Lightle v. State, Real Estate Commission
2006 WL 2988550, 146 P.3d 980, 2006 Alas. LEXIS 162 (2006)
Rule of Law:
A real estate agent commits fraudulent misrepresentation when making statements about a property's status that are either untrue, made without a basis, or are materially misleading half-truths, with the intent or expectation that a buyer will rely on them in a transaction.
Facts:
- In early 1998, Craig Lightle, a real estate agent, listed a residential property in Anchorage for sale on behalf of the Leighs.
- On April 17, the Williamses offered to buy the house, and the Leighs accepted the offer, but the Williamses later had difficulty securing a loan, which was initially denied before June 5.
- Lightle re-listed the property on the Multiple Listing Service (MLS) as an "active listing" with a note stating "previous pending offer, buyer unable to qualify for loan," despite the Williamses still seeking financing.
- On Friday, June 5, Arlene Seeley, represented by agent Cheryl Ponder, became interested in the house, and Lightle told Ponder the home was "available" and the prior offer was "dead," mentioning a rescission agreement was being sent but not yet received.
- Later on June 5, Seeley, based on Lightle's information, submitted an offer of $120,000, along with an earnest money agreement and a $500 deposit.
- On June 8, after the Leighs countered, Seeley submitted a counteroffer for $122,000, which Lightle then told Ponder and Seeley (over speakerphone) had been accepted, assuring Seeley that "the house is yours" and the sellers would return on June 12 to sign.
- Based on these assurances, Seeley canceled her existing lease, rented a U-haul, and began switching her utilities.
- Soon after June 8, Lightle learned that the Williamses were still interested in the house and trying to arrange a different loan, and on June 12, Lightle sent Ponder a signed copy of Seeley's proposed earnest money agreement but with a new "Back-up Addendum" that conditioned Seeley's acceptance on the Williamses' pending offer falling through.
Procedural Posture:
- Arlene Seeley filed a claim against the Alaska Real Estate Commission's real estate surety fund, alleging Craig Lightle engaged in fraudulent misrepresentation and caused her damages.
- The Alaska Real Estate Commission appointed a hearing officer to hear Seeley's claim, at which Lightle, Seeley, and Ponder testified.
- The hearing officer issued a written decision, concluding that Lightle had committed fraudulent misrepresentation, recommending an award of damages to Seeley and suspension of Lightle's real estate license.
- The Alaska Real Estate Commission adopted the hearing officer's decision and its recommendations.
- Craig Lightle appealed the commission's decision to the superior court (intermediate appellate court).
- The superior court affirmed the commission's decision, but also directed the commission to reduce the amount of damages awarded to Seeley.
- Lightle then filed an appeal to the Supreme Court of Alaska.
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Issue:
Does substantial evidence support a finding that a real estate agent engaged in fraudulent misrepresentation by making statements about a property's availability and offer status that were either untrue, made without a basis, or were materially misleading half-truths, thereby inducing a buyer's reliance?
Opinions:
Majority - Bryner, Chief Justice
Yes, substantial evidence supports the Alaska Real Estate Commission's finding that Craig Lightle engaged in fraudulent misrepresentation. The court applied the Restatement (Second) of Torts' definition of fraudulent misrepresentation, which requires a misrepresentation of fact or intention made fraudulently (with "scienter") for the purpose or with the expectation of inducing reliance, justifiable reliance, and causation of loss. The court clarified that "scienter" does not require specific intent to deceive, but rather that the maker knows the representation is untrue, lacks confidence in its accuracy, or knows they lack a basis for it, coupled with an intent or expectation that the recipient will rely. The court found that Lightle's actions constituted several interrelated misrepresentations: (1) listing the property as "active" in the MLS despite a pending offer, which Ponder testified was inaccurate per MLS guidelines; (2) stating on June 5 that the previous offer was "dead" and a rescission agreement was "imminent" when the Williamses had not yet rescinded; and (3) assuring Seeley on June 8 that "the house is yours" after her counteroffer was accepted, without disclosing the still-pending Williamses' offer. The court emphasized that a statement can be literally true yet still be an actionable fraudulent misrepresentation if it omits additional, qualifying material facts that the maker knows or believes might affect the recipient's conduct (Restatement § 529). Lightle's statements were misleading "half-truths" because he failed to reveal the Williamses' still-pending offer. Substantial evidence supported that Lightle lacked confidence in the accuracy of his representations or knew he lacked a basis for them, and that he intended or had reason to expect Seeley would rely.
Analysis:
This case significantly clarifies and applies the Restatement (Second) of Torts' standard for fraudulent misrepresentation in Alaska, particularly reinforcing the "half-truth" doctrine. It establishes that real estate agents and others in transactional roles bear a high responsibility for full and transparent disclosure, as even statements that are technically true but omit material qualifying information can be deemed fraudulent. The ruling underscores that "scienter" in misrepresentation does not require a malicious intent to deceive, but merely knowledge of falsity or a lack of basis for a statement, coupled with an expectation of reliance. This broad interpretation promotes honesty in commercial dealings and offers protection for consumers against misleading partial disclosures.
