STATE OF NEW YORK
DEPARTMENT OF STATE
OFFICE OF ADMINISTRATIVE HEARINGS
734 DOS 01
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DIVISION OF LICENSING SERVICES,
Complainant,
-against-
GALINA AILEEN TURYAN,
d/b/a METRO HOMES REALTY,
Real Estate Broker,
Respondent.
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ADMINISTRATIVE LAW TRIBUNAL
123 William Street, New York, NY 10038
Felix Neals, Supervising Administrative Law Judge
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HEADNOTES
1. A transaction that consists of negotiations and subsequent purchase of a business does not involve a regulated, real estate activity as defined in Real Property Law, §440.
2. When a real estate broker purchased a business and, as buyer, negotiated an extension of a lease of the business premises on her own behalf, the transaction did not involve a regulated, real estate activity.
3. A real estate broker's unlawful act that directly relates to the broker's fitness to perform the duties and to meet the responsibilities legally imposed on a licensed real estate broker may be the subject of a disciplinary action under Real Property Law, Article 12-A, although the unlawful act did not involve a regulated, real estate activity.
4. Agency, a legal concept that involves a consensual relationship, is created by operation of law when two, required, factual elements - consent and control - exist in a transaction. Once the factual relation exists, the agency is established whether the parties intend it, understand it, mislabel it, or affirmatively disavow it. Compensation is not requisite to an agency relationship; an agent
734 DOS 01 -2-
acting gratuitously is bound by the laws governing the agency relationship.
5. An agency was created between the broker and the sellers by operation of law where: The seller employed the broker to find a suitable buyer; the broker acted with the consent and under the control of the sellers in the subject matter of the agency - the sale of the business; and the agency was further manifested in a written agreement, an exclusive right-to-sell contract.
6. A contract of employment between an agent and the principals, the sellers, is an agency agreement that, unlike an ordinary, business relationship, involves fiduciary obligations. It is a
relationship founded on trust and confidence placed by one person in the integrity and fidelity of another.
7. The fundamental duties of a fiduciary - the duty of good faith and undivided loyalty, the duty of confidentiality, the duty of full and fair disclosure, the duty of reasonable care, and the duty to account - are imposed upon an agent by contract law, agency law, and tort law. The object of the rigorous standards of performance imposed by law upon an agent as a fiduciary 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.
8. An affirmative duty required by law of a fiduciary agent is to make a full and fair disclosure to a principal of all information known or obtained by the agent during the employment that might affect the principal's interest in the agency and to avoid any undertaking or conduct that involves interests adverse to, inconsistent with, in competition with or in duality with the principal's interests in the agency, unless prior to engaging in any such undertaking or conduct, the agent obtains the informed consent of the principal for the agent to proceed in such undertaking or conduct. Informed consent is consent freely given by the principal after the agent's duty of full and fair disclosure has been satisfied.
9. Where adverse interests are to be served, an agent's disclosure to a principal must lay bare the truth in all its stark significance without ambiguity or reservation. The rule of undivided loyalty is maintained through uncompromising rigidity in the enforcement of the standard of disclosure.
10. Agency principles prevent an agent from acting for the agent's own self-interests in .a transaction to the detriment of the principals. The rule against self-dealing by an agent is, stated broadly, that a person who undertakes to act for another in any matter shall not, in the same matter, act for himself. An agent is prohibited by law from advancing a secret, personal interest of his own that is adverse to the interests of his principals in the discharge of the agency.
734 DOS 01 -3 -
11. Agency law forbids a fiduciary agent from acting concurrently as an agent for the sellers and as the principal-buyer of the subject matter of the agency. In that situation, the agent must terminate the agency relationship with the sellers before the agent may assume the role of a buyer of the subject matter of the agency.
12. Where a real estate broker became an undisclosed principal as a potential buyer of the business, the subject matter of the agency, the relationship of principals and agent between the sellers and the broker ceased to exist, and the agency terminated, although the sellers were unaware of the situation.
13. The agent of the sellers breached the fiduciary duty of confidentiality when the agent disclosed to the buyer confidential information material to the subject matter of the agency, the price that the sellers would accept below the asking price.
14. The real estate broker breached the fiduciary duties of full and fair disclosure and of good faith and undivided loyalty when the broker gave the employers, the sellers, false information about the potential sale of the business, information essential to the achievement of the agency purpose.
15. Where the real estate broker misrepresented material existing facts with the intent to deceive the employers who relied on the misrepresentations and were thereby injured, that affirmative misrepresentation of fact constitutes fraud.
16. Where the real estate broker had a duty to communicate undisclosed information to the principals, concealment of that information is of the same legal effect and significance as affirmative misrepresentation of fact when the concealment is done with intent to defraud.
17. Where the real estate broker committed a fraudulent act, the broker necessarily engaged in a fraudulent practice. The term "fraudulent or deceptive practices," as used in relation to the regulation of commercial activity, is generally interpreted to include those acts which may be characterized as dishonest and misleading. Since the purpose of such restrictions on commercial activity is to afford the consuming public expanded protection from deceptive and misleading fraud, the application is ordinarily not limited to instances of intentional fraud in the traditional sense, and proof of an intent to defraud is not essential.
18. An agent's circumvention of the fiduciary duties of full" and fair disclosure and of good faith and undivided loyalty through dishonest and misleading acts is a fraudulent practice. Any
deceptive act or practice in the conduct of any business, trade or commerce or in the furnishing of any service in the State of New York is unlawful (General Business Law, §349[a]).
734 DOS 01 -4 -
19. The offense of forgery: involves a written instrument; is defined to cover documents and other items capable of being used to the advantage or disadvantage of a person (Penal Law, §170.00[1]); and involves the making, completing or altering a written instrument by someone other than the ostensible maker of the instrument (or the maker's agent) with the intent to defraud, deceive or injure another (Penal Law, §170. 05) . The crime of forgery includes the false making of a signature on a written instrument.
20. The testimony of the purported signator and the comparison by the tribunal of the disputed signature and authentic signatures that appear on documents in evidence proved that the disputed signature was not that of the purported signator.
21. Where the evidence does not establish that the agent engaged or participated in or knew of the making of the false signature of the principal, the State failed to prove that the agent engaged in forgery.
22. Real Property Law, §443, does not apply to a lease of commercial property or to a transaction that does not involve a regulated, real estate activity.
STATE OF NEW YORK
DEPARTMENT OF STATE
OFFICE OF ADMINISTRATIVE HEARINGS
734 DOS 01
-------------------------------------------------------------------X
DIVISION OF LICENSING SERVICES,
Complainant,
-against- DECISION
GALINA AILEEN TURYAN,
d/b/a METRO HOMES REALTY,
Real Estate Broker,
Respondent.
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ADMINISTRATIVE LAW TRIBUNAL
123 William Street, New York, NY 10038
Held: June 12 and 25, August 23 and October 11, 2001
Felix Neals, Supervising Administrative Law Judge
--------------------------------------------------------------
Respondent, Ms. Galina Aileen Turyan, d/b/a Metro Homes Realty, 292 Nelson Avenue, Staten Island, NY 10308: represented herself on June 12, 2001; did not appear and was not represented on June 25, 2001; was represented by Joseph B. Dennis, Esq., Gaines & Fishler, Esqs., 255 Richmond Avenue, Staten Island, NY 10314, on August 23, 2001; and represented herself on October 11, 2001.
Complainant, the Division of Licensing Services, was represented by Laurence Soronen, Esq., Litigation Counsel, 84 Holland Avenue, Albany, NY 12208.
ISSUES
Under the provisions of Real Property Law, §441-e, State Administrative Procedure Act, Article 3, and 19 New York Codes, Rules and Regulations, Part 400, the State charges that the respondent engaged in fraud and fraudulent business practices and demonstrated untrustworthiness and incompetence. Specifically, the complaint alleges that the respondent:
1. Acted as an undisclosed, dual agent and for undisclosed, adverse interests by representing simultaneously both a potential seller and a potential buyer in a regulated, real estate transaction, in breach of fiduciary obligations.
734 DOS 01 -2-
2. Failed to disclose to a principal information material to. the principal's interests in the subject matter of the agency, in violation of fiduciary obligations.
3. Disclosed a principal's confidential information without authorization, in violation of fiduciary obligations.
4. Acted both as an agent and as an undisclosed principal in the same agency transaction, a violation of fiduciary obligations.
5. Placed her own interests above that of a principal and appropriated the benefits of the agency transaction, in violation of fiduciary obligations.
6. Engaged in forgery.
7. Attempted to mislead a Division of Licencing Services’ investigator.
8. Failed to maintain business records as prescribed by law.
SUMMARY OF EVIDENCE
A. EXHIBITS.
1. Pleadings consisting of notice of hearing and complaint with four exhibits.
2. Domestic return receipt of United States Postal Service.
3. Notices of adjournments.
4. Purchase offer, Talk of the Millennium Realty Inc. 5. Letter, Talk of the Millennium Realty Inc.
6. Rider to lease.
7. Sales agreement, Cat co Marketing & Management Inc., and Galina Aileen Turyan.
8. Disclosure statement.
9. Decision and Order, New York State Supreme Court, Richmond County.
10. Two statements of Mr. Jacob Kagan.
11. Statement of Ms. Galina Aileen Turyan.
12. Correspondence, Ms. Galina Aileen Turyan.
734 DOS 01 -3-
13. Notices hearing re-opened returned by United States Postal Service.
14. Subpoena.
B. WITNESSES. For the complainant: Ms. Izabella Segal, real estate salesperson; Mr. Nicholas Bashirov, real estate broker; Mr. Steven R. Cataneo, Ms. Florence Cataneo, complaining witnesses; and Ms. Victoria Cline, license investigator, Division of Licensing Services. For the respondent: Misses Galina Aileen Turyan and Anna Turyan.
PROCEDURAL HISTORY
At the hearing held on June 12, 2000, Ms. Turyan stated that she was unaware that she coule be represented by counsel before the tribunal and requested an adjournment. The tribunal granted Ms. Turyan's request. A notice of adjournment that scheduled a hearing on June 25, 2001, was mailed by first class mail on June 12, 2001, addressed to Galina Aileen Turyan, Metro Homes Realty, 292 Nelson Avenue, Staten Island, NY 10308, the address last known to the Division of Licensing Services and the address to which a copy of the pleadings had been delivered by certified mail and signed for by Ms. Turyan on April 13, 2001. The notice of adjournment was not returned to the Division of Licensing Services by the United Stated Postal Service.
Ms. Turyan did not appear at the hearing held on June 25, 2001. On July 2, 2001, both by telephone and by fax, Ms. Turyan stated that she did not receive the notice of adjournment until after June 25, 2001. Consequently, the tribunal reopened the case and scheduled a hearing for August 23, 2001. On July 3, 2001, a copy of the notice of hearing reopening was sent by certified mail return receipt requested and by first class mail addressed to Galina Aileen Turyan, 4970 Amboy Road, Staten Island, NY 10312, and to Galina Aileen Turyan, Metro Homes Realty, 292 Nelson Avenue, Staten Island, NY 10308. The certified mail was returned by the United States Postal Service with the notation, "unclaimed". The first class mail was not returned by the United States Postal Service.
On July 6, 2001, Ms. Turyan sent a request to the tribunal for a subpoena to be issued to a witness to be present at the hearing scheduled for August 23, 2001. Attached to the request for a
subpoena were copies of letters from Ms. Turyan to New York State Attorney General, Mayor of New York City, New York Department of Health, Office of Professional Medical Conduct and New York State Grievance Committee in which Ms. Turyan complains about various judges, doctors, lawyers, and district attorney offices. On July 12, 2001, the subpoena requested by Ms. Turyan was sent to her for service.
734 DOS 01 -4-
On August 23, 2001, Ms. Turyan appeared and was represented by counsel, Joseph B. Dennis, Esq. After the State completed its case in chief, the tribunal granted Mr. Dennis' request for a continuance to allow time, until October 11, 2001, in which to subpoena witnesses.
Ms. Galina Aileen Turyan appeared and represented herself at the hearing on October 11, 2001.
FACTS
By the substantial evidence, I find the following facts:
The essential events in this case span the duration of time from May 1999 to May 2000 and involve: Mr. Steven R. Cataneo and Ms. Florence Cataneo, owners and sellers of Catco Marketing & Management Inc., a medical marketing and management business located at 4060 Hyland Boulevard, Staten Island, N.Y.; Ms. Galina Aileen Turyan, real estate broker, Metro Homes Realty; Mr. Jacob Kagan, a potential purchaser of Catco Marketing & Management Inc.; Ms. Izabella Segal, real estate salesperson associated with Talk of the Millennium Realty Inc., who represented Mr. Jacob Kagan in negotiations to purchase Catco Marketing & Management Inc.; Mr. Nicholas Bashirovwas associated as a real estate salesperson with Talk of the Millennium Realty Inc.
Ms. Galina Aileen Turyan is licensed as a real estate broker for the term December 10, 2000, to December 10, 2002, doing business under trade name Metro Homes Realty, 292 Nelson Avenue, Staten Island, NY 10308.
In May 1999, Mr. Steven R. Cataneo and Ms. Florence Cataneo decided to sell their business, Catco Marketing & Management Inc.; the sale of the business would include the assignment and assumption of a commercial lease held by Catco Marketing & Management Inc. for property in which the business was located at 4060 Hyland Boulevard, Staten Island, N.Y.
On May 25, 1999, Mr. and Mrs. Cataneo met with Ms. Galina Aileen Turyan in her office and discussed the possible sale of the business. Ms. Turyan first expressed an interest in becoming a business partner of the Cataneos who stated that they were not interested in a partnership, but wanted to sell the business. Ms. Turyan then expressed an interest in possibly purchasing the business herself with her daughter, Ms. Anna Turyan, as a partner. The Cataneos decided to list the business with Ms. Turyan. With Mr. Steven R. Cataneo present, Ms. Florence Cataneo and Ms. Galina Turyan executed an exclusive right-to-sell contract listing for sale the business, Cat co Marketing & Management Inc., at a listing price of $285,000 and providing for a six percent brokerage fee. At the time of contract, the sellers disclosed to Ms. Turyan that they would be willing to accept a bottom-line price of $200,000 for the business.
734 DOS 01 -5-
During the meeting on May 25, 1999, Ms. Turyan did not give an explanation of the fiduciary duties of an agent and did not offer an agency disclosure form to Mr. and Ms. Cataneo. Ms. Turyan listed the business with the multiple listing service of the Staten Island Board of Realtors, Inc. In response to the dissemination of the listing of the business for sale by the multiple listing service, Ms. Izabella Segal, a real estate salesperson associated with Talk of the Millennium Realty Inc., made an appointment with Ms. Turyan to introduce a potential buyer, Mr. Jacob Kagan.
On June 13, 1999, Ms. Segal and Mr. Kagan met with Ms. Galina Turyan at the offices of Metro Homes Realty. In the meeting, Mr. Kagan and Ms. Galina Turyan agreed as partners that Ms. Turyan would present to the sellers a purchase offer of $170,000. Thereupon, a Talk of the Millennium Realty Inc. purchase offer form presented by Ms. Segal and dated June 13, 1999, was completed to show Jacob Kagan and Aileen Turyan as purchasers offering a purchase price of $170,000 and both Talk of the Millennium Realty Inc. and Metro Homes Realty as the brokers who brought about the transaction. While Ms. Segal and Mr. Kagan were still present in Ms. Turyan's office, Ms. Turyan'telephoned Mr. Cataneo, informed him- that Mr. Kagan had offered $170,000 for the business. Mr. Cataneo refused the offer, and Ms. Turyan stated that she would try to get a higher price. At that time, Ms. Turyan did not tell Mr. Cataneo that she had, become a partner with Mr. Kagan and a potential purchaser of the business.
Subsequently, Ms.' Galina Turyan advised the Cataneos that Mr. Kagan was an unqualified buyer, and she offered to buy the business. On June 18, 1999, Ms. Galina Turyan and the Cataneos executed a binder of sale dated June 8, 1999, in which Ms. Turyan agreed to purchase the business for $190,000, at "0% commission"; $76,000; was to be paid on taking of title, and $95,000 were to be "owner finance for 1 year."
After June 18, 1999, at a time not established in the record, Ms. Cataneo met with Mr. Kagan at his request to discuss his involvement in the purchase of the business. Ms. Cataneo states that they spoke about Mr. Kagan's past, purchase offers and his interest in purchasing the business. Mr. Kagan's written statement, offered by both respondent and by the State, conflicts with the statements purportedly made by Mr. Kagan in the meeting with Ms. Cataneo. Mr. Kagan did not testify at the hearings.
On July 9, 1999, the Cataneos sold the business to Ms. Galina Turyan (A & A Marketing & Management Inc.) on terms stated in the binder agreement.
734 DOS 01 -6-
Also on July 9, 1999, in an agreement between the landlord and A & A Marketing & Management Inc. and Galina Aileen Turyan as guarantor, the original lease agreement between the landlord and Cat co Marketing & Management Inc., dated February 27, 1997, was assigned, assumed, and extended for an additional five year term.
In a letter dated August 8, 1999, from Mr. David B. Vain, a real estate broker with Talk of the Millennium Realty Inc., to Mr. Steven Cataneo: Mr. Vain accused Ms. Galina Turyan of preventing the realty" from creating a very advantageous sale" by her becoming a partner with Mr. Kagan and offering less than the $250,000 that Mr. Kagan suggested on June 13, 1999; and Mr. Vain asked Mr. Cataneo to file a complaint against Ms. Galina Turyan with the Division of Licensing Services. Mr. Cataneo filed a preliminary statement of complaint with the Division of Licensing Services October 28, 1999. Although subpoenaed, Mr. Vain failed to appear at the hearings.
As a result of Mr. Cataneo's preliminary statement of complaint, the Division of Licensing Services first started an investigation that was closed due to "insufficient evidence of a violation of licensing law," a regulated, real estate transaction not having been involved in the sale of the business. On May 12, 2000, as a "result of additional information provided by" the Cataneos, the Division of Licensing Services reopened the investigation, because the transaction involved the renegotiation of the lease agreement between the landlord and Ms. Turyan.
In the duration of time between June 8, 2000, and July 20, 2000, Ms. Galina Turyan failed to comply with Division of Licensing Services' requests for original documents used in the listing of the Cataneos' business: she stated that the documents had been lost and provided copies of the documents. During the hearings, Ms. Galina Turyan produced and offered the original, multiple list;ing service agreement and the original, real estate agency disQlosure form dated May 25, 1999, signed by Ms. Galina Turyan and purportedly signed by Ms. Florence Cataneo who testified that she never signed the form and first saw the form when shown to her by the Division of Licensing Services' investigator. Ms. Galina Turyan testified that she incorrectly dated the forms but could not remember the circumstances of the execution of the document.
In comparing the genuine signatures of Ms. Florence Cataneo on documents (in evidence either proved or conceded to be genuine) with the disputed signature that appears on the disclosure form dated May 25, 1999, the tribunal finds that the signature purported to be that of Ms. Florence Cataneo on the disclosure form is noticeably different from the signature proved to be genuine. Therefore, the signature that appears on the disclosure form dated May 25, 1999, is not the signature of Ms. Florence Cataneo. The record does not disclose any factual evidence regarding the
734 DOS 01 -7-
execution of the false signature on the disclosure form, when or who signed the false signature and with what intent.
After purchasing the business, Ms. Galina Turyan sued the Cataneos, Dr. Daniel Wilen (the physician who was associated with the business) and Dr. Joseph Mormino, the landlord. The Cataneos counter claimed alleging Ms. Galina Turyan' s failure to make payments under the purchase contract. By decision dated April 27, 2000, the Supreme Court of the State of New York, Galina A. Turyan, plaintiff, against Florence Cataneo, et al., Defendants, dismissed Ms. Turyan' s complaint against all defendants and continued the causes of action alleged in the counter claim by the Cataneos.
Ms. Galina Turyan admits her involvement as a partner with Mr. Kagan in the initial purchase offer of June 13, 1999, and denies any wrongdoing or a breach of any fiduciary duty. As a defense, Ms. Galina Turyan offers numerous, lengthy, written statements accusing the sellers of fraud and tax evasion, and accusing various attorneys (including attorneys hired by her) of conspiracy with doctors, other lawyers, judges, and district attorneys; and Ms. Turyan requests that her accusations be investigated by the Federal Bureau of Investigation.
OPINION
The transaction that consists of the negotiations and subsequent sale .of the business on July 9, 1999, did not involve a regulated, real estate activity as defined in Real Property Law, §440.
On June 13, 1999, the agreement between sellers and agent provide for the sale of the business and the assignment and assumption of a lease. On July 9, 1999, Ms. Turyan purchased the business and, as buyer, negotiated an extension of the lease on her own behalf. At that time, Ms. Turyan was not acting as an agent for any other party to the transaction. Consequently, the factual transactions upon which the sale of the business are based do not involve a regulated, real estate activity.
However, a real estate broker's unlawful act that directly r-A. The licensing agency is legislatively mandated to determine a licensee's trustworthiness and competence to transact the business of a real estate broker, a fiduciary agent, in such a manner as to safeguard the interests of the public.
The factual relations between and among the broker, Ms. Turyan, the sellers, Mr. and Mrs. Cataneo, and the prospective buyer, Mr. Kagan, establish five, legal relationships: first, a principal agency relationship between the sellers and the broker; and second, simultaneously, four, Legal relationships - a principal-agency relationship between the prospective buyer and the broker, a coventure between the prospective buyer and the broker as potential co-purchasers, and a principal-principal relationship between the sellers and the prospective buyer and between the sellers and the broker.
734 DOS 01 -8-
Agency, a legal concept that involves a consensual relationship, is created by operation of law when two, required, factual elements consent and control - exist in a transaction. Once the factual relation exists, the agency is established whether the parties intend it, understand it, mislabel it, or affirmatively disavow it. Compensation is not requisite to an agency relationship; an agent acting gratuitously is bound by the laws governing the agency relationship.
On May 25, 1999, the first, agency was created between the broker and the sellers and factually expressed: The seller employed the broker to find a suitable buyer; the broker acted with the consent and under the control of the sellers in the subject matter of the agency - the sale of the business; and the agency was further manifested in a written agreement, an exclusive right-to-sell contract.
The contract of employment between the agent and the principals, the sellers, is an agency agreement that, unlike an ordinary, business relationship, involves fiduciary obligations. It is a relationship founded on trust and confidence placed by one person in the integrity and fidelity of another. The fundamental duties of a fiduciary - the duty of good faith and undivided loyalty, the duty of confidentiality, the duty of full and fair disclosure, the duty of reasonable care, and the duty to account are imposed upon an agent by contract law, agency law, and tort law. The object of the rigorous standards of performance imposed by law upon an agent as a fiduciary 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.
Accordingly, an affirmative duty required by law of a fiduciary agent is to make a full and fair disclosure to a principal of all information known or obtained by the agent during the employment that might affect the principal's interest in the agency and to avoid any undertaking or conduct that involves interests adverse to, inconsistent with, in competition with or in duality with the principal's interests in the agency, unless prior to engaging in any such undertaking or conduct, the agent obtains the informed consent of the principal for the agent to proceed in such undertaking or conduct. Informed consent is consent freely given by the principal after the agent's duty of full and fair disclosure has been satisfied.
Where adverse interests are to be served, an agent's disclosure to a principal must lay bare the truth in all its stark significance without ambiguity or reservation. The rule of undivided loyalty is maintained through uncompromising rigidity in the enforcement of the standard of disclosure.
734 DOS 01 -9-
Agency principles that prevent an agent from representing any interests adverse to the interests of principals in a transaction without disclosure to and obtaining the consent of the principals also prevent the agent from acting for the agent's own self interests in a transaction to the detriment of the principals. The rule against self-dealing by an agent is, stated broadly, that a person who undertakes to act for another in any matter shall not, in the same matter, act for himself. An agent is prohibited by law from advancing a secret, personal interest of his own that is adverse to the interests of his principals in the discharge of the agency.
Furthermore, agency law forbids a fiduciary agent from acting concurrently as an agent for the sellers and as the principal-buyer of the subject matter of the agency. In that situation, the agent must terminate the agency relationship with the sellers before the agent may assume the role of a buyer of the subject matter of the agency.
On June 13, 1999,. while a fiduciary agent of the sellers, Ms. Turyan disclosed to the potential buyer confidential information obtained from the sellers during the agency, failed to disclose to the sellers facts material to the agency undertaking, and became an undisclosed principal in the .agency business when she executed the purchase offer as a potential co-buyer with Mr. Kagan without the knowledge or consent of the sellers. On June 13, 1999, when Ms. Turyan became an undisclosed principal as a potential buyer of the business, the relationship of principals and agent between the sellers and Ms. Turyan ceased to exist, and the agency terminated, although the sellers were unaware of the situation. At that time, legal relationships were created between Mr. Kagan and Ms. Turyan as principal-agent and as potential co-buyers of the business.
Ms. Turyan breached the fiduciary duty of confidentiality when she disclosed to the buyer confidential information material to the subject matter of the agency, tne price that the sellers would accept below the asking price.
Ms. Turyan breached the fiduciary duties of full and fair disclosure and of good faith and undivided loyalty when she gave the employers, the sellers, false information about the potential sale of the business, information essential to the achievement of the agency purpose. In addition to the deliberate misrepresentation of the facts, the respondent also intentionally withheld from the principals. information material to the achievement of the agency purpose, that she was also a potential purchaser of the business.
734 DOS 01 -10-
Ms. Turyan's nondisclosure of facts and misrepresentations both constitute fraud. The respondent misrepresented material existing facts with the intent to deceive the employers who relied on the misrepresentations and were thereby injured; that affirmative misrepresentation of fact constitutes fraud. The respondent's deliberate nondisclosure of information material to the subject matter of the agency was done with the intent to defraud the principals. The respondent had a duty to communicate the undisclosed information to the principals. Concealment of facts that one is duty-bound to disclose is of the same legal effect and significance as affirmative misrepresentation of fact when the concealment is done with intent to defraud.
Having committed a fraudulent act, the respondent necessarily engaged in a fraudulent practice. The term “fraudulent or deceptive practices," as used in relation to the regulation of commercial activity, is generally interpreted to include those acts which may be characterized as dishonest and misleading. Since the purpose of such restrictions on commercial activity is to afford the consuming public expanded protection from deceptive and misleading fraud, the application is ordinarily not limited to instances of intentional fraud in the traditional sense, and proof of an intent to defraud is not essential. Therefore, the agent's circumvention ,of the fiduciary duties of full and fair disclosure and of good faith and undivided loyalty through dishonest and misleading acts is a fraudulent practice. Any deceptive act or practice in the conduct of any business, trade or commerce or in the furnishing of any service in the State of New York is unlawful (General Business Law, §349[a]).
On June 18, 1999, Ms. Turyan became a disclosed principal when she and the sellers executed an agreement to purchase the business. By not later than June 18, 1999, the relationships of principal-agent between the seller and Ms. Turyan had been severed.
The substantial evidence fails to prove that Ms. Turyan: engaged in forgery; attempted to mislead a Division of Licensing Services' investigator; and failed to maintain business records as required by law.
The State's charges of forgery and failure to keep business records as required by law arise, in part, from the disclosure form dated May 25, 1999, on which the false signature, purported to be that of Ms. Florence Cataneo, appears. Ms. Turyan did not comply with the State's request to supply the original of that document to the Division of Licensing Services during its investigation.
The offense of forgery: involves a written instrument; is defined to cover documents and other items capable of being used to the advantage or disadvantage of a person§170.00[1]); and involves the making, completing or altering a written instrument by someone other than the ostensible maker of the instrument (or the maker's agent) with the intent to defraud, deceive or injure another (Penal Law, §170.0S). The crime of forgery includes the false making of a signature on a written instrument.
734 DOS 01 -11-
The testimony of the purported signator, Ms. Florence Cataneo, and the comparison by the tribunal of the disputed signature and authentic signatures that appear on three documents in evidence proved that the signature that appears on the disclosure form dated May 25, 1999, is not that of the purported signator, Ms. Florence Cataneo. The evidence does not establish that Ms. Turyan engaged or participated in or knew of the making of the false signature on the disclosure form.
Real Property Law, §443, prescribes that a real estate broker representing a party to a transaction involving residential, real property must provide an agency disclosure form to that party at
the time of the broker's first, substantive contact with the party, or if the party refused to sign the disclosure form, the broker must prepare and keep in his files a written declaration of the facts of the refusal. At the time of the agency employment, Ms. Turyan failed to give a disclosure form to the sellers, Mr. and Ms. Cataneo.
First, a regulated, real estate activity was not involved in the sale of the business. Second, even if the negotiations of a lease had been involved in the transaction, Real Property Law, §443, does not apply to a lease of commercial property; and an agency disclosure form is not required to be presented to or completed by parties to the transaction or to be maintained in the files of the real estate broker who represents a party to a lese of commercial property.
The State failed to establish by substantial evidence that Ms. Turyan's failure to furnish original (rather than copies of) documents required by the Division of Licensing Services was a deliberate refusal rather than due to the documents misplacement.
The record is devoid of evidence that indicates what records required by what law to be maintained by the respondent in the sale of the business transaction were not so maintained.
CONCLUSIONS OF LAW
Based on the foregoing findings of fact and opinion and as a matter of law, I conclude:
Respondent, Ms. Galina Aileen Turyan, engaged in fraud and a fraudulent practice and demonstrated untrustworthiness and incompetence in that she breached the fiduciary duties of confidentiality, of good faith and undivided loyalty, and of full and fair disclosure.
734 DOS 01 -12-
The State failed to prove by substantial evidence that the respondent, Ms. Galina Aileen Turyan, engaged in forgery, attempted to mislead a Division of Licensing Services' investigator, and failed to maintain business records as prescribed by law.
In assessing penalty, the tribunal considers the licensee's apparent, gross misunderstanding of the fiduciary obligations imposed by law upon a licensed real estate broker as a fiduciary agent.
ORDER
Based on the foregoing findings of fact, opinion, and conclusions of law and under the provisions of Real Property Law, §441-c:
I ORDER the real estate broker license (UID #37UO752045) of Ms. Galina Aileen Turyan is revoked effectively immediately.
I FURTHER ORDER under the provisions of Real Property Law, §441c (2), that within five (5) days of receipt of a copy of this decision, Ms. Galina Aileen Turyan deliver in person or by certified mail to Ms. Usha Barat, Customer Service Unit, Department of State , Division of Licensing Services, 84 Holland Avenue, Albany, NY 12208, .(a) all licenses and pocket cards issued to her under the provisions of Real Property Law, Article 12-A, or (b) alternatively, files an affidavit in form prescribed by the Division of Licensing Services if the failure to return all licenses and pocket cards is due either to the documents' loss or destruction.
SO ORDERED: November 19, 2001
Felix Neals
Supervising Administrative Law Judge