Complainant, DECISION -against- Complaint No.:

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1 STATE OF NEW YORK DEPARTMENT OF STATE OFFICE OF ADMINISTRATIVE HEARINGS X In the Matter of the Complaint of DEPARTMENT OF STATE DIVISION OF LICENSING SERVICES, Complainant, DECISION -against- Complaint No.: KIMBERLY LANE, Respondent X The above noted matter came on for hearing before the undersigned, Teneka Frost-Amusa, on March 10, 2015 at the office of the Department of State ( Department ) located at 99 Washington Avenue, Albany, New York. The respondent failed to appear. The Division of Licensing Services ( DLS ) was represented by Hearing Presenter Linda Cleary, Esq. COMPLAINT The complaint alleges that respondent s real estate salesperson license should be suspended or revoked because she violated several provisions of Real Property Law ( RPL ) Article 12-A and Title 19 of the New York Code, Rules, and Regulations ( NYCRR ) Part 175, specifically: a. Respondent breached fiduciary duties owed to her client when she failed to provide notification that she was licensed solely as a salesperson and not a broker; b. Respondent represented herself as a real estate broker without having a broker s license, in violation of RPL 440-a; c. Respondent accepted commissions when she was not licensed as a broker, in violation of RPL 442-a; d. Respondent represented herself as a licensed real estate agent on documents, a term that did not accurately describe her status and does not exist in the statues, rules and regulations applicable to real estate salespersons and brokers, in violation of RPL 440; and

2 e. By virtue of the above violations, respondent demonstrated untrustworthiness and/or incompetency pursuant to RPL 441-c. FINDINGS OF FACT 1) Respondent was registered as a real estate salesperson, UID #40LA , with the brokerage H.W. Guernsey Realtors, Inc. in Millbrook, New York, from February 23, 2009 to June 27, 2011 (State s Ex. 2). She was registered as a real estate salesperson with Weathervane Referral Network, Inc. in Rye Brook, New York, for the period January 31, 2013 to July 17, In addition, respondent was a licensed, unassociated real estate salesperson from July 17, 2014 to February 22, 2015 (State s Ex. 2; Transcript at 17). 2) The notice of hearing together with a copy of the complaint was served by certified and regular mail posted on July 11, 2014 and addressed to respondent at her last known business address with Weathervane Referral Network, Inc. (State s Ex. 1). The certified return receipt was signed and returned and the regular mailing was not received back from the Post Office. An adjournment notice dated September 16, 2014 was sent to respondent s residence address and last known business address with Weathervane Referral Network, Inc. Subsequently, an adjournment notice dated January 28, 2015 was sent to respondent s residence address and last known business address with Weathervane Referral Network, Inc. At hearing, the Hearing Presenter stated that on the morning of the hearing, respondent sent her a note saying that she would not be attending the hearing (Transcript at 5, 39). 3) At hearing, Investigator John Goldman testified that he received a complaint filed by Homer W. Guernsey III, a real estate broker of H.W. Guernsey Realtors, Inc. ( Broker ), regarding respondent dated June 27, 2011, and based on that complaint, subsequently conducted an investigation thereof (State s Ex. 6; Transcript at 8). The complaint alleges that sometime in the spring of 2011 and while working for the Broker, respondent was practicing as a broker independently when she negotiated the lease of property located at 69 Trotwood Farm Road in Amenia/Millbrook, New York, (hereinafter referred to as the Trotwood Property ) (State s Ex. 6; Transcript at 9-10). 4) Said lease was between Hilltopper Properties Corp., ( Hilltopper ) the holding company for the Trotwood Property, and a tenant by the name of Manfred Affenzeller (State s Ex. 7; Transcript at 10-11). The lease agreement, submitted to DLS by respondent, shows that Affenzeller agreed to rent the Trotwood Property from Hilltopper for the period May 27, 2011 to September 5, 2011, for a total rental amount of $33,000 (State s Ex. 7; Transcript at 28). When respondent brokered the subject lease she was the listing agent for the sale of the Trotwood Property, which was listed with the Broker (State s Ex. 6,8). 5) The complaint further alleges that respondent, without knowledge of the Broker, collected a commission directly from Hilltopper for the lease of the Trotwood Property in the amount of $3,000, which respondent did not turn over to her Broker (State s Ex. 6). A letter written by the respondent to Suzy Conklin of Hilltopper, dated April 21, 2011, states the following:

3 Commission for rental of house located at 69 Trotwood Farm Road, Amenia, New York and rented to Manfred Affenzeller for period beginning May 27, 2011 and ending September 5, 2011, for a total rental amount of $33,000. Commission of $3,000, amount equal to 10% of total rental amount less discount, is now due Kim Lane, licensed real estate agent (State s Ex. 6). Hilltopper gave respondent a check for $3,000 dated April 28, 2011, which was cashed by respondent on May 2, 2011 (State s Ex. 6). Respondent also admitted to Investigator Goldman that she showed Affenzelller the Trotwood Property and was paid $3,000 by Hilltopper directly for the lease she brokered between them (State s Ex. 3; Transcript at 12). The check was provided to Investigator Goldman by Mr. Guernsey (Transcript at 25). Upon discovery of the commission collected by respondent for the Trotwood Property that was never turned over to the Broker, Mr. Guernsey terminated respondent from his brokerage firm (Transcript at 14). 6) Additionally, in the April 21, 2011 letter, respondent refers to herself as a Licensed Real Estate Agent, which according to Investigator Goldman, is not a license type that DLS recognizes (Transcript at 23). OPINION AND CONCLUSIONS OF LAW I- The holding of an ex parte quasi-judicial administrative hearing was permissible, inasmuch as there is evidence that notice of the place, time and purpose of the hearing was properly served. Patterson v Department of State, 36 AD2d 616, 312 NYS2d 300 (3rd Dept. 1970); Roy Staley v Division of Licensing Services, 14 DOS App 01; Matter of the Application of Rose Ann Weis, 118 DOS 93; See also, Verdell v DeBuono, 262 AD2d 812, 691 NYS2d 679 (3rd Dept. 1999); Jacoby v New York State Board for Professional Medical Conduct, 295 AD2d 655, 743 NYS2d 192 (3rd Dept. 2002). In this case, the notice and complaint were served by certified and regular mail and addressed to the respondent at her last known business address, in addition to her residence address. The domestic return receipt was signed and the regular mailing was not received back from the Post Office. In addition, there is evidence that respondent received notice of the hearing because she contacted the Hearing Presenter on the morning of the March 10, 2015 hearing and communicated that she would not be attending the hearing that day. II- The Department of State retains jurisdiction to conduct this proceeding even though the respondent s real estate salesperson s license is expired. Albert Mendel & Sons, Inc. v NYS Department of Agriculture and Markets, 90 AD2d 567, 455 NYS2d 867 (3 rd Dept. 1982); Main Sugar of Montezuma, Inc. v Wickham, 37 AD2d 381, 325 NYS2d 858 (3 rd Dept. 1971). The respondent may renew her license before February 22, 2017 (2 years from the date of expiration) merely by submitting an application and the applicable fee. RPL 441(2). III- As the party which initiated the hearing, the burden is on the complainant to prove, by substantial evidence, the truth of the charges in the complaint. State Administrative Procedure Act ( SAPA ) 306(1). Substantial evidence means such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact... More than seeming or imaginary, it is less than a preponderance of the evidence, overwhelming evidence or evidence beyond a reasonable doubt (citation omitted). 300 Gramatan Avenue Associates v State Div. Of Human

4 Rights, 45 NY2d 176, 408 NYS2d 54, (1978); Tutuianu v New York State, 22 AD3d 503, 802 NYS2d 465 (2nd Dept. 2005). The question...is whether a conclusion or ultimate fact may be extracted reasonably probatively and logically. City of Utica Board of Water Supply v New York State Health Department, 96 AD2d 719, 465 NYS26 365, 366 (4th Dept. 1983), quoting 300 Gramatan Avenue Associates v State Div. of Human Rights, supra, 408 NYS2d at 57. IV- The relationship of agent and principal is fiduciary in nature, "...founded on trust or confidence reposed by one person in the integrity and fidelity of another." Mobil Oil Corp. v Rubenfeld, 72 Misc.2d 392, 339 NYS2d 623, 632 (Civil Ct. Queens County, 1972). Included in the fundamental duties of such a fiduciary are good faith and undivided loyalty, and full and fair disclosure. Such duties are imposed upon real estate licensees by license law, rules and regulations, contract law, the principals of the law of agency, and tort law. L.A. Grant Realty, Inc. v Cuomo, 58 AD2d 251, 396 NYS2d 524 (1977). The object of these rigorous standards of performance is to secure fidelity from the agent to the principal and to insure the transaction of the business of the agency to the best advantage of the principal. Department of State v Short Term Housing, 31 DOS 90, conf'd. sub nom Short Term Housing v Department of State, 176 AD 2d 619, 575 NYS2d 61 (1991); Department of State v Goldstein, 7 DOS 87, conf'd. Sub nom Goldstein v Department of State, 144 AD2d 463, 533 NYS2d 1002 (1988). Respondent breached her fiduciary duties to Hilltopper by failing to disclose to Hilltopper that she was solely licensed as a real estate salesperson and not a broker, and as such she was not permitted by law to act in such capacity. V- Pursuant to RPL 440-a, no person shall hold herself out as a real estate broker without first procuring a license therefor. RPL 440 defines real estate broker as any person who, for another and for a fee, commission or other valuable consideration, lists for sale, sells at auction or otherwise, exchanges, buys or rents, or offers or attempts to negotiate a sale, at auction or otherwise, exchange, purchase or rental of an estate or interest in real estate Respondent admitted that she showed the Trotwood Property to Affenzelller for the purpose of renting it from Hilltopper and collected a $3,000 commission for this service. Because respondent is not licensed as a broker and her license as a real estate salesperson does not authorize such practices, she violated RPL 440-a. VI- Pursuant to RPL 442-a, No real estate salesperson in any place in which this article is applicable shall receive or demand compensation of any kind from any person, other than a duly licensed real estate broker with whom she is associated, for any service rendered or work done by such salesperson in the appraising, buying, selling, exchanging, leasing, renting or negotiating of a loan upon any real estate. The complainant has proven by substantial evidence that in 2011, respondent, a licensed real estate salesperson, brokered a lease for the Trotwood Property, demanded a commission directly from Hilltopper, and directly received a commission from Hilltopper without informing her Broker. These practices are explicitly prohibited by RPL 442- a, and therefore, respondent violated this provision. VII- Pursuant to RPL 441-c, the Department may revoke or suspend the license of a real estate salesperson, or impose a fine, for demonstrating untrustworthiness or incompetency to act as a real estate salesperson. The complainant has proven by substantial evidence that the respondent engaged in licensed activity as a real estate broker without ever possessing a real estate

5 broker s license. She demonstrated incompetence by representing herself as a Licensed Real Estate Agent, which is not a recognized license type, and by collecting a commission without the knowledge of her broker. VIII- Where a salesperson has received money to which she is not entitled, she may be required to return it, together with interest, as a condition of retention of her license. Donati v Shaffer, 83 NY2d 828, 611 NYS2d 495 (1994); Kostika v Cuomo, 41 N.Y.2d 673, 394 N.Y.S.2d 862 (1977); Zelik v Secretary of State, 168 AD2d 215, 562 NYS2d 101 (1990); Edelstein v Department of State, 16 A.D.2d 764, 227 N.Y.S.2d 987 (1962). Therefore, as the commission paid by Hilltopper was improperly collected directly by the respondent without the knowledge of the broker with whom she was then associated, she should be required to return it. DETERMINATION WHEREFORE, IT IS HEREBY DETERMINED THAT Kimberly Lane has violated RPL 440-a, RPL 442-a, 19 NYCRR 175, and has demonstrated incompetency and untrustworthiness in violation of RPL 441-c. Accordingly, pursuant to RPL 441-c, her license as a real estate salesperson is deemed revoked, effective immediately. No application for the renewal of that license, and no application for a new license by respondent shall be considered until she has produced proof satisfactory to the Department of State that she has refunded the sum of $3,000, together with interest at the legal rate for judgments (currently 9%) from April 28, 2011, to H.W. Guernsey Realtors, Inc. Dated: June 7, 2016 /s/ Teneka Frost-Amusa Administrative Law Judge