DEPARTMENT OF STATE

OFFICE OF THE SECRETARY OF STATE

-----------------------------------------------------------X

In the Matter of

JOANNE SIMME, VICTOR L. PETERSON, and

M.J. PETERSON REAL ESTATE, INC.,

                                    Appellants,

                                                                                                DECISION & ORDER

                        -against-                                                           15 DOS APP 10

DEPARTMENT OF STATE  

DIVISION OF LICENSING SERVICES,

                                    Respondent.

------------------------------------------------------------X

            Joanne Simme, Victor L. Peterson, and M.J. Peterson Real Estate (Appellants) have appealed from an adverse determination of the Office of Administrative Hearings (OAH) (747 DOS 09). In a decision dated July 15, 2009, following an administrative hearing held on July 10, 2008, Administrative Law Judge (the ALJ) Scott NeJame found that Appellant Joanne Simme violated Real Property Law § 440-c by acting as a real estate salesperson while unlicensed, and thereby demonstrated incompetency in violation of Real Property Law § 441-c (747 DOS 09, at p. 12). The ALJ also determined that Appellants Victor L. Peterson and M.J. Peterson Real Estate violated Real Property Law §§ 441-c and 442-c by employing Simme as a real estate salesperson while she was unlicensed (747 DOS 09, at p. 12-13).

            Pursuant to Real Property Law § 441-c, the ALJ imposed a fine of $3,000 on both Appellant Simme and Appellants Victor L. Peterson/M.J. Peterson Real Estate, to be paid on or before August 31, 2009 (747 DOS 09, at p. 12-13). The ALJ also ordered Appellants to refund the sum of $16,200 plus interest to Susan Abbatoy and Evelyn Janis for commissions found to have been received in relation to the unlicensed activities of Appellant Simme (747 DOS 09, at p. 13).

            On July 30, 2009, the Secretary of State received Appellants’ request for a stay. A memorandum of law in opposition to the stay was filed by Respondent Division of Licensing Services on July 31, 2009. On August 21, 2009, the First Deputy Secretary of State granted Appellants’ application for a stay of the date for payment of the fines ordered by the ALJ, with the condition that the accrual of interest on the payment of restitution ordered by the ALJ shall not be tolled due to the issuance of the stay, should the restitution order be ultimately confirmed on appeal (45 DOS APP 09). Thereafter, an appeal postmarked August 14, 2009 and received by the Secretary of State on August 18, 2009 was filed by Appellants with the Secretary of State. A memorandum of law in opposition to the appeal and in support of cross appeal was filed by Respondent on September 14, 2009. Appellants filed a reply to Respondent’s cross appeal on September 30, 2009. This matter will now be decided on the merits.

OPINION

I.That the Division of Licensing Services was represented by a non-attorney at the commencement of this administrative proceeding does not warrant dismissal.

            Respondent Division of Licensing Services was represented in this matter at all times by Mr. David Mossberg. Mr. Mossberg was authorized to act as a legal intern for the Department of State on September 11, 2007, and became licensed to practice law in the State of New York on January 30, 2008. Mr. Mossberg served as an intern in the Office of General Counsel prior to authorization from the Third Department to present cases as a legal intern. The ALJ noted:

The complainant served its amended complaint on the respondents [Joanne Simme, Victor L. Peterson, and M.J. Peterson Real Estate, Inc.] on January 31, 2008 and the complaints were delivered by the Postal service on either February 2 or 4, 2008 (see below). For almost the entire time from when the respondents and Mr. Ferber received the amended complaint until the date of the hearing, Mr. Mossberg was a licensed attorney. Even for the very short time that Mr. Ferber may have spoken with Mr. Mossberg while he was not officially licensed as an attorney, he was fully authorized to represent the complainant and present the complainant’s case before the tribunal.

As an intern for the Department of State, Mr. Mossberg was fully authorized to sign documents and appear on behalf of the Division of Licensing Services before an ALJ (see Bd. of Educ. Of Union-Endicott Cent. School Dist. v. NYS Public Employment Relations Bd., 233 AD2d 602 (3d Dept., 1996)). Appellants contend, however, that because Mr. Mossberg was not at all times a licensed attorney and that fact was not disclosed to Appellant’s counsel, they have been prejudiced and the charges against Appellants should be dismissed.

            A party to an administrative action before the Department of State may, but is not required to, be represented by a licensed attorney (see 19 NYCRR § 400.10). Paralegals and investigators routinely represent the Department of State in administrative proceedings. The attorney supervision necessary to practice before the courts of record in this state pursuant to Judiciary Law sections 478 and 484 and 22 NYCRR § 805.5(c) does not apply to administrative practice before the Department of State’s administrative tribunals (see Judiciary Law § 2; Bd. of Educ. Of Union-Endicott Cent. School Dist. v. NYS Public Employment Relations Bd., 233 AD2d 602, 603 (3d Dept., 1996) (“An administrative hearing, however, is not a court of record ... it is an adjudicatory proceeding governed by the State Administrative Procedure Act”). Further, the “administrative agencies” referenced in 22 NYCRR § 805.5(c) should be viewed as those “ancillary agencies” noted in Subtitle C of Title 22, and not as including the Department of State (see Judiciary Law § 2; 22 NYCRR Parts 6000, 7000, 7100, 7200, 7300, 7400). As such, the requirements of 22 NYCRR § 805.5 should not be construed as applicable requirements regarding administrative hearings held under 19 NYCRR Part 400.

            Appellants’ contention that they were prejudiced because their counsel initially negotiated with and advocated against a legal-intern-turned-newly-admitted-attorney lacks merit. Such a circumstance, in which one party is represented by a seasoned member of the bar and the other is represented by a legal intern or newly admitted attorney cannot credibly be construed as prejudicial to the party with veteran counsel at their side, and does not warrant dismissal (see People v. Black, 156 Misc. 516, 519 (1935); see also People v. Pizzaro, 146 Misc.2d 527, 531 (1990)).

II.        The ALJ’s failure to render a decision within 150 days of the date of hearing does not require that the underlying complaint be dismissed.

            Appellants contend that the ALJ’s decision was not in accord with the procedures and time periods provided by 19 NYCRR § 400.13, to which the Department of State, Division of Licensing Services is bound. Here, an administrative hearing was held and concluded on July 10, 2008 and a decision was ultimately rendered by the ALJ on July 15, 2009 (see 747 DOS 09). The rules and regulations of the Department of State, Division of Licensing Services provide that “every adjudicatory proceeding under the jurisdiction of the Secretary of State shall be brought to completion within 150 days of the date of the hearing specified in the service of the notice of hearing” (19 NYCRR § 400.13(a)). Here, over one year passed between the conclusion of the hearing and the issuance of a determination by the ALJ.

            Adjudication is the “process of judicially deciding a case” (see Blacks Law Dictionary, at p. 42 (7^th Ed., 1999)). Completion of the adjudicatory process occurs when a decision is rendered by an Administrative Law Judge. An adjudicatory proceeding must be completed within 150 days of the date of hearing specified, unless an extension of time is consented to by the parties or a written determination is issued by the ALJ or Secretary of State within the 150 day period finding that the adjudicatory proceeding cannot be completed within the 150 day period and stating sufficient reasons therefore (see 19 NYCRR § 400.13(a), (c)). Here, no such consent was sought or obtained and no such determination was issued. The record supports the conclusion that the adjudicatory process was not completed within 150 days and no extension of that time period was obtained.

            A failure to abide by the required time periods is reviewable under Article 78 of the Civil Practice Law and Rules “in the nature of mandamus” (19 NYCRR § 400.13(d)). Failing to render a decision within the time periods set forth in 19 NYCRR § 400.13(c), however, has resulted in the dismissal of the underlying complaint under Article 78 review in one instance (see Bouck v. Department of State, Division of Licensing Services, 37 AD3d 1095 (4^th Dept. 2007)). In Bouck, the Fourth Department appears to have overlooked the phrase “in the nature of mandamus” within section 400.13(d) in rendering its decision. The phrase, “in the nature of mandamus,” sets forth the nature of the relief that may be provided under such circumstances. An action in the nature of mandamus is one through which an aggrieved party may compel action on a matter. Where the section 400.13(c) time period is not adhered to, a court may direct the administrative law judge to promptly render a decision but in no event is the Department of State required to dismiss the complaint. Here no such Article 78 proceeding in the nature of mandamus was sought, and a determination on the merits was ultimately rendered by the ALJ. Under the circumstances, the Department of State is not required to dismiss the underlying complaint or vacate the ALJ’s Decision. Therefore, this matter will now be decided on its merits.

III.       Subdivision 2 of section 441-a of the Real Property Law has been repealed by implication due to its unreconcilable conflict with subdivision 7 of section 441-a and Real Property Law section 441-b(2), which were more recently enacted.

            Appellants contend that the ALJ erred in finding Appellant Simme’s activities between March of 2006 and August of 2006 as a real estate salesperson following the expiration of her license constituted a violation of law. Appellants claim that Real Property Law § 441-a(2) permitted such activities. Real Property Law § 441-a(2), enacted in 1922, provides that “a license issued or reissued under the provisions of this article shall entitle the person ... to act as a real estate salesman in this state up to and including the thirty-first day of October of the year in which the license by its terms expires.”

            In 1985, a series of amendments to Real Property Law Article 12-A were enacted for the purpose of creating a staggered system of license expirations and renewals. Such legislation was enacted to ease the administrative burden on the Division of Licensing Services that was caused by a system pursuant to which all licenses expired on the fixed date of October 31^st. That body of legislation and the legislative history surrounding its enactment contains no mention of subdivision 2, as referenced above. The 1985 amendments did, however, enact Real Property Law § 441-a(7), which provides that “from and after the date when this subdivision shall take effect, the term for which a license shall be issued or reissued under this article shall be for a period of two years.” In addition, section 9 of the 1985 amendments provides: “Notwithstanding the provisions of subdivision seven of section [441-a] of this article, after January [1,1986], the secretary of state shall assign staggered expiration dates for outstanding licenses that have been previously renewed on October thirty-first of each year from the assigned dated unless renewed ... if the assigned date results in a term that exceeds twenty-four months, the applicant shall pay an additional prorated adjustment together with the regular renewal fee ... the secretary of state shall assign dates to existing licenses in a manner which shall result in a term of not less than two years” (see § 9, Chapter 497 of the Laws of 1985). It is apparent that the 1985 enactments were intended to impose a two year license term with staggered issuance and expiration dates.

            Statutes must be construed, if at all possible, in a compatible manner (see McKinney’s Cons. Laws of N.Y., Book I, Statutes § 391). Where they cannot be compatibly construed, or where such a construction would render an absurd result or one contrary to the intent of the Legislature, the later enactment may be determined to have repealed the former incompatible provision by implication (see Statutes § 391). The 1985 amendments to Article 12-A of the Real Property Law were designed to reduce the statutory scheme relating to real estate broker and salesperson licenses into a complete and harmonious system of staggered issuances and expirations with applicable two year terms (see Chapter 497 of the Laws of 1985; Mem of Senate, Bill Jacket, L. 1985, ch. 497; Mem of Dept. of State, Bill Jacket, L. 1985, ch. 497). Subdivision 2 of Real Property Law § 441-a cannot be compatibly construed with the 1985 amendments in a manner consistent with the purpose and intent of that legislation.

            Subdivision 2 of Real Property Law Section 441-a, however, expressly provides that a license holder may continue to “act as a real estate [broker / salesperson] in this state up to and including the thirty-first day of October of the year in which the license by its terms expires” (Real Property Law § 441-a(2)). To give effect to this provision along with the 1985 amendments might render the absurd result that only those licensees assigned expiration dates on or after October 31^st would receive the requisite two-year term prior to renewal, while licensees assigned expiration dates prior to October 31^st would be able to engage in licensed activities for more than a two-year period before being required to seek renewal. Such a construction would not only render an absurd result, but contradict the clear purpose of the 1985 amendments and the initial pro-rata charges imposed by RPL § 441-b(1).

            “The latest constitutional declaration by the Legislature constitutes the law, and though the act contains no express repealing clause all prior acts are thereby impliedly repealed so far as they are in conflict” (Statutes § 391, Commentary; Statutes § 398). Giving effect to RPL § 441-a(2) would contravene the spirit and purpose of the more recently enacted 1985 amendments to Article 12-A, and defeat in large part the administrative benefits derived therefrom. Therefore, it appears that the legislature created an irreconcilable statutory conflict among the expirations provisions, which must be redressed. The ALJ was correct in determining that the legislature repealed, by implication, in enactment of the 1985 amendments to Article 12-A of the Real Property Law, all vestiges of the mandatory October 31^st expiration of license terms contained in that Article and as such, subdivision 2 of section 441-a of the Real Property Law has been repealed by implication due to its unreconcilable conflict with subdivision 7 of section 441-a and Real Property Law section 441-b(2), which were more recently enacted.

IV.      Appellant Simme did not act as a real estate salesperson while unlicensed.

            Appellant Simme’s license as a real estate salesperson expired by its terms on March 12, 2006, and was not renewed until August 2006. Between March 12, 2006 and the license renewal in August 2006, Simme continued to act a real estate salesperson on behalf of M.J. Peterson Real Estate. Following an administrative hearing, the ALJ determined that Appellant Simme’s activities in the months of March through August of 2006, following her license’s expiration by its terms in March of 2006, constituted impermissible unlicensed activity (747 DOS 09).

            At the administrative hearing, Appellant Simme testified that in February of 2006 she timely mailed her completed renewal application to the Department of State. Appellant Simme testified that it was not until May of 2006 that she became aware that the Department of State had not processed her application or issued any renewal of her license. The ALJ, however, did not credit this testimony.

             That testimony, given under oath, was not disputed or contradicted by any other witness. In fact, at the hearing below, Respondent’s Investigator testified that he had heard as many as 50 complaints from the public within the last year concerning the Division of Licensing Services processing of renewal applications, and that errors may, at times, occur. The record also shows that in May of 2006, after discovering that her application had not been fully processed, Appellant engaged in a series of conversations via telephone with the Division of Licensing Services and, ultimately, filled out an additional renewal form and submitted it to Respondent. That submission was received and fully processed, and a late renewal was issued to Appellant in August of 2006. The ALJ, however, did not credit this testimony. Interestingly, had Appellant’s application been properly received and the processing delayed, pursuant State Administrative Procedure Act §401(2), her license would not have expired until a decision was made on her timely renewal.

            For nearly twenty years prior to the expiration of her license in March 2006, Appellant Simme acted as a licensed real estate salesperson without incident, complaint or disciplinary action. The ALJ does not appear to have considered Appellant Simme’s long and exemplary license history in rendering his credibility determination finding her testimony to lack merit. Given her previously unblemished record and the testimony of the Division of Licensing Services personnel, in this instance, it is determined that Appellant Simme’s testimony should be credited on that point.

            In the interest of justice, and considering the unique circumstances presented herein, the charge that Appellant Simme acted as a real estate salesperson while unlicensed should be dismissed and the ALJ’s determination shall be modified in accordance with this Decision. In reversing the decision below, we are not unmindful that restitution has been ordered paid to Susan Abbatoy and Evelyn Janis for commissions found to have been received in relation to Appellant’s unlicensed activities. As it has now been determined that Appellant’s license did not lapse and the commissions may well have been properly earned, an award of restitution would be inappropriate.

DETERMINATION

            Based on the foregoing, the Decision of the ALJ (747 DOS 09) is hereby modified as follows:

1.         That portion of the ALJ’s Opinion which found that Appellant Simme violated Real Property Law § 440-a and thereby demonstrated incompetency in violation of Real Property Law § 441-c is hereby reversed; and,

2.         That portion of the Opinion and Determination of the ALJ which found Appellants Victor L. Peterson and M.J. Peterson Real Estate in violation of Real Property Law § 442-c and thereby demonstrated incompetency in violation of Real Property Law § 441-c is hereby reversed; and,

3.         The penalties imposed upon Appellants are hereby vacated in their entirety.

So ordered on: April 16, 2010                        __________________________________________

                                                                                    Daniel E. Shapiro

                                                                                    First Deputy Secretary of State