STATE OF NEW YORK

DEPARTMENT OF STATE

OFFICE OF ADMINISTRATIVE HEARINGS

515 DOS 05

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DIVISION OF LICENSING SERVICES,

Complainant,

-against- DECISION

EDDY D. DUROSEAU,

Real Estate Salesperson,

Respondent,

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ADMINISTRATIVE LAW TRIBUNAL

123 William Street, New York, NY 10038

Held: June 1, 2005

Felix Neals, Supervising Administrative Law Judge

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Respondent, Mr. Eddy D. Duroseau, did not appear and was not represented.

Complainant, Division of Licensing Services, was represented by Scott NeJame, Esq.

This action was brought under the provisions of Real Property Law, §441-e, State Administrative Procedure Act, Article 3 and 4, and 19 New York Codes Rules and Regulations, §400, to determine if the respondent engaged in fraud and fraudulent business practices and demonstrated untrustworthiness and incompetence. The complaint alleges that in the duration of time from April 2003 to June 2004, respondent: (1) breached his fiduciary duties of full disclosure, of obedience, of good faith and undivided loyalty, and of reasonable care, skill, diligence and judgment owed to his principal; (2) failed to refund escrow funds to a principal; (3) illegally retained deposit funds of a principal; (4) demanded and retained an illegal commission; (5) acted as a real estate broker without being licensed to so act; (6) failed to cooperate with a Division of License Services' investigation of a consumer complaint against the respondent filed with the agency; (7) failed to provide agency disclosure form to a principal; and (8) failed to maintain or retain records or receipts of the regulated, real estate transaction.

The Stated offered the only evidence admitted at the hearing. The evidence admitted is not impugned by any direct evidence or by any legitimate inference, is not improbable, and is not surprising or suspicious. Accordingly, the evidence is conclusive.

Respondent, timely and properly served with a copy of the notice of hearing and a copy of the complaint on May 17, 2005, (Real Property Law, §441-e, State Administrative Procedure Act, §301, and 19 New York Codes, Rules and Regulations, §400), did not appear and was not represented at the hearing.

Mr. Eddy D. Duroseau was licensed as a real estate salesperson from December 24, 2002, (associated with Brita Realty Company to October 16, 2003, when the employment was terminated) until December 24, 2004, when the license automatically expired.

Currently, respondent is not licensed to engage in regulated, real estate activity; and respondent failed to appear or to be represented at the hearing. Consequently, jurisdictional issues are raised.

Subject-matter jurisdiction is statutorily conferred and cannot be acquired, lost, waived or extended except by a legislative action. Personal jurisdiction is obtained through the proper service of process. The Department of State retains jurisdiction over and the quasi-judicial, administrative law tribunal possesses authority to determine allegations made against a party: (1) who was licensed to engage in real estate brokerage activity when the alleged, unlawful conduct occurred; and (2) the disciplinary proceeding was commenced by the proper service of the pleadings as prescribed by Real Property Law, §441-e, State Administrative Procedure Act, §301, and 19 New York Codes, Rules and Regulations, §400; and (3) when properly served with a copy of the pleadings, the party served (a) was licensed to engage in regulated, real estate activities; or (b) was an applicant for either a license or for the renewal of a license to engage in regulated, real estate activity, or (c) was eligible to automatically renew the prior license under the two-year, limitation provision of Real Property Law, §441(2).

Accordingly, the Department of State retains jurisdiction over and the tribunal possesses authority to determine the allegations made against Mr. Duroseau: He was licensed as a real estate salesperson when the alleged, unlawful acts occurred. The disciplinary action was started with the proper service of copy of the pleadings. When served with a copy of the pleadings, Mr. Duroseau was eligible for automatic renewal of the real estate license that expired on December 24, 2004. Further, at the time of the disciplinary hearing (June 1, 2005), Mr. Duroseau was eligible to automatically renew his real estate salesperson license under Real Property Law, §441-c.

The facts are both uncontroverted and are admitted by Mr. Eddy D. Duroseau in two, written statements (July 25 and December 10, 2003) submitted by him to the Division of Licensing Services.

This disciplinary action concerns the prospective rental of an apartment in the duration of time from April 2003 to July 2003 by Ms. Judith O'Neal.

In April 2003, Ms. O'Neal employed Mr. Duroseau to assist her in finding a residential, rental accommodation. At the time of employment, a fiduciary agency was created. Mr. Duroseau failed to provide Ms. O'Neal with or to obtain her signature on an agency disclosure form as prescribed by Real Property Law, §443.

As deposits (rent and security payments) towards securing the rental of an apartment, Ms. O'Neal gave Mr. Duroseau $1,400 in April and $1,400 in July 2003. Although he was licensed as a real estate salesperson associated with Brita Realty Company, Mr. Duroseau did not inform the broker about the transaction and did not give the deposit funds to the broker.

The prospective rental did not occur, and Ms. O'Neal demanded a return of the $2,800 deposit. Mr. Duroseau returned $500 to Ms. O'Neal; he refused to refund the $2,500 balance.

On September 2, 2003, Ms. O'Neal filed with the Division of Licensing Services a preliminary statement of complaint against Mr. Duroseau. In the duration of time from September until at least January 28, 2004, the Division of Licensing Services made numerous requests (both in writing and telephonically) for Mr. Duroseau to provide specific information and documents concerning the transaction involving Ms. O'Neal. Mr. Duroseau gave two, written statements (October 3 and December 10, 2003) to the Division of Licensing Services. In those statements, he both admitted the allegations made in the preliminary statement of complaint and offered an explanation. He did not provide the specific documents requested by Division of Licensing Services, and he did not refund to Ms. O'Neal the deposit fund balance of $2,300.

Subsequently, the Division of Licensing Services commenced the disciplinary action by a complaint that echoes the allegations made by Ms. O'Neal in the preliminary statement of complaint.

Real Property Law: (1) prescribes that before engaging in the practice of real estate brokerage activity regulated by Real Property Law, Article 12-A, a person or entity must be licensed either as a real estate broker or as a real estate salesperson, unless statutorily exempted (§440-a); (2) defines a real estate broker as any person who (a) for another (b) and for a fee, commission or other valuable consideration (c) lists for sale, sells, exchanges, buys or rents or offers or attempts to negotiate a sale, exchanges purchase or rental of an interest in real estate or offers or attempts to negotiate a loan secured or to be secured by a mortgage (other than a residential mortgage loan); sells or exchanges or offers or attempts or agrees to negotiate the sale or exchange of any lot or parcel of real estate (§440[1]). The services rendered by Mr. Duroseau for a fee to Ms. O'Neal, the assistance in the rental of the real estate, conform with the statutory definition of regulated, real estate brokerage activities (Real Property Law, §440-a[1]).

Law permits a licensed real estate salesperson to perform regulated, real estate activities as an agent of and under the supervision of a licensed real estate broker in a licensed real estate office (Real Property Law, §§440[3], 440-a, 441[1][d]; 19 New York Codes, Rules and Regulations, §§175.20, 175.21; Department of State v Stout Realty Inc., 20 DOS 88 [1988]). Concomitantly, law forbids an associated, licensed real estate salesperson from engaging in a regulated, real estate business for the salesperson's own, direct interest or benefit (Real Property Law, §440-a; 19 New York Codes, Rules and Regulations, §175.20[a]). This means on a practical level that a real estate salesperson: (1) must be associated with a licensed real estate broker before engaging in activities described in the provisions of Real Property Law, §440 (Real Property Law, §442-b); (2) is prohibited from acting as or holding himself out as a real estate broker prior to licensure as a broker (Real Property Law, §440-a); (3) is forbidden from conducting real estate brokerage activities in any place not indicated in the license of the sponsoring broker (Department of State v Testa, 23 DOS 90 [1990]); (4) obtains all clients and real estate business on behalf of and subject to the control and supervision of the sponsoring broker; and (5) in all advertisements, including business cards and stationery, is required to give an honest and accurate representation of agency, status, and associate standings. And a real estate salesperson is forbidden to receive or demand compensation "of any kind from any person, other than a duly licensed real estate broker with whom he (or she is) associated, for any service rendered or work done by such salesperson in the appraising, buying, selling , exchanging, leasing, renting or negotiating of a loan upon any real estate." Real Property Law, §442-a.

Mr. Eddy D. Duroseau engaged in fraudulent business practices and demonstrated untrustworthiness and incompetence in violation of Real Property Law, §§441-c and 441-a, in that he violated Real Property Law, §§440-a and 443, and breached fiduciary duties of obedience, of good faith and undivided loyalty, of reasonable care, skill, diligence and judgment and to account: (1) by failing to refund deposit monies to a principal; (2) by illegally retaining deposit funds; (3) by retaining an illegal commission; (4) by failing to provide agency disclosure form to a principal; (5) by acting as an unlicensed real estate broker.

Considering the two written statements submitted by respondent to Division of Licensing Services and Division of Licensing Services' allegation in its complaint that respondent failed to keep or maintain records of the real estate transaction (an allegation not litigated), the charge of uncooperation with a Division of Licensing Services' investigation, a violation of Real Property Law, §442-e, is dismissed.

I ORDER respondent, Mr. Eddy D. Duroseau, immediately to refund to Ms. Judith O'Neal the total sum of two thousand three hundred ($2,300) dollars, plus interest from the date of this decision, at the prevailing rate for judgments, currently nine percent, by certified check or money order; and (2) to present proof satisfactory to the Division of Licensing Services that he has fully complied with the order of this tribunal. Proof of compliance shall be sent to Ms. Yvette Carter-Kreczko, Customer Service Unit, Department of State, Division of Licensing Services, 84 Holland Avenue, Albany, NY 12208.

I FURTHER ORDER that if respondent fails to comply with the order of this tribunal, any future application made for licensure under provisions of Real Property Law, Article 12-A, by respondent, Mr. Eddy D. Duroseau, shall not be considered until respondent has fully complied with the order of this tribunal.

SO ORDERED: June 2, 2005

Felix Neals

Supervising Administrative Law Judge