TREC License Renewal Policy Successfully Challenged Through Declaratory Judgment Action
When the applicable licensing agency refuses to back down sometimes the only avenue for relief available for a Texas professional is through the filing of a declaratory judgment action in District Court. This is an extraordinary remedy as it involves significant time and money on the part of the professional and their attorneys; however, in certain cases it could be the only way to obtain a favorable result. This frequently occurs when the relevant state licensing agency / board is exercising its jurisdiction in a manner that is not authorized by their enacting statute.
A prime example of this scenario recently occurred in connection with my firm's representation of a licensed real estate salesperson before the Texas Real Estate Commission. Through a misunderstanding of the renewal process, my client failed to timely renew his license. After subsequently filing for late renewal with TREC, his background check yielded a previously undisclosed, but minor, misdemeanor from several years prior. Based on this criminal matter and my client's failure to disclose the same, TREC initiated a disciplinary investigation and refused to renew his license pending a final determination.
Knowing, however, that the salesperson would be unable to work until his license was renewed, TREC presented him with an unreasonable settlement offer which would have placed his license on probation for five years, required him to notify all employees of the existence and reason for the Order, and restricted his ability to apply for a broker's license. In the meantime, my client's broker terminated his employment and refused to pay substantial sums owed to him based on their argument that according to TREC he was not a licensed salesperson at the time the transactions occurred and therefore was not entitled to the money.
Thus pressed to the wall by TREC's unreasonable offer and simultaneous refusal to renew his license absent his acceptance, my firm filed a declaratory judgment action in District Court challenging the legality of TREC's actions. Under both the Administrative Procedure Act (an overarching statute applying to most state licensing agencies) and the Texas Real Estate Act it was clear that TREC was not allowed to refuse to renew a license when the salesperson renewed within one year of the expiration date and paid the applicable statutory late fee. The Texas Attorney General's Office, the state entity charged with defending state licensing agencies in District Court, tacitly agreed when, on behalf of TREC, they consented to retroactively renew my client's license and drop the original disciplinary action in exchange for a non-suit and waiver of attorney's fees. In addition to regaining his salesperson license, my client is now in an excellent position to reclaim the money originally denied him by his broker.
The declaratory judgment action is an extraordinary remedy. Although a successful claimant is eligible to win attorney's fees from the losing party, it is still a potentially costly and time consuming process. Nevertheless, as I believe this case illustrates, in certain situations a professional licensee may have little choice but to go forward and challenge illegal agency action in District Court.
