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, -against- DECISION Complaint No.: 2015-1024 ALI B. DIEYE and PAULA J. MCKENZIE, Respondents. -------------------------------------------------------X The above noted matter came on for hearing before the undersigned, Roger Schneier, on September 28, 2017 at the office of the Department of State located at 123 William Street, New York, New York. The respondents did not appear. The complainant was represented by Matthew Wolf, Esq. COMPLAINT The complaint alleges that respondent real estate salesperson Ali B. Dieye unlawfully received compensation for a real estate brokerage transaction from someone other than the real estate broker with whom he was associated, retained an unearned commission after failing to fully disclose the nature of an apartment offered for rent, falsely held himself out to be a real estate broker, and engaged in a transaction without the required supervision of the broker with whom he was associated. It is further alleged that respondent real estate broker Paula J. McKenzie failed to supervise respondent Dieye as required while he was associated with her as a real estate salesperson.
FINDINGS OF FACT 1) Notices of Hearing together with copies of the Complaint were served by regular and certified mail addressed to the respondents at their last known business address and posted on June 11, 2017. The certified mail to Mr. Dieye was returned by the Postal Service marked "return to sender, unable to forward." The certified mail to Ms. McKenzie was returned by the Postal Service marked "unclaimed, unable to forward." The regular mailings were not returned (State's Ex. 1). 2) Ali B. Dieye is, and at all times hereinafter mentioned was, duly licensed as a real estate salesperson in association with Paula J. McKenzie. Paula J. McKenzie is, and at all times hereinafter mentioned was, duly licensed as a real estate broker in her individual name (State's Ex. 2). 3) On May 25, 2015 Kesi A. Augustine contacted Mr. Dieye in response to an advertisement for a Brooklyn studio apartment which he had placed on Craig's List. Ms. Augustine made an appointment with Mr. Dieye, and on May 26, 2015 he showed her the apartment. She applied to rent the apartment, and was accepted by the landlord the next day (State's Ex. 3 and 4). 4) On May 28, 2015 Ms. Augustine and her boyfriend, Richard McCrae, met with Mr. Dieye and the landlord, Mostafa Mohammed, and paid one month's rent, one month's security, and a broker's fee, each in the amount of $1,200.00. The commission check was made payable directly to, and was negotiated by, Mr. Dieye (State's Ex. 3, 6, 7, 11, and 12). 5) Ms. Augustine and Mr. Mustapha executed a one year lease, she was given the keys to the apartment on June 8, 2015, and she began to clean the apartment. In the course of that cleaning she removed and disposed of several appliances which she found in the kitchen. That evening she was contacted by her father, who told her that he heard from Mr. Mohammed that there was a problem and that Ms. Augustine needed to contact him. She did so, and was informed that the kitchen was shared with another tenant, to whom the appliances belonged. That was the first time that anyone, including Mr. Dieye, had told her that the apartment had a shared kitchen, a fact which did not appear in the Craig's List advertisement (State's Ex. 3, 4, and 13). 6) In a telephone conversation Mr. Dieye acknowledged to Ms. Augustine that he had failed to tell her that the kitchen was shared, a fact of which he was aware at all relevant times (State's Ex. 3,14 and 15). 7) Ms. Augustine and Mr. McCrae returned to the apartment on June 14, 2015, bringing with them representatives of the Police and Fire Departments. The Fire Department representative observed various possible building code violations, including the lack of a proper Certificate of Occupancy (State's Ex. 3). 8) Mr. Mohammed returned the rent and security to Ms. Augustine on June 14, 2015. Mr. Dieye refused to return the commission (State's Ex. 3, 8, 10).
9) In the course of the transaction Mr. Dieye used a business card which identified him as a "LICENSE (sic) REAL ESTATE BROKER" (State's Ex. 5). 10) Ms. McKenzie was unaware of the transaction until she learned of it from the complainant's investigator (State's Ex. 9). OPINION AND CONCLUSIONS OF LAW I- To obtain personal jurisdiction and bind the respondents to the agency decision the complainant must properly serve the respondents with notice of the hearing and a copy of the Complaint and afford them the opportunity to be heard. See, Siegel, New York Practice 58 (4th ed. 2005). Service of the Notice of Hearing and Complaint in this matter was made by certified and regular mail addressed to the respondents at their last known business address appearing in the records of the Department of State. Both certified mailings were returned without forwarding addresses, but the regular mailings were not returned. Where, as here, service by certified mail is returned by the Postal Service, the complainant is required to take any reasonable and practical additional steps available to ensure notice is afforded. See, Jones v. Flowers, 547 US 220, 226 (2006)). In this instance there were no reasonable and practical steps available since no forwarding addresses were available. The complainant was not required to search beyond its records and those provided by the US Postal Service for Appellant s current address. Department of State v Battista, 05 DOS APP 11 (2011). Service properly made in a manner reasonably calculated to provide notice of the time, date, place, manner and nature of the proceedings is sufficient whether or not the opposing party actually receives the notice, see Persad v Division of Licensing Services, 63 DOS APP 09 (2009); Pinger v Division of Licensing Services, 23 DOS APP 07 (2007). As notice was properly served in this instance the hearing was permissibly conducted in the absence of the respondents. Patterson v Department of State, 35 AD2d 616 (3d Dept. 1970); Staley v Division of Licensing Services, 14 DOS APP 01 (2001); Department of State v Battista, 05 DOS APP 11 (2011); Roy Staley v Division of Licensing Services, 14 DOS APP 01 (2001); Matter of the Application of Rose Ann Weis, 118 DOS 93 (1993). II- In agreeing to assist Ms. Augustine in obtaining an apartment Mr. Dieye entered into an agent and principal relationship with her. 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. Dubbs v Stribling & Assoc., 96 NY2d 337, 728 NYS2d 413 (2001); Department of State v Short Term Housing, 31 DOS 90 (1990), 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). Mr. Dieye advertised an apartment without disclosing that it had a shared kitchen, and then showed to apartment to Ms. Augustine without telling her that the kitchen was shared. When, having learned that the kitchen was shared, Ms. Augustine decided not to rent the apartment, he refused to refund the commission which she had paid to him. His conduct was a breach of his fiduciary duties, and a demonstration of untrustworthiness. III- Pursuant to Real Property Law (RPL) 442-a, a real estate broker may not receive or demand compensation for a real estate brokerage transaction from any person other than the real estate broker with whom he or she is associated. By accepting a commission directly from Ms. Augustine Mr. Dieye violated that statute, further demonstrated untrustworthiness, and demonstrated incompetence as a real estate salesperson. IV- Pursuant to 440-a, it is unlawful for any person to hold him or herself out to be a real estate broker without being so licensed. By using a business card which identified him as a real estate broker Mr. Dieye violated that statute and further demonstrated untrustworthiness and incompetence. V- Where a broker or salesperson has received money to which he is not entitled, he may be required to return it, together with interest, as a condition of retention of his 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). Mr. Dieye received a commission under false pretenses for a transaction which, because of its fraudulent nature, was properly rescinded. Accordingly, Mr. Dieye should be required to refund that $1,200 commission, plus interest, to Ms. Augustine. VI- A real estate broker is obligated to supervise the real estate brokerage activities of the salespersons association with him or her. RPL 441(1) (b), 19 NYCRR 175.21. That supervision must consist of regular, frequent and consistent personal guidance, instruction, oversight and superintendence by the real estate broker with respect to the general real estate brokerage business conducted by the broker, and all matters relating thereto. 19 NYCRR 175.21(a). That duty has been affirmed judicially, Division of Licensing Services v Giuttari, 37A DOS 87, conf'd. 535 NYS2d 284 (AD 1st Dept. 1988); Friedman v Paterson, 453 NYS2d 819 (1982), aff'd. 58 NY2d 727, 458 NYS2d 546, and has been restated in numerous determinations of the Department of State. Division of Licensing Services v Misk, 64 DOS 92 (1992); Division of Licensing Services v Gelinas, 38 DOS 92 (1992); Division of Licensing Services v Levenson, 52 DOS 91(1991); Division of Licensing Services v Capetanakis, 42 DOS 90 (1990); Division of Licensing Services v Shulkin, 4 DOS 90 (1990). Where, however, the salesperson has acted in such a way as to prevent the broker from being aware of his conduct, Division of Licensing Services
v Bell, 21 DOS 89 (1989), and the broker has no reason to be aware that the salesperson is engaging in any sales activity, it cannot be said that the broker failed to meet his supervisory obligations. The complainant has presented no evidence to establish that Ms. McKenzie was aware of Mr. Dieye's conduct in the subject transaction, or that she received any benefits, profits, or proceeds from it. RPL 442-c. Accordingly, the charge that Ms. McKenzie failed to properly supervise Mr. Dieye must be dismissed. DETERMINATION WHEREFORE, IT IS HEREBY DETERMINED THAT Ali B. Dieye has violated Real Property Law 440-a and 442-a and has demonstrated untrustworthiness and incompetency, and accordingly, pursuant to Real Property Law 441-c, his license as a real estate salesperson, UID #40DI1153899, is revoked effective immediately. Should he ever apply for any license pursuant to Real Property Law Article 12-A, no action shall be taken on that application until he has produced proof satisfactory to the Department of State that he has refunded the sum of $1,200.00 plus interest at the legal rate for judgments (currently 9% per year) from May 28, 2015 to Kesi A. Augustine. He is directed to surrender his license certificate, pocket card, and salesperson's identification by mail addressed to Norma Rosario, Department of State, Division of Licensing Services, One Commerce Plaza, 99 Washington Avenue, 5th Floor, Albany, New York 12231-0001, and IT IS FURTHER DETERMINED THAT the complaint against Paul J. McKenzie is dismissed. /s/ Roger Schneier Administrative Law Judge Dated: October 2, 2017