long it considers the individual
circumstances of each case and bases its decisions on substantial evidence.
In Ms. Stein and Ms. York’s Order, DREC adequately explained the basis for
its decision. Both admitted that they made mistakes which the Commission accepted
as a demonstration of contrition.144 The Commission recognized, however, that “its
policy of maintaining consistency in its monetary penalties and issuance of letters of
reprimand for violation of the [DREC]’s CE requirements outweigh any factors
presented in this case that otherwise might favor reduction of the recommended
139
See generally D.I. 13, at 14–18.
140
D.I. 15, at 18.
141
Id. at 19–20.
142
224 A.3d 939 (Del. 2020).
143
Id. at 957.
144
Stein & York Certified Record, Tab 1, at 1–2.
27
sanctions and penalties.”145 In fact, at Ms. Stein and Ms. York’s hearing, the
Commissioners specifically addressed their individual circumstances as follows:
Commissioner Lane: I want to make very clear that we, as the
commissioners, we review every case on its own fact-finding
information. So, although our recommendation may be consistent in
terms of the dollar amount. I don’t want it construed that we – or
misconstrued that we are not considering these cases as individuals. I
think we focus on the dollar amount to be fair across the board. Other
factors in the order, other items in the order, I mean, we change all the
time.146
. . .
Commissioner Marvel: We put a lot of faith in our Hearing Officer’s
decision and their review of the fact and hearing the case.147
. . .
Commissioner Roger: I agree with [Commissioners Lane and]
Marvel.148
. . .
Commissioner Director: I agree with [Commissioner Lane’s]
assessment of this. And I – I think we do take this individually and
very seriously. But I think we strive for consistency and don’t want to
seem arbitrary and vary the findings. I think, unless there’s a
compelling reason for deviating that we have a – a minimal standard of
what we’re going through in terms of how – how we would deviate
from the hearing officer recommendation of what we feel is fair.149
. . .
Commissioner Olmstead: Hopefully that gives you some clarification
from some of the commissioners.150
The Licensees spent significant and laudable effort citing DREC decisions
where a “standard” $500 fee was imposed in CE proceedings.151 When doing so,
145
Stein & York Certified Record, Tab 1, at 2–3.
146
Stein & York Certified Record, Tab 2, at 8:11–21.
147
Id. at 8:22–24.
148
Id. at 9:1–2.
149
Id. at 9:4–12.
150
Id. at 9:13–14.
151
D.I. 13, at 14–17. Licensees listed forty-eight instances of fines of this sort in their Opening
Brief.
28
however, they conceded that DREC has at times altered its monetary penalties by
increasing or decreasing the amount.152 Further, the Licensees did not address that
Mr. D’Ambrosia, himself, appealed only one of two DREC orders entered against
him on the same day.153 The court penalized him $250 in the matter he did not
appeal, not $500.154 It did so because the subordinate salesperson in that matter
convinced DREC that an illness was an extenuating circumstance.155 Thus, while
the record demonstrates DREC’s efforts to maintain consistency, DREC’s
imposition of some adjusted penalty amounts—including a different penalty
imposed against one of the Licensees himself—supports that it evaluated the
individual merits of the Licensees’ cases.
In turning to Mr. D’Ambrosia’s case, neither the hearing officer nor the
Commission found mitigating factors or extenuating circumstances. DREC
considered, among other things, that he accepted responsibility by admitting that he
made a mistake.156 That admission alone provided substantial evidence for the
result.
In summary, on this record, the Commission did not abuse its discretion when
balancing the need for consistency in penalties against the need to consider the
individual circumstances of each case. The records in all three cases contain the
substantial evidence necessary to support DREC’s findings. As a result, those
findings were not arbitrary or capricious.
D. The Commission’s issuance of a public letter of reprimand was not an
abuse of discretion.
The Licensees also contend that the Commission impermissibly issued a
152
See id.; see also Reply Br. at 7 (D.I. 16) (“In its response, DREC points to a few cases where a
different penalty was imposed. Those, however, are the exceptions that prove the rule.”).
153
See D.I. 15, Ex. 2.
154
Id. at 2.
155
Id.
156
D’Ambrosia Certified Record, Tab 1, at 2.
29
public letter of reprimand.157 Paragraph 2914(a)(1) of the Enabling Statute provides
that the Commission may sanction a licensee, either alone or in combination with
other sanctions, by issuing “a letter of reprimand.”158 The Licensees seize on the
fact that the statutory provision does not specify whether the reprimand should be
public or private, which they believe permits only private reprimands.159 They
further rely on Subsection 2906(11) of the Enabling Statute which authorizes DREC
to “[d]esignate and impose the appropriate sanction or penalty where it has been
determined after a hearing that penalties or sanctions should be imposed.”160 The
latter, they contend, prevents the Commission from expanding a penalty from a
“reprimand” to a “public reprimand.”161
The Licensees do not address the Delaware Freedom of Information Act
(“FOIA”), however.162 As DREC correctly emphasizes, DREC is a “public body,”
as defined by FOIA.163 Public bodies are required to maintain open records and
conduct business in the open, with limited exceptions that are not applicable here.164
DREC is also an “agency” as contemplated by the APA.165 The APA makes
agencies, such as DREC, subject to FOIA, which correspondingly makes their
records available to the public upon request.166
157
D.I. 13, at 19–21.
158
24 Del. C. § 2914(a)(1).
159
D.I. 13, at 20.
160
Id. at 19 (citing 24 Del. C. § 2906(11)).
161
Id. at 19–20.
162
29 Del. C. § 10001 (“It is vital in a democratic society that public business be performed in an
open and public manner so that our citizens shall have the opportunity to observe the performance
of public officials and to monitor the decisions that are made by such officials in formulating and
executing public policy; and further, it is vital that citizens have easy access to public records in
order that the society remain free and democratic. Toward these ends, and to further the
accountability of government to the citizens of this State, this chapter is adopted, and shall be
construed.”).
163
Id. § 10002(k).
164
Id. §§ 10003–10004, 10127; 24 Del. C. § 2905.
165
29 Del. C. § 10102(1).
166
Id. § 10112.
30
Thus, a DREC final order becomes a presumptively public record. The
penalties assessed pursuant to those orders also become matters of public record
absent specific legislative direction to the contrary. Had the General Assembly
intended to override FOIA by permitting only private reprimands, it could have
easily done so. For purposes of this appeal, DREC did not act outside of its statutory
authority or abuse its discretion when issuing public reprimands given the open
records requirements of FOIA.
IV. CONCLUSION
For the reasons explained above, the orders of the Delaware Real Estate
Commission in this consolidated matter are AFFIRMED.
IT IS SO ORDERED.
/s/Jeffrey J Clark
Resident Judge
31