432 DOS 09

STATE OF NEW YORK

DEPARTMENT OF STATE

OFFICE OF ADMINISTRATIVE HEARINGS

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In the Matter of the Complaint of

DEPARTMENT OF STATE

DIVISION OF LICENSING SERVICES,

                   Complainant,                 DECISION

         -against-

PIERRE L. GODARD,

                   Respondent.

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    The above matter was heard by the undersigned, Scott NeJame, on May 13, 2008 at the office of the Department of State located at 123 William Street, New York, New York.

    The respondent, having been advised of his right to be represented by an attorney, chose to represent himself.

    The complainant was represented by Senior Attorney Robert Leslie, Esq.

COMPLAINTS

    The complaint, which was prepared by Associate Attorney Whitney A. Clark, Esq., alleges that the respondent real estate broker: induced a property owner to sign a new listing agreement with RE/MAX Central knowing that the owner had a pre-existing binding exclusive listing agreement and contract of sale with RE/MAX West; misappropriated the commission check which should have been paid to RE/MAX West; and failed to cooperate with a Department of State investigation.

    The complaint also named John C. Himonidis and RE/MAX Central as respondents, but they settled with the complainant prior to hearing.

FINDINGS OF FACT

    1) The notice of hearing scheduling the hearing for December 17, 2007 and a copy of the complaint were served on the respondent by certified mail at his last known business and home address and delivered on October 29 and 27, 2007, respectively (State’s Ex. 1). The hearing was subsequently adjourned to April 24, 2008 and finally, May 13, 2008.

    2) The respondent was licensed as a real estate broker associated with RE/MAX West for the period of May 5, 2003 to August 24, 2005. He became associated with RE/MAX Central for the period of August 25, 2005 to October 12, 2006. He became associated with Keystone Realty USA Corp. for the period of October 31, 2006 to December 29, 2006. The respondent’s license expired on May 5, 2007 (State’s Ex. 2). The tribunal takes official notice of the records of the Department of State and finds that the respondent renewed his license as a real estate broker and is associated with Exit Realty Partners for the period of February 10, 2009 through February 9, 2011.

    3) On or about March 7, 2005, the respondent and his sister-in-law, Marie Ange Dodard, executed a listing agreement for RE/MAX West to procure a purchaser for the property owned by Ms. Dodard and located at 2421 Cedar Swamp Road, Brookville, New York (“the property”). The listing agreement provided for a listing price of $1,595,000, a 10% commission to be paid to RE/MAX West if certain conditions were met, and an expiration date of November 1, 2005 (State’s Ex. 4). The respondent and RE/MAX West became the agent for Ms. Dodard.

    4) Even though the owner of the property was Ms. Dodard, the owner’s name listed on both the listing agreement and the lead-based paint disclosure form is “Godard Assoc.” (State’s Ex. 4 and 5). The respondent used this corporate name in order so that his sister-in-law would not have to pay a large capital gains tax on the sale of the property (Hearing transcript, p. 38).

    5) On July 18 and 26, 2005, respectively, Manjeet Bawa and Ms. Dodard executed a purchase and sale contract for Mr. Bawa to purchase the property for $1,411,100 (State’s Ex. 12). The contract provided that the real estate broker on the transaction was RE/MAX West.

    6) In or about late August 2005, the representative real estate broker of RE/MAX West, Otto Lugo, became aware of what he believed was an indiscretion of the respondent, wherein the respondent obtained the proceeds of a closing directly without the involvement of the brokerage. Therefore, he terminated the respondent effective August 24, 2005 (State’s Ex. 2).

    7) On September 1, 2005, Ms. Dodard and the respondent executed a non-exclusive brokerage agreement for RE/MAX Central Realty (“RE/MAX Central”) to procure a purchaser for the property (State’s Ex. 9). The agreement provided that the seller would pay a 10% commission to RE/MAX Central if certain conditions were satisfied. The agreement also stated that if the seller paid a commission to RE/MAX Central, RE/MAX Central would indemnify and hold the seller harmless from any claims made by any other brokers (State’s Ex. 9). RE/MAX Central and the respondent became the agent for Ms. Dodard.

    8) On November 30, 2005, the closing on the property took place between Ms. Dodard and Manjeet and Sonia Bawa (“the Bawas”) (State’s Ex. 14). The settlement statement for the closing provided that the sales price was $1,675,000 and the brokerage commission was $137,000 (State’s Ex. 14) . On December 2, 2005, the $137,000 commission was paid to RE/MAX Central (State’s Ex. 16). Of that $137,000, the respondent’s corporation (for tax purposes) received $121,735.35 (State’s Ex. 17).

    9) Only later did Mr. Lugo learn that the closing on the property had taken place.

    10) By separate certified letters dated April 26, 2006 to the respondent and John C. Himonidis, the representative real estate broker of RE/MAX Central, Mr. Lugo stated that it came to his attention that the property closed and was sold for $1,675,000, and he demanded the 10% commission of $167,500 be paid to RE/MAX West (State’s Ex. 7 and 8).

    11) Mr. Lugo did not receive a commission from the respondent or RE/MAX Central.

    12) At the hearing, the respondent testified that, although he lived in the property, his sister-in-law owned it because he had credit problems. He also claimed that Mr. Lugo has a history of not telling the truth to the tribunal and he offered into evidence Respondent’s exhibits B and C as proof (Resp.’s Ex. B and C). However, those documents did not establish that Mr. Lugo lied in his present or previous testimony before the tribunal. In fact, the respondent was represented by an attorney in his previous disciplinary proceeding and he and his attorney were in the best position to cross examine Mr. Lugo in an attempt to impeach his credibility. The respondent was apparently not successful in impeaching Mr. Lugo’s testimony at the previous hearing because the decision against the respondent (see discussion below) did not make issue of Mr. Lugo’s credibility. Furthermore, the respondent was given the opportunity to cross examine Mr. Lugo in this proceeding and he chose only to ask him a few questions about the ownership and sale of the property, nothing else.

    13) In a prior disciplinary proceeding commenced in July 2006 by the complainant against the respondent, Administrative Law Judge Roger Schneier (“Judge Schneier”) rendered a decision dated December 28, 2006 finding that the respondent engaged in fraudulent practices and demonstrated untrustworthiness by bypassing his broker, Mr. Lugo, and obtaining direct payment of the entire commissions in three instances. DLS v. Godard, 1021 DOS 06 (2006). Although the facts of that case warranted the revocation of the respondent’s license, Judge Schneier took into consideration mitigating factors and imposed a six month suspension against him. That decision was affirmed on appeal. Godard v. DLS, 27 DOS APP 07 (2007).

OPINION AND CONCLUSIONS OF LAW

    I- Pursuant to 19 NYCRR §175.8, “No real estate broker shall negotiate the sale, exchange or lease of any property directly with an owner or lessor if he knows that such owner, or lessor, has an existing written contract granting exclusive authority in connection with such property with another broker.” The respondent violated this regulation and thereby demonstrated untrustworthiness in violation of Real Property Law §441-c.

    Even though the respondent lived on the property, the owner of the property was Ms. Dodard. The respondent prepared and executed an exclusive listing agreement and residential property data report (State’s Ex. 4), a lead paint disclosure form, a real estate agency disclosure form and a “Seller’s Obligations Regarding Property Condition Disclosure” form (State’s Ex. 5), and he placed the property on the Long Island Multiple Listing Service (“MLS”) (State’s Ex. 6 and 13). In other words, the respondent prepared all the necessary paperwork to list Ms. Dodard’s property with RE/MAX West and advertise it on the MLS.

    The respondent then procured a purchaser for the property, Mr. Bawa, who executed a binding purchase and sale contract with Ms. Dodard on July 26, 2005, approximately one month before Mr. Lugo terminated the respondent.

    After being terminated from RE/MAX West and becoming associated with RE/MAX Central, the respondent had Ms. Dodard sign an exclusive listing agreement with his new brokerage (State’s Ex. 9). Without the knowledge or consent of Mr. Lugo, the respondent proceeded with the closing on the property between the Bawas and Ms. Dodard, and RE/MAX Central was paid a $137,000 commission on the sale, most of which was paid over to the respondent’s corporation (State’s Ex. 16 and 17).

    II- The respondent also demonstrated untrustworthiness by permitting or arranging to have the commission paid to RE/MAX Central and bypassing the broker and brokerage with whom he was associated (Mr. Lugo and RE/MAX West) when he obtained the listing on the property, placed the property on the MLS and procured a purchaser who signed a contract to purchase the property. The only reason that the respondent did this was because of his dispute with Mr. Lugo and so that Mr. Lugo or RE/MAX West would not receive any portion of the commission on the sale.

    III- Real Property Law §442-e(5) states:

The secretary of state shall have the power to enforce the provisions of this article and upon complaint of any person, or on his own initiative, to investigate any violation thereof or to investigate the business, business practices and business methods of any person, firm or corporation applying for or holding a license as a real estate broker or salesman, if in the opinion of the secretary of state such investigation is warranted. Each such applicant or licensee shall be obliged, on request of the secretary of state, to supply such information as may be required concerning his or its business, business practices or business methods, or proposed business practices or methods.

    Implicit in this statute is the requirement that the broker or salesperson supply accurate and truthful information and not provide misleading information to the complainant’s investigator.

    The respondent provided misleading and inaccurate information to the complainant by his letter dated June 25, 2006 (State’s Ex. 11). In that letter, the respondent claimed that: his corporation, Godard and Associates, Inc., had a contract to purchase the property which the respondent intended to resell; while working at RE/MAX West, the respondent listed the property on the MLS under his corporate name; the respondent obtained a potential purchaser for the property, but the purchaser could not obtain a mortgage and the deal was voided; and, after joining RE/MAX Central, Ms. Dodard signed a non-exclusive listing agreement with the respondent and one of the showings of the property resulted in a sale.

    There is no evidence in the record before me and the respondent failed to establish that the owner of the property, during the relevant time period, was anyone other than Ms. Dodard, or that there was a potential purchaser of the property who failed to obtain a mortgage, or that the ultimate purchasers of the property, the Bawas, saw the property or signed a purchase and sale contract after the respondent became associated with RE/MAX Central. Thus, the respondent provided misleading and inaccurate information to the complainant, thereby violating Real Property Law §442-e(5) and demonstrating untrustworthiness.

    IV- The law regarding restitution and real estate brokers is well defined. The Department of State is “accorded broad discretion in imposing penalties designed to safeguard the public interest and discourage real estate brokers from engaging in shadowy practices (citations omitted),” and, “One can hardly fathom a more effective means of removing the incentive for engaging in devious conduct...than a penalty which insures that the malefactor is denied the fruits of his misdeed.” Kostika v. Cuomo, 41 NY2d 673, 394 NYS2d 863, 865 (1977). Ordinarily, I would consider requiring the respondent to return his entire commission that he received on the sale of the property ($121,735.35) as a “penalty which insures that the malefactor is denied the fruits of his misdeed.” In this case, however, if the respondent is required to return the commission to Ms. Dodard, it is not likely that Ms. Dodard would retain that money and instead, would likely return it to the respondent. Furthermore, I am not aware of the terms of the settlement between the complainant and RE/MAX Central, which may have ordered RE/MAX Central to pay restitution to RE/MAX West.

    Further, as Judge Schneier stated in his decision, “However, the Department of State does not have jurisdiction to adjudicate commission disputes between licensees. Stowell v. Cuomo (4 Dept. 1979) 69 A.D.2d 9, 417 N.Y.S.2d 1008, affirmed 52 N.Y.2d 208, 437 N.Y.S.2d 270, 418 N.E.2d 1289. Therefore, particularly since the evidence is unclear as to just who owes what to whom, the issue of whether the respondent should be required to pay over any money to RE/MAX West is best left to the civil, and perhaps criminal, courts.” DLS v. Godard, 1021 DOS 06, p. 4.

    V- In assessing what penalty to impose on the respondent, I have taken the following into consideration: the facts of this transaction occurred during the same period of time and with the same broker as that referenced in Judge Schneier’s decision; all of the respondent’s misconduct in this case took place prior to the complainant’s complaint being filed in the previous administrative proceeding against the respondent (July 2006); Mr. Lugo did not learn of the closing on the property in the instant case until late April 2006 (State’s Ex. 7 and 8) and he did not file a complaint with the complainant until late May 2006 (State’s Ex. 3), which would explain why the complainant investigated and brought this (second) complaint against the respondent after it commenced its first disciplinary proceeding against him. In other words, because the respondent’s wrongful acts in this case took place at the same time as those acts referred to in Judge Schneier’s decision, and with the same complaining witness (Mr. Lugo), the same reasoning that Judge Schneier applied to lessen the penalty against the respondent in that case, applies equally to the penalty that should be levied in this case. As such, the respondent’s license will not be revoked herein. However, the seriousness of the respondent’s misconduct, particularly his intent to mislead the complainant (failure to cooperate), warrants the suspension of his license.

DETERMINATION

    WHEREFORE, IT IS HEREBY DETERMINED THAT respondent Pierre L. Godard has violated 19 NYCRR §175.8 and Real Property Law §442-e, and has demonstrated untrustworthiness in violation of Real Property Law §441-c. Accordingly, pursuant to Real Property Law §441-c, his license as a real estate broker shall be suspended beginning on June 1, 2009 and terminating six months after receipt, by certified mail, by the Department of State of his license certificate and pocket card. The respondent is directed to send his license certificate and pocket card, by certified mail, to Norma Rosario, Department of State, Division of Licensing Services, 80 South Swan Street, P.O. Box 22001, Albany, New York 12201-2201.

                                      Scott NeJame

                                Administrative Law Judge

Dated: April 29, 2009