Brief for Respondert-Respondent

Transcription

1 Supreme Court, Appellate Division, Second Department, New York. In the matter of the Application of Evelyn L. ATANAS and Atanas Realty Corp., Petitioners-Appellants, v. ISLAND BOARD OF REALTORS, INC., Respondent-Respondent. No October 25, Suffolk County Clerk's Index No /03 Brief for Respondert-Respondent Howard W. Goldson, Esq., Goldson, Nolan, Connolly, P.C., Attorneys for Respondent-Respondent, 425 Broad Hollow Road, Suite 300, New York, New York 11747, (631) *i TABLE OF CONTENTS TABLE OF AUTHORITIES... ii PRELIMINARY STATEMENT... 1 QUESTIONS PRESENTED... 2 STATEMENT OF THE CASE STANDARD OF REVIEW... 5 POINT I: PETITIONER WAS NOT DENIED PROCEDURAL DUE PROCESS CHALLENGES TO THE HEARING PANEL POINT II: THE HEARING PANEL NEITHER MISAPPLIED NOR MISINTERPRETED ARTICLE 15 OF THE CODE OF ETHICS POINT III: THE PENALTY IMPOSED BY THE HEARING PANEL WAS NOT AN ABUSE OF ITS DISCRETION CONCLUSION CERTIFICATE OF COMPLIANCE *ii TABLE OF AUTHORITIES 300 Gramatan Ave. Associates v. State Division of Human Rights, 45 N.Y.2d Broker v. Board of Directors of the Broome County Board of Realtors, Inc., 51 A.D.2d 829 (Third Dept. 1976) Cornell Assocs. Realty Ltd. v. Gail S. Shaffer, as Secretary of State, 210 A.D.2d, 537 (3d Dept. 1994)... 20, 23 Joseph Almo v. Gail Shaffer, as Secretary of State of the State of New York, 149 A.D.2d Pell v. Board of Ed. of Union Free School Dist. No. 1 of Towns of Scarsdale and Mamaroneck, Westchester County, 34 N.Y.2d , 25

2 *1 PRELIMINARY STATEMENT Petitioner, Evelyn Atanas, is a member of the Long Island Board of Realtors, Inc. ("LIBOR") (R12). One of Petitioner's obligations as a member of LIBOR is to subscribe to and follow the Code of Ethics of the National Association of Realtors (the code). Furthermore, Petitioner agreed when she became a member of LIBOR that she could be disciplined for violation of that code (By-Laws of the Long Island Board of Realtors, Inc. Article 6, Section 3, R122). Procedures for disciplining members who violate the code are contained in a document entitled "Code of Ethics and Arbitration Manual" (the Manual) (R ). Petitioner was found to have violated Article 15 of the code by an ethic's hearing panel of LIBOR. She now comes before the court seeking relief pursuant to CPLR *2 QUESTIONS PRESENTED 1. Did LIBOR follow the procedures provided in the Manual? It is respectfully submitted that this question should be answered in the affirmative. 2. Was Petitioner provided with procedural due process? It is respectfully submitted that this question should be answered in the affirmative. 3. Was there on the record as a whole substantial evidence to support the decision of the hearing panel? It is respectfully submitted that this question should be answered in the affirmative. 4. Was the penalty imposed by the hearing panel an abuse of the panel's discretion? It is respectfully submitted that this question should be answered in the negative. *3 STATEMENT OF FACTS On or about January 31, 2003, a complaint was made against Petitioner by another LIBOR member, Emmett Laffey and his company Century 21 Laffey Associates (R40-43). On February 12, 2003, Petitioner answered said complaint (R45 & 46). On March 4, 2003, a hearing was held before a panel of the Professional Standards Committee of LIBOR (the panel)concerning the issues raised by the aforesaid complaint and answer. After said hearing and on March 4, 2003, the panel rendered a decision finding that the Petitioner had violated Article 15 of the code and, as a result of said violation, reprimanded the Petitioner, required her to attend an educational course and to pay a fine of $1,000. Thereafter, Petitioner appealed said decision based on alleged procedural errors, alleged misapplication or misinterpretation of Article 15 of the code and the reasonableness of the penalty imposed by the hearing panel (R ). On June 26, 2003, an appeal panel comprised of members of the board of directors of LIBOR heard Petitioner's appeal and after hearing the same, affirmed the original decision (R114). Thereafter, Petitioner commenced this proceeding alleging that the hearing panel failed to follow the procedures set forth in the Manual; that the decision of the panel was arbitrary and *4 capricious including the measure or mode of discipline imposed; that the determination of the hearing panel was not supported by substantial

3 evidence and that the appeal panel failed to consider de novo the factual findings of the panel. *5 STANDARD OF REVIEW The standards by which the panel's decision must be judged are set forth in CPLR Section 7803(3) and 7803(4). These sections raise the following questions: 1. Was Petitioner afforded procedural due process by LIBOR? 2. Was the panel's decision arbitrary, capricious or an abuse of discretion? 3. Was the panel's decision on the entire record supported by substantial evidence? 4. Was the penalty imposed by the panel an abuse of its discretion? *6 POINT I PETITIONER WAS NOT DENIED PROCEDURAL DUE PROCESS Petitioner makes the following arguments with respect to her claim that she was denied procedural due process by LIBOR. 1. Audrey Livingstone should have been automatically disqualified because she is associated with a company which is a franchisee of Century 21 Real Estate. The complainant in the hearing was also associated with such a franchisee. 2. Bettie Meinel became an employee of the complainant three months after the panel made its decision. 3. All but one of th panel members lacked the experience required by the Manual. 4. The complainant controlled and disrupted the hearing process with the result that Petitioner was unable to present her case. 5. Petitioner was denied the opportunity to object to members of the panel. *7 6. The appeal panel failed to consider de novo the factual findings of the panel. CHALLENGES TO THE HEARING PANEL Petitioner claims that the Manual required that the chair of the hearing panel, Audrey Livingstone, be automatically disqualified from sitting because her real estate company is a franchisee of Century 21 Real Estate, an international real estate franchise corporation. Petitioner argues that since the complainant, Century 21 Laffey Associations, is also a franchisee of the same international franchise corporation, the Manual requires such automatic disqualification. Petitioner points to Part 1, Section 2 of the Manual (R177) which requires that a member of a hearing panel shall be automatically disqualified if such member "is an employer, partner, employee or in any way associated in business with the complainant, respondent or a Realtor acting as counsel for complainant or respondent". Neither LIBOR nor the National Association of Realtors consider affiliation with a national or international franchise as being associated in business so as to require automatic disqualification of a panel member (Affidavit of Joseph E. Mottola, paragraph 4, R541). Furthermore, Petitioner points to no

4 authority which states that such *8 automatic disqualification is required by virtue of the fact that two companies belong to the same national or international franchise. Instead, the Petitioner asks this court to substitute its interpretation of the Manual for the interpretation of the Manual by its author, the National Association of Realtors, and by LIBOR, a local constituent board of Realtors. It is respectfully submitted that the interpretation of the language in the Manual is properly the province of its authors and LIBOR and not the province of this court. Absent a showing that LIBOR'S interpretation is irrational, arbitrary or capricious or that such interpretation was made specifically for the instance of this hearing and is not uniformly follow by LIBOR and the National Association of Realtors, this court should not substitute its judgment for that of LIBOR. No such showing has been made in this petition nor does Petitioner have the temerity to even suggest that such is the case. The next attack on the panel is the allegation that the members of the panel did not have the requisite experience to sit and hear the case (Petitioner's Brief pages 24-25). In this regard, Petitioner misconstrues the clear language of the Manual. Petitioner-Appellant claims that the Manual requires that panel members should have two years experience as members on an ethic's hearing *9 panel in order to be qualified to sit (R25). The Manual simply does not state such as a requirement. The qualifications recommended, but not required by the Manual, are set forth in Part 2, Section 15 of the Manual (R184). The court can observe on the record that experience as a hearing panel member is not among the recommended qualifications. In her petition, Petitioner advises this court as she did the LIBOR appeal panel that some three months after the panel rendered its decision, one of the panelists, Bettie Meinel, took a position as an employee of the complainant, Century 21 Laffey Associates. This fact is not denied. Petitioner goes on to say that she is informed and believes that Ms. Meinel had been in discussion with Laffey about joining his company for at least several months prior to June, 2003 (Petition paragraph 20, R 16). Nowhere in her Petition, or for that matter in the Brief filed on her behalf, does she set forth the sources of her information and belief. Other than her above statement, Petitioner gives no evidentiary basis which would allow anybody to conclude that at the time that Ms. Meinel sat on the hearing panel, she had any indication that there was a future employment available to her by one of the parties to the hearing. Indeed, Ms. Meinel specifically denies that such is the case. In paragraph 2 of *10 her Affidavit submitted in this proceeding, Ms. Meinel is able to pinpoint the exact date when she first had a conversation with anybody from Century 21 Laffey Associates with respect to potential employment. That date, Ms. Meinel states, was May 5, In paragraph 3 of her Affidavit, she unequivocally states that prior to that date, May 5, 2003, she had no discussion with anyone from Century 21 Laffey Associates with respect to becoming connected with that company. According to Ms. Meinel, at the time she acted as a panelist in Petitioner's case, she had no indication that an invitation to join Century 21 Laffey Associates would be forthcoming. In paragraph 4 of her Affidavit, Ms. Meinel swears to the court that she acted totally impartially as a member of that hearing panel and made her decision based solely upon the complaint, the response to the complaint, the testimony and the other evidence produced by the parties during the hearing (R ). It is respectfully submitted that based on the clear and factual statements of Ms. Meinel, Petitioner cannot succeed in her challenge to Ms. Meinel's participation as a member of the hearing panel based simply upon her belief that Ms. Meinel had conversations concerning future employment with the complainant, Century 21 Laffey Associates, at or prior to the time she sat on the hearing panel. This *11 is particularly so where Petitioner, despite good counsel and representation, fails to set forth any basis for that belief or any

5 source for the unspecified information she claims she possesses. Petitioner now argues that she was unaware of the persons who were to make up the hearing panel until the day of the hearing itself and, therefore, was unable to object to members of the panel. Respondent admits that because the members of hearing panels are all volunteers, LIBOR itself often does not know the exact makeup of any particular panel prior to the day of the hearing (Mottola Affidavit paragraph 4, R540.) Because such is the case, LIBOR has established a procedure to assure that participants in ethics hearings have an opportunity to object to persons who they believe cannot judge them fairly and impartially. That procedure, which was followed in this case, consists of notifying each participant to an ethics hearing of their right to object to the potential members of the hearing panel at the time that the notice of hearing is mailed to the parties. The official notice of the hearing in this particular case is dated February 4, Paragraph 3 of such official notice reads as follows: "The members of the Professional Standards Committee who may be appointed to hear the case, are set forth in the attached sheet." *12 Paragraph 4 of the notice reads as follows: "Either party may file with the Professional Standards Committee not less than ten (10) days prior to the date of hearing written request for disqualification from the hearing of any member of the panel for any of the following reasons: a) is related by blood or marriage (to the fourth degree) to either complainant or respondent; b) is an employer, partner, or employee or in any way associated in business with either complainant or respondent; c) knows of any reason, acceptable to the Professional Standards Committee, that may prevent him from rendering an impartial decision." (R549) Annexed to the notice is a list of the professional standards committee for the year That list is contained on pages 554 and 555 of the Record. The list sets forth the name of the potential panel members, the name of the real estate company with which they are affiliated and the location of the office in which the potential member of the panel conducts his/her business. In 2003, the list that was supplied to Petitioner contains the names of 44 potential panel members. Of those 44 members, 12 panel members were affiliated with Century 21 franchisees. Petitioner does not deny that she received both the notice of hearing and the list of potential panelists (R50). The records of LIBOR do not show that Petitioner objected to any of the persons on the potential panelists list (Mottola Affidavit paragraph 4, R541). *13 Furthermore, Petitioner fully participated in the hearing itself, face-to-face with all of the members of the panel. At no time did she raise an objection to any panel member nor was she denied the opportunity to raise such an objection. Indeed, the first objection raised by Petitioner was after the panel heard the case and rendered its decision. Clearly, Petitioner, unhappy with the decision made by the panel, is now grasping at straws to find reasons for the reversal of that decision. Petitioner next alleges that the complainant, Emmett Laffey, was allowed to control the hearing and that the same was disorderly and disruptive. She claims that Mr. Laffey called her evil and asinine in the proceedings (R32). In fact, such is not the case. Mr. Laffey used the word evil at page 60 of the Record stating that Petitioner had evil intentions with respect to the statements that were at issue in this hearing. Considering the nature of Article 15, his opinion with respect to the intentions of Petitioner was certainly relevant. With respect to the use of the word asinine, the court is respectfully referred to pages 66, 88 and 96 of the Record. The court can see for itself that in all cases, Mr. Laffey was referring to the situation or the testimony and

6 not to Petitioner. The entire transcript of the proceedings is before the court and the *14 court can determine whether or not the proceedings were so disruptive so as to warrant their being set aside. The court is referred to paragraph 5 of Ms. Meinel's Affidavit in which she expresses her opinion that the hearing was conducted in a fair and reasonable manner. The court is also referred to pages 98 and 99 of the record in which the chair asked both parties to the hearing the following question: "Have each of you had an adequate opportunity to testify, present evidence and conduct cross-examination?" On page 99, Ms. Atanas responded: "Yes." Petitioner's final argument with respect to procedural due process has to do with the appeal of the determination of the hearing panel. Even if an error was made with respect to the appeal process, if the original hearing determination cannot be set aside in this proceeding, then, and any error committed in the appeal process is irrelevant and should be disregarded by this court. In fact, however, no error occurred. Petitioner argues that the appeal panel erred in not revisiting de novo the factual determinations reached by the hearing panel (Petition paragraph 14, R26, Petitioner's Brief page 14). Prior to the appeal hearing, counsel for the Petitioner made it clear that he intended to offer testimony so that the appeal *15 panel would be able to revisit the facts of the case heard by the hearing panel and reach a decision de novo. Counsel was advised that the panel would not reconsider the case de novo but that evidence could be introduced to show that the hearing panel misapplied or misinterpreted Article 15 of the code, denied the Petitioner procedural due process and on the issue of the severity of the discipline imposed by the hearing panel. In this proceeding, Petitioner claims that she was denied due process by virtue of this ruling. Appeals from ethic's decisions are governed by Section 23 of the Manual (R192). Section 23(e) is relevant to the claims made by Petitioner herein. The pertinent part of that section reads as follows: "Either party may present to the directors reasons why the hearing panel's recommendation should be followed or not, but no new evidence shall be received (except such new evidence as may bear upon a claim of deprivation of due process), and the appeal shall be determined on the transcript or summary." (Emphasis added) The discussion in the Manual at page 223 of the Record under the rubric "guidelines" states that the appeal hearing tribunal will seek to determine all ascertainable and relevant facts pertaining to the matter under consideration. It also states that after the appeal hearing tribunal has heard all of the evidence *16 and testimony, they will go into executive session. Petitioner points to these statements to support her argument that she was entitled to a de novo hearing with respect to the merits of the complaint which was heard by the initial hearing panel. In making this argument, she clearly ignores the fact that the matters under consideration in the appeal were the matters set forth in Section 23(e). Furthermore, this language in the script must be read in the context of the entire script which clearly shows the issues which the appeal board was entitled to consider. That script on page 222 of the Record under the rubric "chairperson's opening statement" reads as follows: The respondent (Petitioner) in the original ethic's hearing may appeal the decision and/or recommendation for discipline on the basis (1) misapplication or misinterpretation of an Article(s) of the Code of Ethics of the National Association or Realtors, (2) alleged procedural deficiency or any lack of procedural due process, or (3) the discipline recommended by the hearing panel." Clearly, reading this statement as well as Section 23(e), the language which refers to the panel determining all ascertainable and relevant facts pertinent to the matter and hearing all of the evidence and testimony can only be construed to mean that the panel's obligation was to review such facts and *17

7 evidence as relates to the questions of (1) procedural due process, (2) misinterpretation or misapplication of the code, and (3) the discipline imposed by the hearing panel. Indeed, this understanding was confirmed with the National Association of Realtors during the appeal process (Affirmation of Howard W. Goldson paragraph 3, R ). There was no error committed by the appeal board. Petitioner's argument that she was denied an opportunity for a hearing de novo is meaningless because she was never entitled to such a hearing de novo. Based upon the foregoing, it is clear that the Petitioner has not established that she was denied procedural due process either in the initial hearing or in her appeal. POINT II THE HEARING PANEL NEITHER MISAPPLIED NOR MISINTERPRETED ARTICLE 15 OF THE CODE OF ETHICS Annexed to the original complaint presented to the hearing panel was an article of which appeared in the column of Denis Hamill in the October 13, 2002 New York Daily News (R43). Within that Article, Mr. Hamill wrote as *18 follows: "At a meeting of the Long Island Board of Realtors on Tuesday, every single member was outraged by this", says Evelyn Atanas of Atanas Realty. During the course of the hearing, Mr. Laffey, one of the complainants, testified as to his business organization and the fact that the statements made by the Petitioner had "a tremendous effect on my overall organization" (R52). He specifically referred to the above quotation which appeared in Mr. Hamill's column in his testimony (R53). He pointed out to the panel that the statement was particularly aggrievous because of the role that Ms. Atanas played as a member of LIBOR's leadership (R59-61). Ms. Atanas denied making the statement (R81). In response to the complaint, the Petitioner submitted to the panel a letter from Edward Freeberg who is president of LIBOR's Central Nassau Chapter. It was Petitioner's contention that in her discussion with reporter Hamill, she talked with him concerning what occurred at a meeting of that chapter which took place on October 8, 2002 (R83). The court can read Mr. Freeberg's letter which clearly refers to the fact that at the meeting, Petitioner brought up the subject of the eviction of a renter by a broker. According to the letter, there was a discussion about Realtors making an attempt to assist an help this renter. Mr. Freeberg's *19 letter does not confirm the statement that every member at that meeting was outraged by the situation. The decision of the hearing panel appears on the Record at pages 104 and 105. At page 105, the panel sets forth that there was evidence provided that Ms. Atanas stated to the Daily News, reporter: "At a meeting of the Long Island Board of Realtors on Tuesday, every single member was outraged by this." The panel also acknowledged that Petitioner specifically denied making that statement. The panel wrote: "Ms. Atanas specifically denied making that portion of the statement in the October 13, 2002 Daily News article that pertained to the opinion of other LIBOR members." From the opinion, it is clear that the panel considered the newspaper article attributing said statement to the Petitioner and the fact of her denial. The hearing panel then found as follows: "...the hearing panel finds that the statement 'at a meeting of the Long Island Board of Realtors on Tuesday, every single member was outraged by this' was in fact made by Evelyn Atanas under circumstances which constituted a violation of Article 15 of the Code of Ethics". Although Mr. Laffey had complained of the other statements attributed to Ms. Atanas and alleged that in fact it was she who sought out the Daily

8 News reporter, the committee either *20 rejected those allegations or found that the same did not constitute a violation of the code. Petitioner now concedes that Ms. Atanas made the above statement but alleges that the statement was true and not misleading (Petitioner's Brief page 19). The question presented to this court is whether or not there is substantial evidence on the Record from which the hearing panel could conclude as it did. This court is referred to the matter of Cornell Assocs. Realty Ltd. v. Gail S. Shaffer, as Secretary of State, 210 A.D.2d, 537 (3d Dept. 1994) where the court wrote "...it is well settled that an administrative determination will be upheld if supported by substantial evidence in the Record as a whole, even if the Record also contains evidence that will support a contrary conclusion". In reaching said decision, the Third Department depended upon the case of Joseph Almo v. Gail Shaffer, as Secretary of State of the State of New York, decided by this court on April 3, 1989 and reported at 149 A.D.2d 417. Substantial evidence is defined in Blacks Law Dictionary as: "such evidence that a reasonable mind might accept as adequate to support a conclusion". If the decision of LIBOR's ethic's hearing panel on a whole complies with the *21 substantial evidence rule, this court should not disturb it. (300 Gramatan Ave. Associates v. State Division of Human Rights, 45 N.Y.2d 176). Here, the newspaper article clearly quotes Ms. Atanas as saying that at a meeting of the Long Island Board of Realtors, every single member was outraged. That quotation appearing in the New York Daily News was substantial evidence which the hearing panel had a right to consider along with Petitioner's denial that she made the statement. The Record is clear that the hearing panel considered both the fact that the newspaper attributed the statement to Petitioner and her denial in reaching its decision. The letter from Mr. Freeberg submitted by the Petitioner as part of her answer clearly fails to state that there was any expression of outrage which occurred at that meeting. Clearly, the hearing panel had a right to take the absence of such a statement by Mr. Freeberg into consideration. The committee had a right to consider the fact that the Petitioner had served as a member of LIBOR leadership for over 10 years (R91) and that the statement which the panel found was made by Petitioner did not specify that the meeting she was discussing was a meeting of 1 of LIBOR's 13 chapters (R544). *22 It is respectfully submitted that based upon this evidence, the hearing panel could reasonable conclude that the statement "at a meeting of the Long Island Board of Realtors on Tuesday, every single member was outraged by this" was in fact made by the Petitioner. Having made that finding, based on substantial evidence, it would not be either a misinterpretation or a misapplication of the code for the panel to conclude that the statement was knowingly or recklessly made and that it was at least misleading if not false. It is respectfully submitted that the hearing panel neither misapplied nor misinterpreted Article 15 of the code and that the conclusions of the hearing panel are in fact supported by substantial evidence. POINT III THE PENALTY IMPOSED BY THE HEARING PANEL WAS NOT AN ABUSE OF ITS DISCRETION This court may set aside or alter the penalty imposed by LIBOR's ethic's hearing panel only if it determines that the measure of punishment or discipline imposed is so disproportionate to the offence, in the light of all circumstances, as to be shocking to one's sense of

9 fairness. Pell v. Board of Ed. of Union Free *23 School Dist. No. 1 of Towns of Scarsdale and Mamaroneck, Westchester County, 34 N.Y.2d 222. Petitioner asserts that prior to the hearing in question, she had an unblemished record dating back over 20 years. (Petitioner's Brief page 28) She also asserts that no harm was done to the public and that the complainant did not demonstrate any harm or ill effects as a result of her ethical violation. Certainly, Petitioner's record was one of the factors which the panel had a right to consider. They also had the right to consider complainant's claim of damage as set forth in his testimony; the fact that the statement made to the reporter was intentional; the fact that Petitioner's statement, because she is part of the LIBOR leadership, would have a powerful effect on the minds of the public and the fact that her statement indicated that the meeting referred to was a meeting of LIBOR as opposed to a meeting of 1 of 13 chapters of LIBOR. Given these factors, one cannot say that the discipline imposed is shocking to one's sense of fairness. In support of her position, Petitioner cites Cornell Assocs. Realty Ltd. v. Shaffer, 210 A.D.2d 457 (incorrectly cited as page 822) in which the Third Department reversed a finding against a corporate broker where the evidence demonstrated misconduct only by two of the corporate broker's agents. The *24 basis for the reversal was Real Property Law 442-c which is clearly inapplicable to this case. Petitioner also cites Broker v. Board of Directors of the Broome County Board of Realtors, Inc., 51 A.D.2d 829 (Third Dept. 1976) where the Third Department vacated a penalty of suspension of a broker from membership in the board of Realtors and reduced a fine of $1,000 to $500. The reduction of the fine in Broker to $500 in 1976 dollars equates to much more than the $1,000 imposed upon this Petitioner in the year As pointed out by Petitioner in her Brief at page 27, one of the purposes of a penalty in an ethics case is to provide an educational aspect with respect to enforcement of the code. Here, the requirement that the Petitioner attend a course entitled: "Making the Right Decision Even When Nobody is Looking" clearly fulfills the educational purpose of ethics violation penalties. Obviously, the hearing panel felt that Petitioner needed a refresher with respect to the obligations placed upon her by the code. Finally, the issuance of a reprimand with respect to Petitioner's conduct is not inappropriate given the finding of the violation which involves knowingly or recklessly making false or misleading statements. *25 It is respectfully submitted that under the standard of Pell v. Board of Ed., the penalty imposed by the panel should not be disturb. *26 CONCLUSION For all of the foregoing reasons, the Petition herein should be dismissed and the relief requested by the Petitioner denied.