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New Jersey Real Estate Commission v. Nasir


April 25, 2008


On appeal from the New Jersey Real Estate Commission, Department of Banking and Insurance, Docket No. 05-011.

Per curiam.


Argued April 10, 2008

Before Judges Parrillo and S.L. Reisner.

This is an appeal of the final order of respondent New Jersey Real Estate Commission (NJREC) revoking appellant Muhammad A. Nasir's real estate salesperson's license for a term of five years for violating the New Jersey Real Estate License Act, N.J.S.A. 45:15-1 to -42 (Real Estate License Act). This matter follows two earlier actions which the State brought against appellant, including a civil action for insurance fraud and an agency action to revoke his insurance producer license. For the following reasons, we affirm.

Some background is in order. In 1982, appellant, then thirty-three years old, obtained a New York insurance producer license while working for Northwestern Mutual Insurance Company (Northwestern Mutual), where he continued working for the next fourteen years, until May 20, 1996. During this time, appellant also became a licensed New Jersey insurance producer. In 1986, he obtained a New Jersey real estate salesperson's license and worked in real estate part-time until 1998, when he started full-time. On January 31, 2002, appellant's New Jersey insurance producer license expired and he chose not to renew it.

Meanwhile, on April 27, 1996, appellant had submitted to Northwestern Mutual an application for disability insurance including a group disability insurance medical history statement answering "no" to all questions regarding his medical history for the prior five years. He did not disclose, however, that he had a pre-existing herniated disk. After obtaining the insurance, appellant underwent surgery for his back problem and then attempted to collect disability insurance. Specifically, on July 3, 1997, appellant applied for disability benefits from Northwestern Mutual claiming that on May 7, 1996, he had received a serious injury to his cervical spine. Upon investigation, his employer discovered the deception, denied his claim, and reported the incident to the New Jersey Office of the Insurance Fraud Prosecutor.

On January 3, 2000, the State filed a civil complaint alleging appellant committed insurance fraud in violation of the New Jersey Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30 (Fraud Act), by making false statements in support of his application for disability insurance (count one) and on a disability claim (count two). Following a bench trial, appellant was found liable and assessed a total of $43,710 under the Fraud Act, comprising $7,500 in penalties and $36,210 in counsel fees to the State. He appealed those assessments, and we affirmed in a reported opinion. State v. Nasir, 355 N.J. Super. 96, 100 (App. Div. 2002), certif. denied, 175 N.J. 549 (2003).

Following the insurance fraud prosecution, on September 3, 2002, the Commissioner of the Department of Banking and Insurance (DOBI) filed a separate administrative prosecution seeking to penalize appellant in his capacity as an insurance producer and to revoke his license. This prosecution was filed under the authority of N.J.S.A. 17:22A-17(a)(4) and (20) (Producer Licensing Act), which authorizes the Commissioner to regulate and license insurance producers. The administrative complaint alleged essentially the same facts as the Law Division prosecution, plus allegations that appellant was unworthy of licensure due to his fraudulent actions and that he had wrongfully failed to pay the penalties imposed by the Law Division, thus further demonstrating his "unworthiness" to be a licensed producer.

The matter was transmitted to the Office of Administrative Law, where an administrative law judge granted the Attorney General's motion for summary decision and recommended license revocation, plus $35,000 in penalties and $700 in costs. Appellant filed exceptions, claiming that he should not be penalized twice for the same conduct. The Attorney General countered that appellant was properly being penalized for violating two different statutes, but recommended a $10,000 reduction in the penalty.

The Commissioner concluded that the Fraud Act and the Producer Licensing Act served "distinct remedial goals," justifying the imposition of separate penalties for violations of each statute. He revoked appellant's license,*fn1 although appellant may reapply for licensure after five years. He also imposed a reduced penalty of $17,000 conditioned on appellant providing proof that he paid the Law Division penalties.*fn2 The Commissioner based the amount of the penalty on his analysis of only three of the seven factors set forth in Kimmelman v. Henkels & McCoy, Inc., 108 N.J. 123, 132 (1987), and incorrectly characterized the sixth factor as the "existence of criminal or unconscionable conduct." The Commissioner gave no specific consideration to the monetary fines previously imposed in the Law Division nor to the totality of the penalties being imposed on appellant, including the loss of his livelihood as an insurance producer and a separate administrative action to suspend his realtor's license.

Appellant appealed the Commissioner's imposition of the $17,000 penalty and costs, but not the license revocation. In an unpublished opinion, we concluded that the Commissioner had the authority to impose monetary penalties for appellant's violation of the Producer Licensing Act in addition to those previously imposed for violations of the Fraud Prevention Act, but we remanded the matter to the Commissioner for reconsideration of the amount of the penalty. Comm'r of Banking & Ins. v. Nasir, No. A-6060-04T1 (App. Div. Jan. 30, 2007) (slip op. at 2, 6). In doing so, we directed the Commissioner to "more specifically acknowledge and evaluate the magnitude of its proposed action, as well as analyze the remaining Kimmelman factors other than factors one and four." Id. at 8.*fn3

In the interim, on January 27, 2005, NJREC filed an order to show cause in the instant action, alleging that appellant violated the Real Estate License Act, specifically: (1) N.J.S.A. 45:15-17(e), by committing insurance fraud which demonstrated unworthiness, bad faith and dishonesty; (2) N.J.S.A. 45:15-17(l), because his underlying actions constituted fraud or dishonest dealing; and (3) N.J.S.A. 45:15-9, because his actions demonstrated that he does not possess the requisite good moral character, honesty, integrity and trustworthiness that a licensee must possess.

At the ensuing hearing, appellant and two character witnesses testified on his behalf. According to appellant, in his long career as an insurance producer, no complaints were ever filed against him. One complaint was filed against him under his real estate salesperson license when a seller accused him of prematurely giving a buyer a key, but, after an investigation, the NJREC took no action on the complaint.

At the conclusion of the evidence, NJREC made the following findings:

1. In committing insurance fraud, [appellant] demonstrated unworthiness, bad faith and dishonesty, in violation of N.J.S.A. 45:15-17(e).

2. [Appellant] violated N.J.S.A. 45:15-17(l) by engaging in conduct constituting fraud and dishonest dealing.

3. [Appellant]'s conduct demonstrates that he does not possess good moral character, honesty, integrity and trustworthiness pursuant to N.J.S.A. 45:15-9.

Consequently, NJREC ordered that appellant's real estate salesperson's license be revoked for five years, that no fine be imposed, and that his motion for a stay be denied. In doing so, NJREC considered mitigating factors, including appellant's unblemished disciplinary record, but nevertheless concluded that real estate licensees are "fiduciaries" and that "[t]he real estate licensing law is based on a strong public policy of the State . . . designed to insure that in the interest of public welfare, incompetent, unworthy and unscrupulous persons be excluded from the real estate brokerage business. [Div. of the N.J.] Real Estate [Comm'n] v. Ponsi, 39 N.J. Super. 526 (App. Div. 1956)." Moreover, reasoned NJREC, it is immaterial that appellant's unscrupulous conduct took place outside the real estate realm because "any conduct" demonstrating unworthiness subjects a licensee to the penalty of revocation. Nor does DOBI's prior enforcement action preclude NJREC from taking action against its licensee since the two licensing and regulatory schemes, administered by independent agencies, are separate and distinct, serving different public purposes.

On appeal, appellant contends that the agency erred by failing to consider the Kimmelman factors in assessing the appropriate penalty, and that the penalty of revocation was grossly excessive considering the sanctions imposed in other forums. We disagree.


As to the former claim, Kimmelman dealt with the issue of civil monetary penalties, not license revocations. Kimmelman, supra, 108 N.J. at 128. More specifically, Kimmelman addressed the calculation of civil penalties under the New Jersey Antitrust Act, N.J.S.A. 56:9-1 to -19 (Antitrust Act), delineating seven factors that trial courts should consider in their calculations. Id. at 140. These factors are: (1) the good or bad faith of the defendant, (2) the defendant's ability to pay, (3) the amount of profits defendant gained as a result of the illegal activity, (4) the injury to the public, (5) the duration of the conspiracy or scheme, (6) whether criminal or treble damages actions have been filed, and whether "[a] large civil penalty may be unduly punitive if other sanctions have been imposed for the same violation of the [same act]," and (7) whether past violations had occurred. Id. at 137-40. We subsequently applied Kimmelman to appellant's insurance producer action, wherein he appealed only from the order imposing monetary penalties and not the license revocation, and directed the DOBI on remand to "more specifically acknowledge and evaluate the magnitude of its proposed action, as well as analyze the remaining Kimmelman factors . . . ." Comm'r of Banking & Ins. v. Nasir, supra, slip op. at 7-8.

Here, of course, no monetary fines or penalties were assessed in the real estate action. Rather, appellant's license was revoked because the agency determined he lacked the requisite qualifications of honesty and integrity due to his fraudulent misconduct and violations of the Real Estate License Act. N.J.S.A. 45:15-17. Clearly, the agency has the statutory right, in its discretion, to revoke licensure, Maple Hill Farms, Inc. v. Div. of N.J. Real Estate Comm'n, 67 N.J. Super. 223, 232 (App. Div. 1961), to protect the public from fraud, misrepresentation and unethical practices. Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528, 561-62 (1967). In making this licensing determination, the Kimmelman factors, uniquely tailored to an assessment of monetary penalties, have no meaningful application.

Even though the agency was not obligated to apply the Kimmelman factors, NJREC's licensure decision actually reflects consideration of all relevant facts. So, for instance, under factor 1, the good or bad faith of the producer, the NJREC noted that appellant was adjudicated guilty of fraud and could not deny the findings of the trial court. Under factors 2 and 3, ability to pay and amount of profits obtained from illegal activity, the agency recognized that appellant had already been fined approximately $60,000 and never collected any money from the disability insurance. Factor 4, injury to the public, was also considered as NJREC emphasized the State's strong public policy against allowing dishonest persons into the real estate brokerage business. Although factor 6, the existence of criminal or treble damages actions, was never expressly mentioned, we may infer that the agency did not assess a fine because appellant had already been sanctioned monetarily in other forums. And, under factor 7, past violations, NJREC did note that appellant had no prior disciplinary actions against him. Suffice it to say, NJREC determined that, on balance, the need to insure the honesty, trustworthiness and integrity of the real estate sales profession was of paramount concern, outweighed appellant's mitigating circumstances, and required, in this instance, license revocation for five years. We find no error in this decision.


Accordingly, we reject appellant's claim that license revocation was unduly excessive in light of other sanctions he suffered. It is well settled that an agency has "broad discretion in determining the sanctions to be imposed for a violation of the legislation it is charged with administering." In re Scioscia, 216 N.J. Super. 644, 660 (App. Div.), certif. denied, 107 N.J. 652 (1987). Correspondingly, we have limited "review of an agency's choice of sanction." In re License Issued to Zahl, 186 N.J. 341, 353 (2006). "'Courts generally afford substantial deference to the actions of administrative agencies . . . because of the expertise and superior knowledge of agencies in their specialized fields, and because agencies are executive actors[.]'" Div. of Alcoholic Beverage Control v. Maynards, Inc., 192 N.J. 158, 183 (2007) (alterations in original) (quoting Zahl, supra, 186 N.J. at 353 (citations and internal quotation marks omitted)). Thus, we ordinarily uphold an agency determination so long as it is supported by substantial credible evidence and is not erroneous as a matter of law. See Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980); In re Aetna Cas. & Sur. Co., 248 N.J. Super. 367, 376 (App. Div.), certif. denied, 126 N.J. 385 (1991), cert. denied sub nom., Allstate Ins. Co. v. Fortunato, 502 U.S. 1121, 112 S.Ct. 1244, 117 L.Ed. 2d 476 (1992). The appropriate test for reversal is "'whether such punishment is so disproportionate to the offense, in light of all the circumstances, as to be shocking to one's sense of fairness.'" Zahl, supra, 186 N.J. at 354 (quoting In re Polk, 90 N.J. 550, 578 (1982)).

Measured by this standard, we find no abuse of discretion in the license revocation decision. Contrary to appellant's contention, there is no legal impediment to the imposition of separate penalties for violations of the three separate statutes involved here. The Fraud Act is more general legislation designed to combat this State's "massive" problem with insurance fraud, Merin v. Maglaki, 126 N.J. 430, 436 (1992), regardless of who commits the fraud. On the other hand, the Producer Licensing Act is designed to address the more specific problem of unscrupulous or otherwise unworthy insurance producers. Of course, the same may be said for the Real Estate License Act, a regulatory measure designed to protect the public from fraud, misrepresentation, incompetence and unethical practices by real estate licensees who act in a fiduciary capacity and are held to a high standard of conduct. N.J.A.C. 11:5-6.4(a); see also Ellsworth Dobbs, supra, 50 N.J. at 562.

Thus, while these three statutory schemes serve separate and distinct public purposes, they are not mutually exclusive. Indeed, the Fraud Act specifically provides that the Fraud Prosecutor may refer matters of insurance fraud to appropriate State licensing authorities for consideration of licensing actions, including license suspension or revocation. N.J.S.A. 17:33A-5(a). Thus, the Legislature expressly contemplated that penalties, including revocation, could be imposed against multiple license holders such as appellant. Simply put, appellant is subject to the punitive provisions of both the Producer Licensing Act and the Real Estate License Act because he chose to avail himself of the privilege of license as both a New Jersey insurance producer and real estate salesperson. Hence, we reject appellant's challenge to the penalty here as duplicative. Nor is it excessive in light of the fact that appellant's misconduct clearly demonstrates dishonesty, see N.J.S.A. 45:15-17(e), and the commission of a fraudulent act, see N.J.S.A. 45:15-17(l) -- either of which justifies revocation here.


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