NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

PER CURIAM.

Appellant Lewis A. Edge, Jr. appeals from the December 1, 2015 fianl decision of the Real Estate Commission ("Commission") revoking his real estate salesperson's license for two years and imposing a $5000 penalty for violations of the New Jersey Real Estate Brokers and Salespersons Act, N.J.S.A. 45:15-2 to-42 ("the Act"). We affirm.

We derive the following procedural history and facts from the record developed during proceedings conducted in the Office of Administrative Law ("OAL"). Appellant obtained his real estate salesperson's license in October 2005. Sometime in 2010, appellant became the administrator of the estate of his deceased next door neighbor ("the decedent"). In that position, appellant decided to sell the decedent's property and to serve as the listing agent for this transaction.

Appellant had lived next door to the decedent since 1979. In 1980, a predecessor corporation of Alcatel-Lucent USA, Inc. ("Lucent") found volatile organic compounds ("VOCs") in groundwater samples collected from supply wells on its site which was located approximately one-quarter of a mile from appellant's and decedent's properties. After this discovery, Lucent began to monitor and test residential wells near the site, including appellant's and the decedent's wells, for the presence of VOCs.1 Lucent sent written notice of these test results to the property owners. Tests conducted on appellant's property on June 7, 2005 and November 10, 2010 as part of the Lucent monitoring program revealed that his drinking water met applicable safety standards. Lucent sent written notice of the test results to appellant.

Separate and apart from the Lucent testing program, the township required well water tests prior to the transfer of title to a property. In June 2010, appellant ordered a test of the decedent's well pursuant to the Private Well Testing Act, N.J.S.A. 58:12A-26 to-37. The June 17, 2010 test revealed that the decedent's well water did not meet the State's standards for arsenic and gross alpha radioactivity. Appellant received a written report setting forth these test results.

On July 14, 2010, appellant completed and signed a Seller's Property Condition Disclosure Statement ("disclosure statement") in his capacity as the selling agent for the decedent's property. Despite knowing about the Lucent testing program and the June 17, 2010 test results for the decedent's property, appellant answered "No" to the following three questions on the disclosure statement:

Further, appellant answered "Yes" to Question 40 on the disclosure statement, which asked, "Are you aware of any leaks, backups, or other problems relating to any of the plumbing systems and fixtures . . . or of any other water or sewage related problems?" Appellant stated on the form that the "[s]eptic system is at the end of its useful [life] and will be replaced by the seller."

Appellant also answered "Yes" to question 31 which asked, "If your drinking water supply is not public have you performed any tests on the water?" The second part of this question asked when such testing took place, and appellant responded, "6/17/2010." The question then stated, "Attach a copy of or describe the results." However, appellant did not attach a copy, or describe the results, of the June 17, 2010 test. Appellant posted a copy of the disclosure statement on the Multiple Listing Service website listing the decedent's property for sale.

Sometime after the June 17, 2010 test, a water filtration system was installed on the decedent's property. On July 19, 2010, the property's well water was tested again and this time met the State criteria for arsenic and gross alpha radioactivity.

On September 9, 2010, the township sent appellant a letter concerning his application for a new septic system for the decedent's property. According to the letter, appellant's proposal did not meet State design requirements, but did meet certain exceptions for approval. The township's letter expressly stated, "notice of this exception shall be given to any prospective purchasers of this property by special mention in any contract of sale and by attaching this notice to any contract of sale." Appellant signed the letter and acknowledged its terms. On September 27, 2010, the township sent appellant a follow-up letter conditionally approving the alteration of the septic system.2 The township did not finally approve the new septic system until July 5, 2012.

Between April 1 and April 17, 2011, appellant corresponded by email with a licensed real estate salesperson ("the agent") representing a couple ("the buyers"), who were interested in the decedent's property. The agent had reviewed appellant's disclosure statement and, on April 1, 2011, made an offer on behalf of the buyers. Appellant made a counteroffer of $405,000 on April 3, 2011, and the agent responded on that date with a counteroffer of $370,000.

On April 4, 2011, appellant sent an email to the agent, stating that "the property, with all of its upgrades and improvements, including all new kitchen, new septic system and well water filtration system . . . is worth considerably more than your buyers' offer" and asked the buyers to "submit their highest and best offer over $400K and it will be seriously considered." (emphasis added). As noted above, the "new septic system" had not yet been installed on the decedent's property.

That same day, the buyers made a counteroffer of $390,000. In response, appellant sent an email to the agent, again stating there was a "new septic system" on the property and that the estate was "stand[ing] firm" on its $405,000 offer. On April 16, 2011, the agent advised appellant that the buyers accepted the estate's $405,000 offer and, later that day, the agent sent appellant a contract of sale signed by the buyers.

On April 17, 2011, the agent advised appellant that her clients had just learned that there had been "a significant problem" with the groundwater in the area that had required the installation of a water filtration system. The agent stated that the buyers wanted to know why this problem was not included in the disclosure statement.

In response, appellant revealed for the first time that Lucent and its predecessor "dumped volatile solvents into the ground many years ago which caused contamination of `some' of the neighborhood wells." He stated that the contamination had "dissipated" and that "[t]he well at [the decedent's property] has never been and is not now affected by those solvents." Appellant also claimed that "some time after [he] prepared the" disclosure statement, he "had comprehensive tests done on the well water at that location. . . and we found naturally-occurring arsenic and gross alpha [radioactivity] in the water (unrelated to anything that Lucent had done)." Appellant asserted that "both contaminants have been eliminated by filtration, which subsequent water tests confirmed."

According to the buyers, their decision to purchase the decedent's property was "greatly influenced by the fact that there was a new septic system . . . and that there were no well issues according to the" disclosure statement. On April 18, 2011, the township advised the buyers that the decedent's property, together with other properties in the neighborhood, had been subject to testing by Lucent from October 1998 to June 2010. The township also gave the buyers a copy of its conditional approval of a new septic system on the decedent's property, which appellant had failed to disclose or provide to their agent. On April 18, 2011, the buyers withdrew their offer to buy the property and they subsequently filed a complaint against appellant with the Commission.

Under the Act, the Commission may take action against a licensee for the violation of any of the provisions of the Act or the regulations promulgated thereunder. N.J.S.A. 45:15-17(t). If a violation is found, the Commission may place on probation, suspend, or revoke the license of a real estate salesperson for "[a]ny conduct which demonstrates unworthiness, incompetency, bad faith or dishonesty." N.J.S.A. 45:15-17(e). The Commission may also impose "a penalty of not more than $5,000 for the first violation, and a penalty of not more than $10,000 for any subsequent violation," in place of, or in addition to, any license suspension or revocation. N.J.S.A. 45:15-17.

Strict compliance with the Act is required of all licensees. N.J.A.C. 11:5-6.4(a). Each licensee owes a fiduciary duty to his or her client. Ibid. However, this obligation "does not relieve the licensee from the obligation of dealing fairly with all parties to the transaction." Ibid. Licensees are required to "disclose all information material to the physical condition of any property which they know or which a reasonable effort to ascertain such information would have revealed to their client or principal and when appropriate to any other party to a transaction." N.J.A.C. 11:5-6.4(c). "[I]nformation is `material' if a reasonable person would attach importance to its existence or non-existence in deciding whether or how to proceed in the transaction[.]" N.J.A.C. 11:5-6.4(b)(2). Information is also material "if the licensee knows or has reason to know that the recipient of the information regards, or is likely to regard it as important in deciding whether or how to proceed, although a reasonable person would not so regard it." Ibid.

Following its investigation of the buyers' complaint, the Commission issued an Order to Show Cause on November 21, 2013, charging appellant with breaching a licensee's duties of fair dealing and full disclosure under the Act and the Commission's regulations. The Commission sought to revoke appellant's real estate salesperson's license and impose a monetary penalty. Appellant filed an answer, and the Commission transmitted the matter to the OAL as a contested case.

Because the facts were not in dispute, appellant and the Commission agreed to file cross-motions for summary decision on the issue of liability. Appellant's primary argument was that after the buyers accepted his offer on the decedent's property, but before the contract of sale was finalized, he disclosed the existence of the Lucent testing program, the results of the June 17, 2010 water well test, and the conditional nature of the township's septic system approval. Thus, appellant argued "that the [buyers] did not expend any funds in connection with their offer and that his `full disclosure' . . . gave [the buyers] the information they needed to make an informed decision and withdraw their offer."

After reviewing the undisputed facts of this case and the respective positions of the parties, the Administrative Law Judge ("ALJ") rendered a thorough written opinion rejecting appellant's contentions and finding that appellant breached his duty of dealing fairly with the buyers and their agent, and by failing to timely disclose material information to them. Specifically, the ALJ found that appellant falsely answered "No" to Questions 78, 78a, and 81 on the disclosure statement. The ALJ explained that appellant's

The ALJ further found that appellant's

In addition, the ALJ noted that appellant "failed to fully disclose material information in his answer to Question 31" because, although appellant admitted that a well water test was conducted on June 17, 2010, "he failed to include the results of those tests, which detected arsenic and gross-alpha levels that did `not meet primary contaminant standards for drinking water.'"

The ALJ concluded that "[b]y falsely or not fully answering these questions on the disclosure statement and by failing to amend the disclosure statement at any relevant point, [appellant] demonstrated unworthiness, incompetency, bad faith or dishonesty as a licensed real[]estate salesperson." In so ruling, the ALJ found that "the testing information [appellant] failed to provide on the disclosure statement was material to the [buyers] as prospective buyers because a reasonable person would attach importance to the existence, or possible existence, of groundwater issues in deciding whether or how to proceed in a transaction."

The ALJ next addressed the email correspondence that appellant sent to the buyers' agent. The ALJ found that the correspondence "revealed that [appellant] dealt unfairly with the" buyers. First, appellant falsely stated that the decedent's property had a "new septic system" at a time when he knew that the new system was not installed and had only been conditionally approved. Second, appellant falsely represented that after he prepared the disclosure statement, he arranged for the water to be tested on the decedent's property. However, appellant knew that the testing was performed on June 17, 2010, before he prepared the July 14, 2010 disclosure statement.

The ALJ ruled that although appellant and the buyers never fully executed the sales contract, appellant falsely answered the questions on the disclosure statement, and "dishonestly . . . fail[ed] to mention the conditional approval of the septic tank while twice touting the `new septic system' as support for his asking price." Thus, the ALJ concluded that appellant's actions violated both N.J.A.C. 11:5-6.4(a) and (c).

Prior to determining an appropriate penalty, the ALJ heard testimony from appellant concerning his background and his compensation for serving as the estate's administrator and listing agent for the decedent's property. The ALJ then recommended "that the appropriate penalty [would be] a one-year loss of license and a $5,000 fine to be paid prior to renewal."

In reaching this recommendation, the ALJ considered each of the seven factors set forth in Kimmelman v. Henkels & McCoy, Inc., 108 N.J. 123, 137-39 (1987).3 The ALJ found, as mitigating factors, that appellant was seventy-four years old and had no prior disciplinary record. The ALJ stated that appellant's income had been "impacted" by the charges, but he had "some resources with which to pay a fine, and contemplates retirement out of state to reduce his cost of living." The ALJ further found that the penalty should be mitigated because no criminal or other punitive action had been filed against appellant as the result of this incident. As to the aggravating factors, the ALJ found that appellant acted in bad faith, was dishonest in his dealings with the agent and the buyers, and did not "conduct himself in accordance with the high standards expected of him and his profession."

In its December 1, 2015 final decision, the Commission adopted the ALJ's detailed findings of fact. However, the Commission found that the ALJ mistakenly treated the "lack of a criminal action" against appellant as a mitigating factor. As the Commission pointed out, the Supreme Court held in Kimmelman that "[a] large civil penalty may be unduly punitive if other sanctions have been imposed for the same violation." Kimmelman, supra, 108 N.J. at 139. Thus, the absence of a pending criminal prosecution is logically a positive factor in explaining why a civil penalty needs to be sufficient to achieve deterrence.

After making this correction, the Commission adopted the ALJ's recommendation to impose a $5000 civil penalty upon appellant. However, the Commission modified the ALJ's recommendation for a one-year suspension of appellant's license and instead revoked his license for a two-year period.4 The Commission stated that the two-year revocation was necessary because appellant did "not meet the high ethical standards required of real estate licensees." The Commission found that appellant "deceived" the buyers "regarding material elements of the property by making knowing and material misrepresentations," and that his "conduct [was] both dishonest and unfair." This appeal followed.5

On appeal, appellant contends that the Commission's decision is not supported by the record and that the penalty "lack[s] any relationship to the charges." We disagree.

Established precedents guide our task on appeal. Our scope of review of an administrative agency's final determination is limited. In re Herrmann, 192 N.J. 19, 27 (2007). "[A] `strong presumption of reasonableness attaches'" to the agency's decision. In re Carroll, 339 N.J.Super. 429, 437 (App. Div.) (quoting In re Vey, 272 N.J.Super. 199, 205 (App. Div. 1993), aff'd, 135 N.J. 306 (1994)), certif. denied, 170 N.J. 85 (2001). The burden is upon the appellant to demonstrate grounds for reversal. McGowan v. N.J. State Parole Bd., 347 N.J.Super. 544, 563 (App. Div. 2002); see also Bowden v. Bayside State Prison, 268 N.J.Super. 301, 304 (App. Div. 1993) (holding that "[t]he burden of showing the agency's action was arbitrary, unreasonable[,] or capricious rests upon the appellant"), certif. denied, 135 N.J. 469 (1994).

It is not our place to second-guess or substitute our judgment for that of the agency and, therefore, we do not "engage in an independent assessment of the evidence as if [we] were the court of first instance." In re Taylor, 158 N.J. 644, 656 (1999) (quoting State v. Locurto, 157 N.J. 463, 471 (1999)). An appellate court "may not vacate an agency determination because of doubts as to its wisdom or because the record may support more than one result[,]" but it is "obliged to give due deference to the view of those charged with the responsibility of implementing legislative programs." In re N.J. Pinelands Comm'n Resolution PC4-00-89, 356 N.J.Super. 363, 372 (App. Div.), certif. denied, 176 N.J. 281 (2003). This deference is particularly appropriate when the agency adopts the ALJ's findings because the ALJ, and not the agency, has the opportunity to hear live testimony and judge the witnesses' credibility. Clowes v. Terminix Int'l, Inc., 109 N.J. 575, 587-88 (1988).

Thus, we will "not disturb an administrative agency's determinations or findings unless there is a clear showing that (1) the agency did not follow the law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the decision was not supported by substantial evidence." In re Application of Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008). We are not, however, in any way "bound by the agency's interpretation of a statute or its determination of a strictly legal issue." Mayflower Sec. Co., Inc. v. Bureau of Sec., 64 N.J. 85, 93 (1973).

Applying these principles, we discern no basis for disturbing the Commission's reasoned determination. We affirm substantially for the reasons set forth in the Commission's thoughtful written opinion. We add the following brief comments.

Here, the material facts are not in dispute. Appellant prepared and posted a disclosure statement concerning the decedent's property that failed to reveal the ongoing Lucent testing program or the unsatisfactory private test results of the decedent's well. Appellant also falsely represented to the buyers that the property had a new septic system when all he had at that point was a conditional approval to install one. Appellant's email exchange with the buyer's agent clearly shows that he was aware they were relying upon his false representations in the negotiations over the sales price. Yet, he made no attempt to make the required disclosures until after the buyers had accepted his offer and signed their copy of a contract of sale. And, at that time, he still withheld the fact that he had the water tested before he completed and posted the false disclosure statement. Under these circumstances, we discern no basis to disturb the Commission's determination that appellant violated the Act and the regulations promulgated thereunder.

The Commission's decision to revoke appellant's license for two years and to impose a $5000 monetary sanction was also fully supported by the record. Appellant withheld material facts from the buyers and only attempted to address the matters he should have earlier disclosed after the buyers discovered the truth about the property. Although we are mindful of appellant's previous unblemished record and his personal circumstances, we cannot say that the penalty selected by the Commission, which was more stringent than the one the ALJ recommended, "shock[s] [our] sense of fairness." Hermann, supra, 192 N.J. at 28-29.

In sum, the Commission's decision is based on adequate factual findings in the record, and was neither arbitrary, capricious, or unreasonable. We therefore affirm the two-year revocation of appellant's real estate salesperson's license and the penalty imposed. In light of our determination, the stay we granted on April 13, 2016 is hereby dissolved effective twenty days after the issuance of this opinion.

Affirmed.