PER CURIAM.
Peter Petridis, a licensed real estate salesperson, and his supervisor Margaret Steadman, a licensed real estate broker/salesperson, appeal from a February 1, 2011 final agency decision and order of the New Jersey Real Estate Commission (Commission). The order in question suspended their respective licenses due to their violation of portions of the New Jersey Real Estate Brokers and Salesperson Act (Act),
Petridis and Steadman were licensed realtors employed by Prudential Fox & Roach Realtors (Prudential), located in Brigantine. In October 2006, Osprey Estates, L.L.C. (Osprey) signed a listing agreement with Prudential designating Prudential as its exclusive agent for the sale of building lots and homes in an Osprey development on West Riverside Drive in Atlantic City. Petridis was designated as the listing agent and Steadman was Prudential's broker/salesperson on the Osprey listing agreement. The listing agreement permitted Prudential to act as a disclosed dual agent if the opportunity arose.
On November 17, 2007, Petridis prepared an offer on behalf of Richard Vizzi to purchase one of the Osprey properties. Vizzi was an investor who had been Petridis's client for many years prior to the signing of the November 17, 2007 offer. On November 26, 2007, Osprey and Vizzi executed an agreement of sale under which Vizzi agreed to purchase the property for the sum of $440,000, with a 4% sales commission due to Prudential. The closing was scheduled to take place no later than December 31, 2007; however, on that date, the parties executed an agreement extending the settlement date to January 18, 2008. The closing occurred as scheduled on the latter date.
On January 1, 2008, before the Osprey/Vizzi transaction closed, Petridis met with an individual named Yishai Kedar, who expressed interest in purchasing a property in the Osprey development. At the time, all of the constructed Osprey homes were under contract, and Kedar was unwilling to wait five to six months for a home to be constructed. He expressed interest in buying the property on West Riverside Drive that was under contract to Vizzi.
Petridis never told Osprey of Kedar's interest in purchasing a property. Instead, he contacted Vizzi to determine if he would be interested in selling the property to Kedar. Vizzi expressed an interest in doing so.
In early January 2008, Petridis and Steadman discussed how to proceed, in light of the fact that Vizzi would be contracting to sell the property to Kedar before he, Vizzi, took title. Petridis and Steadman reached the following conclusions: they had no duty to disclose to Osprey Kedar's interest in purchasing the property that Vizzi had agreed to purchase from Osprey; Vizzi was entitled to sign a contract agreeing to sell the property to Kedar, even though at the time of execution of any contract, Vizzi would be merely an "equitable owner" without legal title; the agreement of sale between Vizzi and Kedar need not reveal that Vizzi did not yet have legal title; and Petridis and Steadman could act as dual agents in the Vizzi/Kedar transaction.
Consequently, on January 7, 2008, before the Osprey/Vizzi transaction closed, and before Vizzi actually owned the property, Petridis prepared a contract of sale for the subject property with Kedar agreeing to purchase the property from Vizzi for the sum of $575,000. The contract identified Vizzi as the seller, but did not disclose that Vizzi did not hold title to the property. Neither did either Petridis or Steadman notify Osprey, or its managing partner, Daniel Sawicki, of Kedar's interest in an Osprey Estates property. Nor did either of them notify Osprey of the contemplated Vizzi/Kedar transaction prior to the closing of the transaction. Because no other real estate broker was involved in either the Osprey/Vizzi or the Vizzi/Kedar sales, Prudential and Petridis received commissions on the two sales of the same property, in the amounts of $17,600 on the first transaction, and $14,300 on the second.
Upon learning of the two transactions, and realizing that neither Petridis nor Steadman had advised Osprey of the second transaction, Sawicki filed a complaint with the Commission, charging Petridis and Steadman with unethical practices and violations of the Act. After a preliminary investigation, the Commission filed a complaint against the two, followed by a hearing on May 11, 2010, during which Sawicki, Petridis and Steadman testified, along with Glen Flores, an investigator employed by the Commission.
On February 1, 2011, the Commission issued its final order, accompanied by a thirty-three page decision setting forth the Commission's findings of fact and conclusions of law. In relevant part, the Commission reached the following conclusions:
In sum, the Commission concluded that Petridis and Steadman violated portions of the Act and the implementing regulations by: failing to strictly comply with the principles governing fiduciary relationships; performing incompetently; and misrepresenting the status of a party to a real estate transaction. The Commission also concluded that Steadman failed to properly supervise the activities of Petridis. For these violations, the final order suspended Petridis's salesperson's license for two months; downgraded Steadman's broker/salesperson's license to a salesperson's license for four months; imposed a $5000 fine on both Petridis and Steadman; required that they complete a thirty-hour remedial course within one year; and placed them on probation for a period of one year after their respective licenses were to be reinstated.
On appeal, in their joint brief, Petridis and Steadman raise the following claims:
A portion of the Act,
An appellate court will not upset the ultimate determination of an agency such as the Commission unless the agency action is arbitrary, capricious or unreasonable, or violative of legislative policies expressed or implied in the act governing the agency.
Although an administrative agency's interpretation of its own enabling statute and regulations is not binding on us, we are obliged to afford the agency's interpretation "considerable weight," and we will ordinarily defer to that interpretation unless the agency's interpretation was "plainly unreasonable" or contrary to statutory authorization.
Moreover, we will not weigh the evidence anew, redetermine the credibility of witnesses, draw inferences and conclusions from the evidence, or resolve conflicts in the evidence so long as the agency's determinations find support in the record.
Although appellants' Points I through V are framed as five separate arguments, all five challenge the validity of the Commission's findings of fact and its conclusion that Petridis and Steadman engaged in acts constituting misrepresentation, incompetency and breach of their fiduciary duties. We will analyze appellants' first five points collectively.
We turn first to the Commission's finding that by failing to insert a provision in the Vizzi/Kedar agreement of sale reflecting that Vizzi did not have legal title to the property at the time he agreed to sell it to Kedar, and possessed merely an equitable interest, Petridis and Steadman engaged in acts of misrepresentation within the meaning of
The statute of frauds,
Because the Commission's findings on misrepresentation, as defined by
At the hearing, defendants admitted they failed to obtain written consent to dual agency from the parties to the Osprey/Vizzi and Vizzi/Kedar transactions and that the contract of sale "should have," but did not identify Vizzi as an equitable owner. Petridis testified:
Additionally, during her testimony Steadman admitted:
Because they hold themselves out as specialists, real estate licensees are obliged to exercise "reasonable skill, care and diligence" in the execution of real estate documents.
Additionally, when a licensed broker or salesperson acts as a dual agent representing both the seller and the buyer in a real estate transaction, such licensee is required to obtain the written informed consent of the parties.
Petridis and Steadman both recognized these principles at the hearing when they conceded that they should have identified Vizzi as merely an equitable owner and that written disclosures to dual agency should have been procured, but were not. In assessing defendants' conduct and cumulative "oversights," the Commission determined these errors taken together did not demonstrate bad faith, but nonetheless fell below the level of competence expected of a licensed real estate professional. In light of Petridis's and Steadman's acknowledgment of their breach of the applicable standards, and the well-reasoned conclusions of the Commission, we have no cause to disturb the Commission's finding that Petridis's and Steadman's errors and serious misjudgments demonstrated "incompetence" in the real estate profession.
A real estate professional is obliged to ensure that the interests of his or her principal are paramount, and must place the interests of the principal ahead of his or her own. The Commission's rules obligate licensees to
Once a fiduciary relationship has been established, the licensee owes a duty of "absolute fidelity and good faith" to the principal and is duty bound to "disclose . . . all the facts within [the licensee's] knowledge which [are] material to the business for which [the licensee is] employed."
Here, the record amply supports the Commission's finding that Petridis and Steadman were not adequately loyal to the interests of their client Osprey. As listing agent for the entire Osprey subdivision, Petridis was obliged to sell the subdivided properties at the highest price, and that obligation remained in place throughout the Vizzi/Kedar transaction. Yet, despite that obligation, Petridis and Steadman concealed from Osprey Kedar's interest in purchasing one of the subdivided properties, by arranging for Vizzi to "flip" his property to Kedar. In so doing, Petridis denied his client Osprey the opportunity to make a sale to Kedar. Petridis earned two commissions by concealing from Osprey the Vizzi/Kedar transaction, thereby disserving Osprey's interest and benefiting Petridis at Osprey's expense. Such conduct supports the Commission's finding that the two licensees breached their fiduciary obligation to Osprey.
Petridis and Steadman urge us to reverse the Commission's findings on that subject. They point to a provision of the listing agreement with Osprey, paragraph 19, which relieves them of the obligation of presenting any "back-up" offers to Osprey once Osprey has agreed to sell the property to a purchaser. Paragraph 19 provides:
We do not view paragraph 19 as having any bearing on the precise issue the Commission addressed when it concluded that Petridis and Steadman breached their fiduciary obligations to Osprey. Notwithstanding paragraph 19, Petridis and Steadman were bound by their fiduciary obligations to disclose "all the facts" within their knowledge that were "material" to their business relationship with Osprey.
We see nothing in paragraph 19 that in any way relieved Petridis or Steadman of their duty to disclose to Osprey Kedar's interest in purchasing a property at the Osprey development. The listing agreement with Osprey obligated Petridis and Steadman to afford Osprey the maximum opportunity to make a sale and the opportunity to derive the maximum profit from all potential transactions. By hiding the Vizzi/Kedar sale from Osprey, Petridis and Steadman reserved all of the profit from that transaction for themselves, depriving their principal of the opportunity to derive a benefit from the prospective buyer, Kedar.
Thus, even if Petridis and Steadman were not required to present Osprey with "back-up" offers on the particular property once an agreement with Vizzi was reached, Petridis and Steadman breached their fiduciary duties by failing to convey material facts to their principal and by placing their own interests above Osprey's. The Commission's findings on this subject were supported by substantial and credible evidence in the record, and we have been presented with no meritorious basis upon which to disturb the Commission's finding that Petridis and Steadman breached their fiduciary obligations to Osprey.
In Point VI, Petridis and Steadman argue that the penalties imposed were excessive and unwarranted. Specifically, they assert that in light of "the totality of the findings," the penalties imposed against them were "far too harsh based upon the analytical and conclusory errors of law and of fact that were made." We disagree.
When considering the appropriate penalty to be imposed, the Commission must consider: (1) the licensee's good or bad faith; (2) the licensee's ability to pay a financial penalty; (3) the amount of profit earned from wrongful activity; (4) the extent of any injury to the public; (5) the duration of the wrongful activity; (6) the existence of any criminal actions; and (7) the existence of any prior violations.
In assessing the penalty, the Commission recognized that: Petridis and Steadman "did not demonstrate bad faith," but rather a lack of competence; neither of them had previously violated the Commission's rules; and neither one had any "criminal actions pending against them." Nonetheless, the Commission observed that neither Petridis nor Steadman had submitted evidence of an inability to pay the sanction; they had together earned an additional $14,300 in commission through the Vizzi/Kedar transaction under circumstances that were improper; and they had significantly harmed the public welfare as licensees by misrepresenting the status of the seller, by breaching their fiduciary obligations to their principal and by failing to carry out their duties with the degree of competence expected of licensees.
The penalties imposed here are consistent with other disciplinary actions by the Commission.
After carefully reviewing the record in light of appellants' arguments in Point VI, we are satisfied that the Commission properly analyzed each of the seven
Affirmed.
