Justice for Texas Appraiser? You Bet. Price Tag: $99,000

Jeremy Bagott

Justice for Texas Appraiser? You Bet. Price Tag: $99,000. 

The Texas Appraiser Licensing and Certification Board is a hot mess, but one with a malicious and callous streak. That makes it dangerous to licensees.

The Unclean Hands Doctrine is a legal defense. It helps prevent petitioners who are engaged in fraud, deceit or bad faith from recovering certain damages from others. If you’re a known cattle rustler yourself, the Unclean Hands defense may keep you from recovering damages if your own cattle go missing. It’s also sometimes called the “Clean Hands Doctrine” or the “Dirty Hands Doctrine.”

Based on this doctrine, the feculent fingers of the Texas Appraiser Licensing and Certification Board need a deep scrubbing under the nails. The board openly violates one corner of Texas law itself while enforcing another corner of Texas law on hapless licensees. One such licensee, Fort Worth-based real property appraiser Lyle Gallagher, successfully fought off a baseless complaint, but it cost him almost $100,000 to clear his name. He now wants to compel the board to comply with state law through a public-interest lawsuit.

The takeaway from Gallagher’s case? Just to get mixed up in the appraiser complaint system in Texas is to lose – even if you win. Of course, Gallagher could have gone wobbly, falsely acknowledged guilt and spared himself most of the trouble. Instead, the former Marine fought off the complaint and successfully restored his reputation, though it lightened his wallet considerably.

The Texas Appraiser Licensing and Certification Board is a hot mess, but one with a malicious and callous streak. That makes it dangerous to licensees.

The state board has been so busy enforcing a Texas occupational licensing statute that it hasn’t had the time to comply with the state’s Administrative Procedure Act and the Texas Administrative Code. It has neglected to submit past versions of the copyrighted Uniform Standards of Professional Appraisal Practice – the centerpiece of appraiser regulation in Texas – to a state notice-and-comment rulemaking as it is required to do by state law. As a result, the standards haven’t been legally enforceable in the state. It means the board has been enforcing them on a bluff.

When Gallagher was first charged in the complaint two years ago, he decided early on to call the bluff. The board, realizing it would be unable to unhinge its jaw wide enough to swallow Gallagher, slithered back to its den. Gallagher, who was willing to put his money where his mouth was, turned out to be an armadillo, not a gopher.

The chief architect of the board’s malfeasance over the years was Kristen Worman, the board’s then-general counsel. Her befouled fingers are now flitting about at another state agency. While with the appraiser board, records show she accepted thousands of dollars in all-expense-paid travel and other things of value from the private code’s Washington, D.C., publisher, whose cause she favored by neglecting the agency’s state rulemaking obligations for each new version of the code, effectively muzzling citizens of Texas and denying them the ability to participate in the creation of binding state law. Easy come, easy go.

Mark Lee, then-staff attorney with the board, also comes up with manky manos. Records show he received nearly $5,000 in all-expense-paid trips to Tampa, Florida, and elsewhere from the Beltway publisher whose cause the board favored. Records with the State Bar of Texas in November 2021 indicate Lee was an attorney with the Pflugerville-based Law Office of Mark R. Lee, while the Texas State Comptroller’s Office identified him as a state employee. Neither Worman nor Lee responded to requests for comment last year on the all-expense-paid travel and any quid pro quo that might have resulted.

Gallagher believes Lee badly bungled his case, adding tens of thousands in unnecessary legal costs for both him and the people of Texas.

“Lee admitted to the judge in my hearing that he had not read any of my responses or rebuttals,” said Gallagher. “When the judge asked if anyone at [the Texas appraiser board] had read my detailed responses, Lee said ‘no, we have other things to do.’ The judge seemed visibly startled.”

In July, the Texas Appraiser Licensing and Certification Board contacted Gallagher’s legal team, headed by Austin-based attorney Jason Ray, and said it would be willing to drop the complaint if Gallagher withdrew his motion to recover attorney fees and court costs. After nearly two years of being steadily bled by the scofflaw board, Gallagher agreed. The judge dismissed the case with prejudice, which means the state board cannot refile it.

If you have the optimism of professor Pangloss, take heart: The Texas board is now mouthing homilies about bad-faith complaints being summarily dismissed in the future. But Texas licensees may want to hold off on any big-ticket purchases based on the good news.

Also coming up with defiled digits were state workers Deloris Kraft-Longoria and Troy Beaulieu. Records show both accepted free trips, lodging, food and other things of value from the publisher while the Texas board enforced unadopted versions of the copyrighted code on licensees like Gallagher. The neglect allowed the publisher, known as the Appraisal Foundation, to sell edition after edition of its continually changing code to captive Texans at monopoly pricing. Lee, Kraft-Longoria and Beaulieu seem to have all recently left government service, or at least moved on to parts unknown within the dank warrens of the Austin statehouse.

Gallagher’s goal now is to enlist the help of a public-interest law firm. He’s hoping to be a plaintiff in a lawsuit to compel the Texas board to comply with state law and the Texas Constitution. Such a win could open a floodgate of cases from licensees wrongfully disciplined in the past based on purported violations of what will no doubt be ruled unrecognized and nonbinding standards.

The takeaway from the Gallagher case: Every appraiser in Texas now needs to accumulate a war chest. That much is clear. Since most appraisers are fee-takers, not fee-makers, most will be unable to build such a fund and will have to roll over and admit to violations they haven’t committed. The board is more than happy for you to know that Gallagher spent almost $100,000 to defend himself. It will help you with your cost-benefit analysis should a similar baseless claim against you come in over the transom.

Those who can build a war chest will be passing the cost onto property owners across the Lone Star State. Just another hidden cost of runaway occupational licensing. Their straitened brethren will be issuing mea culpas, paying fines and bankrolling further mischief by a rogue state agency.

# # #

If you want to help, please simply print out this press release twice. Drop one copy into an envelope addressed to the Hon. Greg Abbott, Governor of Texas, P.O. Box 12428, Austin, Texas 78711-2428. Drop the second into an envelope addressed to the Hon. Ken Paxton, Texas Attorney General, P.O. Box 12548 Austin, TX 78711-2548.

Image credit flickr - Travis Wise
Jeremy Bagott

Jeremy Bagott

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

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9 Responses

  1. Avatar Pat Turner says:

    Should they not file a class action suit for false and malicious prosecutions?

    9
  2. Avatar Anna Renard says:

    Hats off to Mr. Gallagher! You are a shining example and may many more of us follow your lead.

    4
  3. Avatar Dan says:

    I am left bewildered about what Mr. Gallagher’s offense was, and how others can avoid being prosecuted for similar violations.

    4
  4. Avatar Eric Kennedy says:

    Thanks to the KIng Cobra

    2
  5. Avatar Mike says:

    What a horrible profession. Its no longer worth the time and effort. Good luck to those survivors

    3
  6. Lori Noble, SRA Lori Noble, SRA says:

    Legislators and Governors across the country should perhaps inquire why the Appraisal Subcommittee enables and encourages state agencies to violate their Administrative Procedures Act putting citizens in jeopardy and costing consumers money.

    This time, the victim is a veteran ~ a Marine. Every appraiser should write and thank him for standing up to scofflaw and anticompetitive board practices.

    If you feel the need to do something more, inquire with your respective state auditors and find out if the appraiser board is in compliance with Administrative Procedures and if USPAP is even codified. If not, take the discussions further and higher.

    Louisiana recently passed legislation that allows licensees and citizens to petition for audits of scrupulous and subjective rules. After what FTC and LA showed us, it truly shocked me the ASC and states doubled down on barriers to entry and scofflaw.

    6
    • Baggins Baggins says:

      Thank you Lori. Interesting. Educational. Complex. If you thought complying with the mish mash regulations for appraisal oversight was difficult. Take a stab at administrative procedures for extra credit. It would be doubtful to expect the lurking bureaucrats haunting the state halls and to know all the details either. They’re in place to milk the golden cow and as far as I’m aware, there are no special continuing education requirements focused on procedural compliance, review, adjudication, applicable authority, etc. Like most government efforts these days, they just enact what they want, rules and constitutionality are hardly ever challenged. “Come out of her my people.”

      https://en.wikipedia.org/wiki/Administrative_Procedure_Act_(United_States)
      https://uscode.house.gov/view.xhtml?req=(title:12%20section:3335%20edition:prelim)
      https://uscode.house.gov/view.xhtml?req=(title:5%20chapter:5%20edition:prelim)%20OR%20(granuleid:USC-prelim-title5-chapter5)&f=treesort&num=0&edition=prelim

      From the third link: Applicable to this appraisers drawn out expenses?

      §504. Costs and fees of parties
      (a)(1) An agency that conducts an adversary adjudication shall award, to a prevailing party other than the United States, fees and other expenses incurred by that party in connection with that proceeding, unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust. Whether or not the position of the agency was substantially justified shall be determined on the basis of the administrative record, as a whole, which is made in the adversary adjudication for which fees and other expenses are sought.
      (2) A party seeking an award of fees and other expenses shall, within thirty days of a final disposition in the adversary adjudication, submit to the agency an application which shows (continued)

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  7. Avatar Eric Kretz says:

    Appraisers are ALWAYS guilty until proven innocent. Fines are the revenue mechanism for the state boards, and they
    have their guns loaded with USPAP to hammer appraisers at will.

    USPAP Standards Rule comment 1-1
    (b) not commit a substantial error of omission or commission that significantly affects an appraisal;
    (c), perfection is impossible to attain, and competence does not require perfection.

    So who is on first?

    1
  8. Baggins Baggins says:

    Such operational expenses might be hard to afford with many companies new $50 hybrid appraisal report. As this corporation has taken it upon themselves to dictate to tens of thousands of appraisers nationally, and hundreds of property preservation companies, that full 1004 appraisals for reo are no longer necessary or needed, that the appraiser should be tied to the desk all day and never view another home in person again through their entire working career. They reportedly were inspired by the amc model they read so much glowing news about online. We just wish these appraisers would do more when it comes to pushing back against an entire operations modeling change on the client side. When lawn mowing pays substantially more than appraisal, with exponentially lower liability factors, and no licensing required.

    3

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Justice for Texas Appraiser? You Bet. Price Tag: $99,000

by Jeremy Bagott time to read: 5 min
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