Filed: September 6, 2002

HAROLD W. DEARBORN,

Respondent on Review,

v.

REAL ESTATE AGENCY,

Petitioner on Review.

On review from the Court of Appeals.*

Argued and submitted May 8, 2001.

Jas. Jeffrey Adams, Assistant Attorney General, Salem, argued the cause for petitioner on review. With him on the brief were Hardy Myers, Attorney General, and Michael D. Reynolds, Solicitor General.

No appearance contra.

Before Carson, Chief Justice, and Gillette, Durham, Leeson, Riggs, and De Muniz, Justices.**

GILLETTE, J.

The decision of the Court of Appeals is affirmed in part and modified in part. The order of the Real Estate Commissioner is reversed.

*Judicial Review from an order of the Real Estate Commissioner. 165 Or App 433, 997 P2d 239 (2000).

**Kulongoski, J., resigned June 14, 2001, and did not participate in the decision of this case; Balmer, J., did not participate in the consideration or decision of this case.

GILLETTE, J.

This is a case of judicial review of a final order of the Real Estate Commissioner (the Commissioner). The order revoked the license of a real estate broker (broker) for engaging in conduct that the Commissioner determined to be subject to professional discipline under ORS 696.301 (1995), (1) set out post. On broker's petition for judicial review, the Court of Appeals reversed the order, holding that there was not a sufficient nexus between broker's conduct and his real estate activities to permit disciplinary action under the statute. Dearborn v. Real Estate Agency, 165 Or App 433, 997 P2d 239 (2000). Petitioner on review, the Real Estate Agency (the Agency), (2) contends that the Court of Appeals erred in reversing the order. For the reasons that follow, we affirm in part and modify in part the decision of the Court of Appeals.

Because broker does not challenge the factual findings included in the Commissioner's order, we accept those findings as true for purposes of review. See Jefferson County School Dist. No. 509-J v. FDAB, 311 Or 389, 393 n 7, 812 P2d 1384 (1991) (unchallenged findings of fact in agency order are considered to be facts for purposes of judicial review). We take our statement of facts from those findings, supplemented with additional facts derived from the record before the Commissioner.

Broker has been licensed as a real estate broker since 1973. In the fall of 1996, Klamath County law enforcement officers interviewed a 16-year-old male runaway whom they were holding at a juvenile detention center on drug charges. Among other things, the youth reported that he had used methamphetamine, marijuana, and alcohol provided by broker at broker's apartment. The youth also reported that broker had engaged in sexual acts while the youth was present and had shown the youth pictures of naked men.

Thereafter, the officers obtained a warrant to search broker's apartment for drugs, pornographic materials, and other evidence relating to the crimes of possession of controlled substances, delivery of controlled substances to minors, and furnishing obscene materials to minors. When the officers executed the warrant, they found pornographic materials and small amounts of cocaine and methamphetamine. They questioned broker and another man who was present in the apartment when they arrived. Broker made some admissions. The other man stated that broker had picked him up in the "mission" district of the city the day before "for the purpose of having sex with him" and that broker had obtained drugs for him. Broker was arrested and ultimately was indicted on seven criminal counts: One count of possession of a controlled substance (cocaine); one count of possession of a controlled substance (methamphetamine); one count of conspiracy; one count of promoting prostitution; one count of prostitution; one count of endangering the welfare of a minor; and one count of furnishing obscene materials to a minor.

In the spring of 1997, broker pleaded guilty to the two drug possession charges. The court sentenced him to 18 months of probation. The court imposed a number of conditions, including requiring that broker pay a fine, perform community service, and refrain from any contact with juveniles during the probationary period. Prosecutors dismissed the remaining charges against broker.

Thereafter, the Commissioner issued a notice of intent to revoke broker's real estate license, alleging that broker was subject to discipline under two subsections of ORS 696.301 (1995). At the subsequent hearing, the Commissioner received in evidence law enforcement investigative reports and other materials relating to broker's arrest and conviction. Broker testified at the hearing and acknowledged that he had possessed and used the drugs in question. Broker also acknowledged having had sexual relations with men whom he picked up in the local mission district and having provided drugs, and money to buy drugs, to such individuals. After the hearing, the Commissioner issued an order suspending broker's license.

Later, on reconsideration, the Commissioner decided that he would revoke broker's license and replace it with a limited salesperson's license for a period of two years, at which time (assuming that broker committed no further sanctionable acts), he would issue broker a new, unrestricted license. In his order on reconsideration, the Commissioner concluded that broker was subject to discipline under two subsections of ORS 696.301 (1995), because broker (1) had pleaded guilty to crimes "which are substantially related to his trustworthiness to engage in professional real estate activity"; and (2) had engaged in conduct that "demonstrates untrustworthy and improper dealings." The Commissioner explained in his order that he was concerned that broker would "indiscriminately seek sexual liaisons with strangers, who could be juveniles, and entice them with drugs." The Commissioner stated:

"Though there is no evidence of his use of his position as a real estate licensee for soliciting sexual partners or of his approaching clientele or their families for such purposes, I find the risk unacceptable. It should be obvious that some juveniles, confronted with an offer of drugs for sex would find the offer very attractive. Though he has not been adjudicated to be a sex offender, he is under court order not to have contact with juveniles under the age of 18 during his probation. If the Court is concerned about [broker's] proximity to juveniles, the Real Estate Agency should share in that concern. This would make working with clientele, listing and showing property difficult, if not impossible.

"Real estate licensees typically have access to people's homes after they are listed, including times when juveniles might be at home alone. Further, a licensee using drugs, who has access to people's homes, also has access to any prescription drugs, cash, or other things convertible to cash found in a home. To allow such an individual this type of access is an unacceptable risk."

(Emphasis added.) The Commissioner also suggested that a broker who abuses cocaine and methamphetamine might convert money held in trust for clients to support his or her habit.

Broker sought judicial review, arguing that ORS 696.301 (1995) pertains only to actions that "were part of and directly impact [the broker's] duties as a real estate licensee," and that the conduct alleged was not of that kind. The Agency conceded that the Commissioner could suspend broker's license under ORS 696.301 (1995) only for conduct that, at the least, was substantially connected to the broker's future real estate activity. The Court of Appeals therefore focused on whether the Commissioner had shown such a connection. Dearborn, 165 Or App at 438.

The Court of Appeals noted that the Commissioner had identified two "purported connections" between broker's conduct and his professional activities: (1) the risk that petitioner might use his position as a real estate broker to solicit sex from minors; and (2) the risk that petitioner's use of addictive drugs might lead to misbehavior in his real estate practice. The Court of Appeals considered each purported connection and concluded that, although concerns respecting each might be reasonable in the abstract, there was no "factual support" for the view that such risks actually exist in this case. The Court of Appeals therefore reversed and remanded the case to the Commissioner, because "the concerns identified by the Commissioner * * * fail to fit the facts." Id. at 439.

On review in this court, the Agency argues that, contrary to the Court of Appeals' view, the Commissioner rationally can infer that, based on the facts in the case, there are risks to broker's future real estate clients. The Agency further argues that, although the Court of Appeals might itself draw different or more limited inferences respecting broker's future actions than has the Commissioner, the Court of Appeals cannot overturn the Commissioner's order on that basis. As we shall explain, however, that disagreement between the Court of Appeals and Agency over brokers' future conduct is the wrong one.

To be entitled to discipline a licensee, the Commissioner first must be able to show that one or more acts of a licensee violated one or more subsections of ORS 696.301 (1995). Whether this licensee -- broker -- has committed acts that violate those subsections is a question concerning the meaning and scope of those subsections. Such an inquiry is a matter of statutory construction, for which we employ the analytical framework set out in PGE v. Bureau of Labor and Industries, 317 Or 606, 859 P2d 1143 (1993). Consistent with that framework we look, first, to the statutory text and context. Id. at 610-11.

Our precise inquiry is the meaning and scope of the statutory standards cited in the Commissioner's order, viz., ORS 696.301(26) and (31) (1995). The Court of Appeals' view is that suspension or revocation of a broker's license under either of those sections is authorized only if there is a "substantial nexus" between the conduct at issue and the broker's potential or future real estate activities. Dearborn, 165 Or App at 438.

The question is what kind of nexus must exist between particular conduct and real estate activity for the conduct to fall into one of the categories described in ORS 696.301 (1995).

ORS 696.301 (1995) provides, in part:

"The commissioner may suspend or revoke the real estate license of any real estate licensee * * * who has done any of the following:

"* * * * *"

(Emphasis added.) The statute then sets out, in 33 subsections, a compendium of the kinds of acts by licensees that can give rise to discipline. Virtually all the subsections specify, in one way or another, that the acts that they set out must have occurred in connection with the licensee's real estate activity, and the others, read in context, all appear to be similarly limited in scope. For the sake of brevity, we set out only the specific subsections -- (26) and (31) -- that the Agency asserts apply to broker's acts:

"(26) Entered a plea of nolo contendere, or has been found guilty of, or been convicted of, a felony or misdemeanor substantially related to the licensee's trustworthiness or competence to engage in professional real estate activity.

"* * * * *

"(31) Any act or conduct, whether of the same or of a different character specified in this section which constitutes or demonstrates bad faith, incompetency or untrustworthiness, or dishonest, fraudulent or improper dealings."

ORS 696.301(26) (1995) explicitly requires a "substantial nexus" between the acts in question and a licensee's professional activities. That is, the broker's criminal acts must have been "substantially related to the licensee's trustworthiness or competence to engage in professional real estate activity." (Emphasis added.) See also former ORS 969.060(6), repealed by Or Laws 2001, ch 30,