Kateen v. Department of Real Estate

Opinion

SPARKS, J.

The Department of Real Estate (Department) appeals from a judgment of the Superior Court of Sacramento County granting a peremptory writ of administrative mandate (Code Civ. Proc., § 1094.5), in favor of Marilyn Kateen. Concluding that the findings were inadequate and that the punishment constituted an abuse of discretion, the court directed the Department to set aside its decision revoking Kateen’s real estate broker’s license, and to reconsider the penalty to be assessed. The Department as

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serts that its decision to revoke Kateen’s license was not an abuse of discretion, and that its findings were adequate to support the decision. For the reasons which follow, we agree with the Department and shall reverse.

Facts

On May 5, 1982, an accusation was filed charging that Kateen had engaged in conduct which was cause for suspension or revocation of her license under Business and Professions Code section 10176, subdivisions (a) [making substantial misrepresentations], and (i) [other conduct which constitutes fraud or dishonest dealing]. After an administrative hearing the administrative law judge prepared a proposed decision which was adopted by the real estate commissioner. The Department determined to revoke Kateen’s license and license rights.

In support of its decision to revoke Kateen’s license, the Department found that in August 1980, acting in an agency capacity, Kateen negotiated the sale of a parcel of real property. The terms of the sale included a purchase price of $165,000, with the buyer to assume an existing loan in the amount of $140,000, secured by a deed of trust, and to execute a note to be secured by a second deed of trust in the amount of $25,000. Thus, there was to be no downpayment.

After an escrow was opened Kateen, without the knowledge of the buyer or seller, telephoned an agent of the escrow company and directed that escrow instructions be prepared which reflected a sales price of $206,250, and a cash down payment of $41,250. Kateen presented the false escrow instructions to a mortgage broker and further verbally misrepresented that the cash down payment was $41,250, and the total sales price was $206,250. Kateen committed these acts with the knowledge, intent and understanding that the false escrow instructions would be an added inducement for the mortgage brokerage company to purchase the note secured by the second deed of trust, or to find investors to purchase the note. In reliance upon the false escrow instructions the mortgage brokerage company approved the loan package and found two investors to purchase the note. The company would not have approved the loan package had it been aware that there was to be no downpayment on the property.