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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Lightle v. State, Real Estate Commission (10/20/2006) sp-6065

Lightle v. State, Real Estate Commission (10/20/2006) sp-6065, 146 P3d 980

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


) Supreme Court No. S- 11719
Appellant, )
) Superior Court No. 3AN-01-6223 CI
v. )
) No. 6065 - October 20, 2006
Appellee. )
Appeal    from     the
          Superior Court of the State of Alaska,  Third
          Judicial   District,  Anchorage,  Philip   R.
          Volland, Judge.

          Appearances:  Hugh  G. Wade,  Wade,  Kelly  &
          Sullivan, Anchorage, for Appellant.  Karen L.
          Hawkins,    Assistant    Attorney    General,
          Anchorage,   David   W.   M rquez,   Attorney
          General, Juneau, for Appellee.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          BRYNER, Chief Justice.

           Arlene Seeley made an offer to buy a home but withdrew
her offer after learning that the seller had accepted it only  as
a  back-up  offer:  an offer that would be  accepted  only  if  a
previously  accepted  offer fell through.  Seeley  then  filed  a
claim with the Alaska Real Estate Commission, alleging that Craig
Lightle,    the    homes   listing   agent,    had   fraudulently
misrepresented  the homes status by leading her to  believe  that
the  home  was immediately and unconditionally available.   After
holding  a hearing on the claim, the commission ruled in  Seeleys
favor  and imposed sanctions against Lightle.  On appeal, Lightle
insists  that  the  evidence  fails to  support  the  commissions
finding   of  intentional  misrepresentation.   But  the   record
contains  substantial  evidence that Lightle  misrepresented  the
homes  availability by inaccurately describing the  home  in  the
Anchorage  Multiple  Listing Service as  an  active  listing;  by
prematurely telling Seeley that the originally accepted offer had
been  rescinded; and by incorrectly assuring Seeley that her  own
offer had been accepted and that the house is yours.  Because the
record also contains substantial evidence that Lightle knew these
representations to be untrue or unfounded when he made  them  yet
intended  or expected that Seeley would rely on them, we conclude
that  the record supports the commissions finding of a fraudulent
          In  early 1998 Craig Lightle, a real estate agent  with
Realty  Executives  Alaska,  listed  a  residential  property  in
Anchorage  for  sale on behalf of the Leighs.  On  April  17  the
Williamses  offered  to buy the house.  The Leighs  accepted  the
offer.   The  Williamses  had  trouble  securing  a  loan:  their
application  was initially denied.  Sometime before June  5,  the
bank  notified  Lightle that it had denied the loan.   Meanwhile,
the  Williamses  evidently  decided to  seek  other  sources  for
          Lightle  nevertheless re-listed  the  property  on  the
Multiple  Listing  Service  as an active  listing,  with  a  note
stating previous pending offer, buyer unable to qualify for loan.
In  early  June  1998 Arlene Seeley  represented by  real  estate
agent  Cheryl  Ponder   saw the house and  became  interested  in
making  an  offer.  On Friday, June 5, Ponder called  Lightle  on
Seeleys  behalf  to  discuss the home.  During this  conversation
Lightle  told  Ponder  that  the home  was  available.   Although
Lightle  acknowledged  that  a prior  offer  had  been  made  and
accepted,  he insisted the deal was dead.  According  to  Ponder,
either during this June 5 conversation or their next conversation
on  June  8, Lightle told Ponder that a rescission agreement  had
been sent to him, but that it had not yet been received.  At  the
end  of the June 5 conversation, Lightle informed Ponder that  he
planned  to  be  out  of  town but that  Ponder  could  call  his
associate  if  she  wanted  to prepare  an  offer.   Ponder  then
contacted Seeley and told her the house was for sale and  active.
Based on this information, Seeley decided that she wanted to make
an  offer  to  buy the Leighs home.  Later the same  day,  Ponder
contacted  Lightles  associate, who said  that  she  should  send
Seeleys  offer by fax and that he would get it and take  care  of
it.  Ponder then sent Seeleys offer of $120,000, together with  a
proposed  earnest  money  agreement  and  a  $500  earnest  money
          On  June 8, after the weekend, Lightle called Ponder to
communicate   the   Leighs  counteroffer  of   $124,000.    After
consulting  with  Ponder,  Seeley  decided  to  send  Lightle   a
counteroffer  for $122,000.  Ponder transmitted the counteroffer,
and Lightle called Ponder back later that day to tell her Seeleys
$122,000  counteroffer had been accepted by the  Leighs.   Seeley
was  present in Ponders office when Lightle called, and  listened
on   Ponders  speaker-phone.   During  the  conversation  Lightle
assured Seeley that the house was hers, and said that the sellers
would  return to Anchorage to sign the agreement on Friday,  June
12.   Based  on her understanding that she had the house,  Seeley
canceled her existing lease, rented a U-haul, and began switching
her utilities over.
          Soon  after  the June 8 conversation, however,  Lightle
learned  that  the  Williamses still wanted the  house  and  were
trying  to  arrange a different loan.  On June  12  Lightle  sent
Ponder  a  copy of Seeleys proposed earnest money agreement  that
had  been  signed by the Leighs.  But the agreements wording  had
been  changed  to  incorporate  a  new  Back-up  Addendum,  which
purported  to  accept  Seeleys offer only as  a  back-up  to  the
Williamses still-pending offer.
          Upon  learning  of  these changes,  Seeley  refused  to
accept  the  agreement.   After obtaining  a  rescission  of  her
earnest money offer and a refund of her deposit,1 Seeley filed  a
claim  against  the  Alaska Real Estate Commissions  real  estate
surety  fund,  a state-administered fund created  by  statute  to
compensate   individuals  who  suffer   loss   in   real   estate
transactions due to fraud.2  She alleged that Lightle had engaged
in  fraudulent misrepresentation and that his actions had  caused
her  to  suffer damages by prompting her to cancel  her  existing
          Lightle  disputed these allegations, and the commission
appointed  a  hearing  officer to hear Seeleys  claim.   Lightle,
Seeley, and Ponder testified at the hearing.  The hearing officer
issued  a written decision, concluding that Lightle had committed
fraudulent  misrepresentation by telling Seeley that  the  Leighs
house  was  available,  without disclosing  that  the  Williamses
previously  accepted  offer  had not  yet  been  rescinded.   The
decision specifically found that Lightles misrepresentations were
intentional  and  material to the real  estate  transaction.   It
recommended  an  award of damages to compensate  Seeley  for  the
losses  she incurred by prematurely canceling her lease; it  also
recommended   suspending  Lightles  real  estate  license.    The
commission  adopted  the  hearing  officers  decision   and   its
          Lightle  appealed to the superior court, which affirmed
the  commissions  decision.3  Lightle  then  filed  this  appeal,
contending  that  the  evidence fails to  support  a  finding  of
intentional misrepresentation.
          When   the  superior  court  acts  as  an  intermediate
appellate  court  in  an  administrative appeal,  we  review  the
agencys actions directly.4  We review issues of law de novo,  but
use  the  substantial evidence test to review an agencys  factual
findings.5   Substantial evidence to support an agencys  findings
exists when there is  such relevant evidence as a reasonable mind
might  accept  as  adequate  to support  the  conclusion.  6   In
deciding  whether this standard has been met, we view the  record
in the light most favorable to upholding the trial courts ruling.7
It  is  not  our  job to reweigh the evidence or  choose  between
          competing inferences; we only determine whether substantial
evidence  supports  the agencys factual findings.8   Findings  of
misrepresentation involve issues of fact.9
          Seeley  brought  her  claim under AS  08.88.460,  which
allows  claims to be brought against the real estate surety  fund
by  a  person seeking reimbursement for a loss suffered in a real
estate transaction as a result of fraud, misrepresentation,  [or]
deceit.10  Lightle argues that the record fails  to  support  the
commissions  finding that he made intentional  misrepresentations
to  Seeley.   Lightle insists that there is no  evidence  showing
that he made any statement of fact with the knowledge that it was
false and with the intent to deceive. (Emphasis in original.)  At
most, Lightle contends, his statements regarding the availability
of  the house were expressions of expectation and predictions  of
future  events,  rather  than  declaratory  statements  of  fact.
According  to  Lightle, there was no evidence that he  ever  said
that there was no pending offer.  Moreover, Lightle asserts,  his
statements  were not actually false when he made them,  since  he
expected  that the Williamses would rescind their agreement   and
ultimately, they did just that.
          But   Lightle   inaccurately  describes  the   elements
necessary  to prove a fraudulent misrepresentation; specifically,
he is mistaken in suggesting that those elements require proof of
a  specific  intent to deceive.  Alaska follows  the  Restatement
(Second)   of  Torts  on  what  constitutes  an  intentional   or
fraudulent misrepresentation.11  As described in the Restatement,
the   elements  of  fraudulent  misrepresentation  are:   (1)   a
misrepresentation  of  fact or intention, (2)  made  fraudulently
(that  is,  with  scienter), (3) for  the  purpose  or  with  the
expectation  of  inducing another to act in  reliance,  (4)  with
justifiable reliance by the recipient, (5) causing loss.12
          Lightle concentrates his challenge on the elements that
require  proof of fraud and intent.  He concedes that Seeley  did
reasonably  rely  upon  Craig Lightles  assurance  and  does  not
contest that Seeleys reliance caused her to suffer damages.
          Section  525  of the Restatement sets out  the  general
rule  imposing  liability  for  fraudulent  misrepresentation  as
               One    who    fraudulently    makes    a
          misrepresentation of fact, opinion, intention
          or law for the purpose of inducing another to
          act  or  to  refrain from action in  reliance
          upon it, is subject to liability to the other
          in deceit for pecuniary loss caused to him by
          his    justifiable    reliance    upon    the
          As  used in the Restatement, the word fraudulent refers
solely  to  the makers knowledge of the untrue character  of  his
representation.    This   element  of  the   defendants   conduct
frequently  is  called scienter. 14  Under  Section  526  of  the
          [a]  misrepresentation is fraudulent  if  the
               (a)  knows  or believes that the  matter
                    is not as he represents it to be,
                    (b)   does  not have the confidence
                    in     the    accuracy    of    his
                    representation that  he  states  or
                    implies, or
               (c)  knows  that  he does not  have  the
                    basis  for his representation  that
                    he states or implies.[15]
          To  be fraudulent, then, a representation need only  be
made  with  scienter, in other words, the necessary knowledge  of
the untrue character.16  But not all fraudulent misrepresentations
are actionable under the Restatements definition:
               In  order that a misrepresentation  even
          though  fraudulently made, may be actionable,
          it  is  necessary  that the other  conditions
          stated  in   525 exist[,] . . .  namely,  the
          makers purpose to induce the recipient to act
          in reliance upon the misrepresentation[.][17]
  The Restatement defines this requirement of a purpose to induce
action as follows:
          One  who makes a fraudulent misrepresentation
          is  subject  to liability to the  persons  or
          class  of  persons  whom he  intends  or  has
          reason  to  expect to act or to refrain  from
          action      in     reliance     upon      the
          misrepresentation,   for    pecuniary    loss
          suffered  by  them through their  justifiable
          reliance in the type of transaction in  which
          he  intends  or  has reason to  expect  their
          conduct to be influenced.[18]
As  can be seen, this provision does not require the maker  of  a
false  statement  to  act with the specific  intent  to  deceive;
rather,  it requires the maker to have reason to expect that  the
others conduct will be influenced.
            With this framework in mind, we turn to the record to
determine  whether the evidence supports the commissions  finding
of   fraudulent  misrepresentation.   In  our  view,  the  record
contains  substantial  evidence that would,  if  believed,  allow
reasonable     persons     to    find    several     interrelated
          It  is  undisputed that sometime in May or  early  June
1998,  Lightle  re-listed the property in  the  Multiple  Listing
Service  as  an  active  listing, with a  note  stating  previous
pending  offer,  buyer unable to qualify for loan.   It  is  also
undisputed that Seeley relied on this listing when she  submitted
her  first offer to Lightle on June 5.  Yet according to  Ponder,
Lightles  description  of  the  property  as  an  active  listing
amounted to a false statement of fact.
          Specifically, Ponder testified that, according  to  MLS
guidelines when a property is in [the] computer as active, it  is
          for sale.  It is not pending or contingent.  They have  they have
pending  and  contingency, you can put them in  there  that  way.
Lightle  offered no testimony or other evidence to rebut  Ponders
assertions, so it was not unreasonable for the hearing officer to
find that they were credible.
          Nor  was  it  unreasonable for the hearing  officer  to
infer that Lightle knew that it was inaccurate and misleading  to
give the house an active listing.  Nothing in the record suggests
that  the original offerors, the Williamses, intended to  rescind
their  offer before June 12, 1998, or that they said anything  to
Lightle  suggesting that they had such an intent  after  learning
that  their first loan application had fallen through.   Nor does
the  record contain any evidence suggesting that, after  learning
that  the  first application was rejected, Lightle had any  basis
for  concluding that the Williamses had actually abandoned  their
efforts  to  make  good  on their offer.   To  the  contrary  the
Williamses persisted in attempting to obtain adequate funding and
did not rescind their offer until June 24.
          Thus,  when he relisted the property as active, Lightle
lacked  any  basis  to believe that the Williamses  actually  had
rescinded, as the active listing specifically suggested; instead,
he  evidently surmised that they probably would rescind.  And  it
is  uncontested that no rescission agreement was actually  signed
until well after the property was listed.
          Moreover, Ponder also testified that Lightle  told  her
on  June 5 that the house was available and that the first  offer
was  dead.   On June 5 or 8 Lightle told Ponder that a rescission
of   the  previously  accepted  offer  was  being  sent  to  him.
Specifically, Ponder testified that Craig [Lightle] said that the
rescission was coming and that it had been signed by his  seller,
and  he  assured  us it would be back.  Ponder further  testified
that Lightle indicated that the rescission agreements arrival was
imminent.   And  according to Ponder, she  and,  by  implication,
Seeley  relied on Lightles assurances.
          Seeley,   who  listened  to  the  conversation  between
Lightle  and  Ponder on Ponders speaker-phone, confirmed  Ponders
testimony,  insisting that Lightle said the sellers had  accepted
[her  counter] offer.  The hearing officer found that both Ponder
and  Seeley  were credible witnesses, while noting that  Lightles
testimony was noteworthy both for what he said, and for  what  he
did not say.
          When viewed in the light most favorable to Seeley, this
evidence  supports  a finding that Lightle knowingly  made  false
statements of fact by telling Ponder and Seeley that a rescission
agreement  had been signed and that the house is yours.   And  as
previously  mentioned,  Lightle  does  not  contest  that  Seeley
reasonably relied on these assurances.
          Finally,  the evidence at the hearing included  further
testimony  by Ponder describing misleading assurances by  Lightle
that Seeleys $122,000 counteroffer had been accepted.  As already
noted,  Lightle  had listed the property in the Multiple  Listing
Service  as an active listing.  Ponder testified that this  meant
that  the  property  had no other pending offers.   Referring  to
Lightles  June 8 conversation with Ponder, Seeley confirmed  that
Craig  said over the speaker phone that the sellers accepted  the
offer and that they would be flying in on Friday, I believe,  was
the  12th  of June, to sign paperwork.  And according to  Ponder,
Lightle  told  her and Seeley that yep, the house is  yours,  not
selling  it to anybody else, the sellers would not let   did  not
want  him  to  fax  it, they would sign it when they  got  there.
Ponder also testified that, we were never told we were in a back-
up position.
          Ponders    testimony    was   corroborated    by    her
contemporaneous notes of the June 8 conversation.   Ponder  wrote
that she and Seeley made the counteroffer of $122,000, and
          Craig  call[ed] us right back and said Seller
          accepted the counter.  He ask[ed] for lenders
          phone [number] because seller anxious as  the
          home previously sold by Remax []and Buyer did
          not  qualify  I gave lenders phone  [number].
          Craig said seller would [not] sign until  she
          arrives  on Friday, did not have  a  fax  and
          dont   worry  property  is  sold  to   Arlene
          [Seeley] . . . .
          By Lightles own account, he learned sometime soon after
June  8  that the Williamses were still interested in the  house.
On  June  15  Lightle sent Ponder and Seeley a  copy  of  Seeleys
$122,000  earnest  money offer that the Leighs had  just  signed.
Yet this copy had been changed to include a new  Back-up Addendum
to  [the] Earnest Money Receipt and Agreement to Purchase,  which
conditioned  the  Leighs  acceptance  of  Seeleys  offer  on  the
Williamses  failing  to close the still pending  original  offer.
Seeley  immediately refused to accept this  new  term.   And  the
Williamses  did not rescind their original offer until  June  24,
well after Seeley withdrew.
          On  appeal, Lightle takes the position that, as far  as
he  knew, his June 8 statements were literally true when he  made
them:  The evidence strongly suggests that from June 5th  through
June  8th,  Craig Lightle reasonably believed that  the  Williams
offer  was  dead, in the sense that it was not going to culminate
in  a  sale  of the Leigh property.  But this theory  is  legally
flawed  because it ignores that, even if literally  true  in  the
limited  sense suggested by Lightle, his June 8 statements  would
amount to misrepresentations by half-truth.
          As  we  initially recognized in Carter v. Hoblit19  and
more  recently  held  in  Anchorage  Chrysler  Center,  Inc.   v.
DaimlerChrysler Corp.,
          a  statement  can be literally true  and  yet
          still  be  an  actionable  misrepresentation.
          Section  529  of the Restatement (Second)  of
          Torts  says:  A  representation  stating  the
          truth  so far as it goes but which the  maker
          knows or believes to be materially misleading
          because of his failure to state additional or
          qualifying    matter    is    a    fraudulent
          misrepresentation.  Under  this  standard,  a
          partial  disclosure  is  fraudulent  if   the
          person making the statement knows or believes
          that  the undisclosed facts might affect  the
          recipients  conduct  in  the  transaction  in
          hand.   The  Restatement gives some examples,
          including a prospectus that fails to list all
          the  companys debts; a statement that a title
          to land has been upheld by a particular court
          without  mentioning that the courts  decision
          has  been  appealed;  and  a  statement  that
          tenants in a building all pay a certain rent,
          without  mentioning that the  rent  is  still
          subject   to  approval  by  a  rent   control
          Lightles June 8 statements are closely analogous to the
Restatements  illustrations of fraudulent  misrepresentations  by
half-truths: by assuring Ponder that the prior deal is dead, that
Seeleys offer had been accepted, and that the house is yours  all
without  any  mention of the fact that the Williamses  previously
accepted  offer had not yet been rescinded and still  technically
remained  in  effect    Lightle made a  partial  disclosure  that
failed   to  reveal  facts  that  might  [have]  affect[ed]   the
recipients conduct in the transaction in hand.21
          And   despite  Lightles  arguments  to  the   contrary,
substantial  evidence supports the finding that Lightles  partial
disclosure was fraudulent  that is, that Lightle [did]  not  have
the  confidence in the accuracy of his representation[s] that  he
state[d] or implie[d];22 that he [knew] that he [did] not have the
basis  for his representation[s] that he state[d] or implie[d];23
and  that  he  intend[ed] or ha[d] reason to expect  that  Seeley
would act . . . in reliance upon the misrepresentation.24
          Because the Restatement standard requires nothing  more
to  establish an intentional misrepresentation, we hold that  the
evidence supports the commissions findings and conclusions.
          For these reasons, we AFFIRM the superior courts ruling
upholding the commissions decision.
     1     The Williamses  eventually failed in their efforts  to
secure another loan and rescinded their agreement with the Leighs
on June 24, 1998  well after Seeley had withdrawn her offer.  The
Leighs  ultimately sold their home to another buyer, and   Realty
Executives Alaska received a commission as joint agent for  buyer
and seller.

     2    See AS 08.88.450; AS 08.88.460.

     3     For reasons not relevant here, the superior court also
directed  the commission to reduce the amount of damages  awarded
to Seeley.

     4     Treacy v. Municipality of Anchorage, 91 P.3d 252,  260
(Alaska 2004); Halliburton Energy Servs. v. State, Dept of Labor,
2  P.3d 41, 44 n.1 (Alaska 2000) (citing Univ. of Alaska v. Univ.
of  Alaska  Classified Employees Assn, 952 P.2d  1182,  1184  n.6
(Alaska 1998)).

     5    Treacy, 91 P.3d at 260 (citation omitted).

     6     Yoon  v.  Alaska Real Estate Commn, 17 P.3d  779,  782
(Alaska 2001) (quoting Balough v. Fairbanks N. Star Borough,  995
P.2d 245, 254 (Alaska 2000)).

     7     Stumbaugh v. State, 599 P.2d 166, 172-73 n.15  (Alaska

     8     Storrs  v.  State Med. Bd., 664 P.2d 547, 554  (Alaska

     9     See Yoon, 17 P.3d at 782 (whether there was promissory
fraud  is  primarily a question of fact and based on  credibility
determinations); see also Wirum & Cash, Architects v.  Cash,  837
P.2d 692 (Alaska 1992).

     10    AS  08.88.460(a).

     11    E.g., City of Fairbanks v. Amoco Chemical Co., 952 P.2d
1173,  1176 n.4 (Alaska 1998); Barber v. National Bank of Alaska,
815  P.2d 857, 862 (Alaska 1991) (citing Restatement (Second)  of
Torts   525  (1977));  Carter v. Hoblit, 755 P.2d  1084,  1086-87
(Alaska 1988) (relying on Restatement).

     12    Restatement (Second) of Torts  525, 526, 531 (1977).

     13    Id.  525.

     14    Id.  526 cmt. a.

     15      Id.;   see   Anchorage  Chrysler   Ctr.,   Inc.   v.
DaimlerChrysler Corp., 129 P.3d 905, 914 (Alaska 2006).

     16    Restatement (Second) of Torts  526 cmt. a (1977).

     17    Id.  526 cmt. b.

     18    Id.  531 (emphasis added).

     19     See Carter, 755 P.2d at 1086-87 (citing with approval
Restatement (Second) of Torts  529 (1977)).

     20     Anchorage  Chrysler  Ctr.,  Inc.,  129  P.3d  at  915
(citations  omitted) (quoting and citing Restatement (Second)  of
Torts  529, 529 cmt. b, 529 cmt. a, illus. 2 (1977)).

     21    Restatement (Second) of Torts  529 cmt. b (1977).

     22    Id.  526.

     23    Id.

     24    Id.  531.

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