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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
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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| CRAIG LIGHTLE, | ) |
| ) Supreme Court No. S- 11719 | |
| Appellant, | ) |
| ) Superior Court No. 3AN-01-6223 CI | |
| v. | ) |
| ) | |
| STATE OF ALASKA, REAL | ) O P I N I O N |
| ESTATE COMMISSION, | ) |
| ) 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.
I. INTRODUCTION
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been rescinded; and by incorrectly assuring Seeley that her own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
misrepresentation.
II. FACTS AND PROCEEDINGS
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
financing.
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
deposit.
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
lease.
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
recommendations.
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.
III. STANDARD OF REVIEW
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
IV. DISCUSSION
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
follows:
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
misrepresentation.[13]
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
Restatement,
[a] misrepresentation is fraudulent if the
maker
(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
misrepresentations.
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
agency.[20]
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.
V. CONCLUSION
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
1979).
8 Storrs v. State Med. Bd., 664 P.2d 547, 554 (Alaska
1983).
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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