Gruwell v. The Illinois Department of Financial and Professional Regulation ( 2010 )

NO. 4-09-0495 Filed 11/30/10
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
CAROL E. GRUWELL, ) Appeal from
Plaintiff-Appellant, ) Circuit Court of
v. ) Sangamon County
THE ILLINOIS DEPARTMENT OF FINANCIAL ) No. 05MR545
AND PROFESSIONAL REGULATION; )
DIVISION OF BANKS AND REAL ESTATE OF )
THE ILLINOIS DEPARTMENT OF FINANCIAL )
AND PROFESSIONAL REGULATION; THE )
REAL ESTATE ADMINISTRATION AND )
DISCIPLINARY BOARD OF THE ILLINOIS )
DEPARTMENT OF FINANCIAL AND )
PROFESSIONAL REGULATION; THE BUREAU )
OF REAL ESTATE PROFESSIONS OF THE )
DIVISION OF PROFESSIONAL REGULATION )
OF THE ILLINOIS DEPARTMENT OF )
FINANCIAL AND PROFESSIONAL )
REGULATION; DANIEL E. BLUTHARDT, as )
Director of the Division of )
Professional Regulation of the )
Illinois Department of Financial and )
Professional Regulation; D. LORENZO )
PADRON, Director of the Division of )
Professional Regulation of the )
Illinois Department of Financial and )
Professional Regulation; BRENT E. )
ADAMS, Acting Secretary of the )
Illinois Department of Financial and )
Professional Regulation; and MICHAEL )
McRAITH, Director of the Division of )
Insurance of the Illinois Department )
of Financial and Professional ) Honorable
Regulation, ) Leo J. Zappa, Jr.,
Defendants-Appellees. ) Judge Presiding.
_________________________________________________________________
JUSTICE KNECHT delivered the opinion of the court:
In March 2005, an administrative hearing officer found
plaintiff, Carol E. Gruwell, engaged in the unlicensed practice
of real estate in violation of section 20-10 of the Real Estate
License Act of 2000 (Act) (225 ILCS 454/20-10 (West 2002)). In
April 2005, defendant Real Estate Administration and Disciplinary
Board (Board) of the Illinois Department of Financial and Profes-
sional Regulation (Department) found the same and recommended a
fine of $25,000. In October 2005, defendant Daniel E. Bluthardt,
Director of the Division of Professional Regulation of the
Department (Director), denied plaintiff's motion for rehearing,
adopted the Board's findings and conclusions, and imposed a
$25,000 civil fine. Plaintiff sought administrative review. In
June 2009, the circuit court affirmed the Director's order.
Plaintiff appeals the administrative order, arguing, among other
things, (1) the Director erred in finding plaintiff engaged in
the unlicensed practice of real estate; (2) the $25,000 fine is
excessive; and (3) the Act, as applied to plaintiff, violates the
first amendment to the United States Constitution. We affirm as
modified to reflect our reduction in the amount of plaintiff's
fine to $7,500.
I. BACKGROUND
From September or October 2002 to October 2003, plaint-
iff worked as an independent contractor for Central Illinois For
Sale By Owner (Central). Central's primary business was the
operation of a Web site hosting classified advertisements for a
flat fee. It provided a forum for homeowners to advertise their
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homes for sale. By prohibiting homeowners represented by real
estate agents from advertising on its site, Central ensured the
homes it advertised were for sale by owner. Central's Web site
provided these home sellers with uniform advice on pricing,
staging, and negotiating the sale of their homes and referred
them to professionals who provided related services. Plaintiff
received a commission for each advertisement she sold.
In October 2003 Central agreed to enter, and in January
2004 Central did enter, a consent order with the Department. In
the order, Central admitted its activities, in the aggregate,
amounted to unlicensed practice of real estate in violation of
section 20-10 of the Act (225 ILCS 454/20-10 (West 2002)).
Central agreed to undergo and complete the requirements to become
a licensed corporate broker and to pay a $7,500 fine.
In October 2003, plaintiff discontinued working for
Central. In December 2003, the Department served plaintiff with
a complaint and notice of a preliminary hearing. The complaint
alleged plaintiff practiced real estate without a license during
her tenure with Central in violation of section 20-10 of the Act
(225 ILCS 454/20-10 (West 2002)). Specifically, it alleged
plaintiff unlawfully practiced real estate by (1) representing
herself as a real estate agent in newspaper advertisements and
radio appearances; (2) contracting with homeowners to assist them
in marketing and selling their homes; (3) advising homeowners on
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selling their homes, setting the price, and negotiating with
buyers; (4) assisting homeowners in marketing their homes by
taking photographs of their homes and posting them to Central's
Internet site; (5) assisting homeowners in holding open houses;
and (6) referring homeowners to professional service providers
including attorneys, home lenders, and home inspectors.
In August 2004, the parties presented arguments in an
administrative hearing before a hearing officer and two members
of the Board. The parties stipulated to admission of several
evidentiary exhibits offered by the Department, which included
tapes and transcripts of eight of plaintiff's regular radio
appearances, newspaper advertisements plaintiff ran, pages from
Central's Web site, and Central's consent order.
In her radio appearances, plaintiff and a radio host
spoke about plaintiff's services with Central, including its real
estate advertising services. Plaintiff said homeowners could
advertise their homes for sale on Central's Web site for a flat
fee. The fee included assistance from a representative of
Central in operating the advertising software and free home
photography for use in the advertisement. In one appearance,
plaintiff stated, "I am an Internet site and I help people sell
their homes on the Internet."
In some, but not all, of the appearances, plaintiff
included disclaimers specifying she was not a real estate agent
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and she did not negotiate sales. In one such disclaimer, she
said, "[Central is] not a real estate company[,] so there's [sic]
no hidden costs or commissions." She said homeowners themselves
were responsible for writing their advertisements and opening
their houses to the public. In one appearance, plaintiff likened
Central to "an extra, extra fancy newspaper where [plaintiff was]
the newspaper and [homeowners were] their own editors." She
corrected the radio host once when he characterized Central as a
"real estate service" by stating, "[Central is] an ad agency[,]
not a real estate company."
During these appearances, plaintiff spoke about homes
for sale on Central's Web site, sometimes describing them in the
first person. She sometimes prefaced these descriptions by
asking the radio host if she could "just sneak one in." She gave
the houses' locations and asking prices, details about their lay-
outs and amenities, and information about their neighborhoods.
She told the radio host to visit one home before it sold. She
invited a dentist's clients to visit his open house. In one
appearance, she said Central "sold a half a million last week."
In the newspaper advertisements, plaintiff aggregated
advertisements for several homes on one page with Central and
plaintiff's names and plaintiff's phone number. The advertise-
ments did not provide contact information for the homeowners
whose houses were advertised. Some, but not all, of these
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advertisements included disclaimers specifying plaintiff and
Central were not acting as a real estate agent or company. All
the advertisements taken into evidence included copy advertising
plaintiff or Central's services specifically. One stated, "9
Million in Homes Sold since Jan. '03," and another, "12 Million
Dollars Worth of Homes Listed, approx 4 Million Sold As of Jan.
2003." One stated, "If you want to see your house SOLD," call
plaintiff.
Among the pages from Central's Web site were a disclai-
mer page, a page giving contact information for Central and its
representatives, pages describing Central's services, pages
giving advice to home sellers, and pages of advertisements. The
disclaimer stated Central's Web site was "strictly an advertise-
ment venue" that was not "a real estate organization" and did not
offer "professional real estate[-]related assistance." The
contact page listed plaintiff as the "local contact" for Spring-
field, Illinois, and the surrounding area. One page stated
Central "will not advertise any particular item listed on this
Web site."
The parties also stipulated to several of plaintiff's
exhibits, which included copies of several Web sites that plain-
tiff alleged were similar to Central's and offered similar
services; a letter from the Illinois Attorney General's office to
plaintiff stating it received no complaints about Central from
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January 2000 until March 2004; and a written and signed dis-
claimer from plaintiff, addressed to a client, stating she was
not providing brokerage services.
Plaintiff testified, although she had been a licensed
real estate salesperson from 1986 to 1991, when she allowed her
real estate license to lapse, she did not act as a real estate
broker for Central but merely as an advertiser. She asserted she
never received a brokerage commission, and her compensation never
depended on the home's sale. She asserted other Internet compa-
nies provided the same services and she was singled out for
prosecution because some licensed real estate professionals
disliked her. In closing arguments, the Department argued
plaintiff knowingly practiced real estate without a license and
requested the Director order plaintiff to pay a $7,500 fine.
Plaintiff argued she merely provided advertising services and
asserted, "This is the future [of the industry], like it or not."
In March 2005, the hearing officer found the Department
had sufficiently shown plaintiff engaged in the unlicensed
practice of real estate. In April 2005, the Board concluded
plaintiff knowingly and repeatedly violated section 20-10 of the
Act (225 ILCS 454/20-10 (West 2002)) and recommended a $25,000
civil penalty. Plaintiff moved for a rehearing, arguing the
Board erred in finding she practiced real estate without a
license and in requesting an excessive fine. In October 2005,
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the Director denied plaintiff's motion for rehearing and adopted
the Board's findings of fact and conclusions of law and imposed a
$25,000 fine.
In November 2005, plaintiff sought administrative
review in the circuit court. In March 2009, plaintiff moved for
judgment, arguing (1) she did not act as a "broker" as defined in
the Act (225 ILCS 454/1-10 (West 2002)) or, alternatively, she
qualified for exemptions under sections 5-20(7) and (9) (225 ILCS
454/5-20(7), (9) (West 2002)); and (2) the fine was excessive.
In June 2009, the court affirmed the Director's conclusions and
the fine. This appeal followed.
II. ANALYSIS
On appeal, plaintiff argues (1) she did not act as a
"broker" under the Act; (2) the fine was excessive; and (3) as
applied to her case, the Act violates the first amendment to the
United States Constitution (U.S. Const., amend. I). We disagree
with plaintiff's arguments regarding her violation of the Act,
and we find she forfeited her constitutional argument. We agree
with plaintiff the fine imposed was excessive and affirm as
modified.
A. Standard of Review
On appeal, we review the Board's decision, not the
circuit court's. See Cinkus v. Village of Stickney Municipal
Officers Electoral Board, 228 Ill. 2d 200, 212, 886 N.E.2d 1011,
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1019 (2008). The scope of judicial review of administrative
decisions "extend[s] to all questions of law and fact presented
by the entire record before the court." 735 ILCS 5/3-110 (West
2008). A court may encounter three types of questions on admin-
istrative review of an agency decision: questions of fact,
questions of law, and mixed questions of law and fact. Cinkus,
228 Ill. 2d at 210, 886 N.E.2d at 1018. Because an administra-
tive agency's findings of fact are presumed true, "a reviewing
court is limited to ascertaining whether such findings of fact
are against the manifest weight of the evidence." Cinkus, 228
Ill. 2d at 210, 886 N.E.2d at 1018; see also 735 ILCS 5/3-110
(West 2008) ("The findings and conclusions of the administrative
agency on questions of fact shall be held to be prima facie true
and correct"). "In contrast, an agency's decision on a question
of law is not binding on a reviewing court," and we review such a
decision de novo. Cinkus, 228 Ill. 2d at 210, 886 N.E.2d at
1018.
Mixed questions of law and fact "are 'questions in
which the historical facts are admitted or established, the rule
of law is undisputed, and the issue is *** whether the rule of
law as applied to the established facts is or is not violated.'"
American Federation of State, County & Municipal Employees,
Council 31 v. Illinois State Labor Relations Board, State Panel,
216 Ill. 2d 569, 577, 839 N.E.2d 479, 485 (2005), quoting
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Pullman-Standard v. Swint, 456 U.S. 273, 289 n.19, 72 L. Ed. 2d
66, 80 n.19, 102 S. Ct. 1781, 1790 n.19 (1982). Decisions of
mixed questions of law and fact are reversible only if they are
clearly erroneous. Cinkus, 228 Ill. 2d at 211, 886 N.E.2d at
1018. The clearly erroneous standard is "'significantly deferen-
tial.'" Provena Covenant Medical Center v. Department of Reve-
nue, 236 Ill. 2d 368, 387, 925 N.E.2d 1131, 1143 (2010); see also
Provena Covenant Medical Center, 236 Ill. 2d at 387 n.9, 925
N.E.2d at 1143 n.9 (courts accord deference to administrative
decisions "in recognition of the fact that agencies make informed
judgments on the issues based upon their experience and expertise
and serve as an informed source for ascertaining the legisla-
ture's intent"). "A decision is 'clearly erroneous' when the
reviewing court is left with the definite and firm conviction
that a mistake has been committed." American Federation of
State, County & Municipal Employees, 216 Ill. 2d at 577-78, 839
N.E.2d at 485, citing AFM Messenger Service, Inc. v. Department
of Employment Security, 198 Ill. 2d 380, 395, 763 N.E.2d 272 at
282 (2001).
B. Unlicensed Practice of Real Estate
Plaintiff contends the Director erred by finding she
violated section 20-10 of the Act (225 ILCS 454/20-10 (West
2002)). Section 20-10 provides a civil penalty against "[a]ny
person who practices, offers to practice, attempts to practice,
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or holds oneself out to practice as a real estate broker[ or]
real estate salesperson *** without being licensed under this
Act." 225 ILCS 454/20-10 (West 2002). In turn, section 10-1
defines a "salesperson," in pertinent part, as "any individual,
*** who is employed by a real estate broker or is associated by
written agreement with a real estate broker as an independent
contractor and participates in any activity described in the
definition of 'broker.'" 225 ILCS 454/1-10 (West 2002). Because
plaintiff undisputedly worked as an independent contractor for
Central, which admitted in its consent order to practicing as a
real estate broker, the only question remaining under section 20-
10 is whether plaintiff acted as, or held herself out to be, a
broker.
Section 1-10 of the Act defines "broker," in pertinent
part, as:
"an individual *** who for another and for
compensation, or with the intention or
expectation of receiving compensation, either
directly or indirectly:
(1) Sells, exchanges, purchases,
rents, or leases real estate.
(2) Offers to sell, exchange, pur-
chase, rent, or lease real estate.
(3) Negotiates[ or] offers, at-
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tempts, or agrees to negotiate the sale,
exchange, purchase, rental, or leasing
of real estate.
(4) Lists[ or] offers, attempts, or
agrees to list real estate for sale,
lease, or exchange.
* * *
(7) Advertises or represents him-
self or herself as being engaged in the
business of buying, selling, exchanging,
renting, or leasing real estate.
(8) Assists or directs in procuring
or referring of prospects, intended to
result in the sale, exchange, lease, or
rental of real estate.
(9) Assists or directs in the nego-
tiation of any transaction intended to
result in the sale, exchange, lease, or
rental of real estate.
(10) Opens real estate to the pub-
lic for marketing purposes." 225 ILCS
454/1-10 (West 2002).
Providing a convenient shorthand, the Act defines "licensed
activities" as "those activities listed in the definition of
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'broker.'" 225 ILCS 454/1-10 (West 2002).
As an initial matter, plaintiff asserts this argument
presents a question of fact, as to which our review is under the
most deferential, manifest-weight-of-the-evidence standard. We
disagree. Plaintiff does not dispute the Director's findings
regarding what her conduct was. Instead, she argues the Director
erred in finding her conduct conformed to the Act's prohibitions.
This presents a mixed question of law and fact, which we review
for clear error.
In addressing plaintiff's argument, we must interpret
specific language in the Act. Courts addressing the Act's
predecessor held, "[T]he Act is not a penal measure, to be
strictly construed against the State, but a broad statutory
system which is remedial and therefore should be liberally
construed." White v. Chicago Title & Trust Co., 99 Ill. App. 3d
323, 325, 425 N.E.2d 1017, 1018 (1981) (interpreting the Real
Estate Brokers and Salesmen License Act (Ill. Rev. Stat. 1979,
ch. 111, pars. 5701 through 5743)). These courts relied on the
General Assembly's statement of intent contained in the earlier
act: "The intent of the legislature in enacting this statute is
to evaluate the competency of persons engaged in the real estate
business for the protection of the public." Ill. Rev. Stat.
1979, ch. 111, par. 5701. From this language, they concluded the
purpose of the act was to prevent "injury to the public by
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assuring that the occupation will be practiced with honesty and
integrity, excluding from the profession those who are incompe-
tent or unworthy." Ranquist v. Stackler, 55 Ill. App. 3d 545,
551, 370 N.E.2d 1198, 1203 (1977). The terms of the predecessor
act prohibiting unlicensed practice of real estate were thus
construed broadly to deter the circumvention of licensing re-
quirements. See, e.g., Rabin v. Prenzler, 116 Ill. App. 3d 523,
531, 451 N.E.2d 1331, 1337 (1983).
The legislative statement of intent remains substan-
tially the same in the Act as in its predecessor. Compare Ill.
Rev. Stat. 1979, ch. 111, par. 5701 (quoted above), with 225 ILCS
454/1-5 (West 2002) ("The intent of the General Assembly in
enacting this statute is to evaluate the competency of persons
engaged in the real estate business and to regulate this business
for the protection of the public"). Therefore, we find the
principles regarding construction of the Real Estate Brokers and
Salesmen License Act apply to the current Act as well.
Plaintiff's argument consists of three fundamental
contentions: (1) plaintiff did not perform any "licensed activi-
ties" under the Act; (2) plaintiff did not act "for another"
under the Act; and (3) plaintiff did not act "for compensation"
under the Act. While defendants argue plaintiff forfeited the
latter two arguments by failing to raise them at her administra-
tive hearing, plaintiff contended throughout the proceedings in
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this matter she did not act as a real estate agent. While our
review in administrative-review cases is limited, we decline
defendants' invitation to find plaintiff forfeited these argu-
ments by failing to utter the specific words used in the statute.
We consider each argument in turn.
1. "Licensed Activities"
Plaintiff argues the Director erred in finding she
performed, or held herself out as performing, licensed activi-
ties. The gist of plaintiff's argument appears to be she did
nothing more than provide a forum for homeowners to advertise
their real estate for sale. In arguing plaintiff did not repre-
sent herself to be a broker, plaintiff relies extensively on
disclaimers she made in several of her many newspaper and radio
advertisements to the effect she was not, and did not work for, a
real estate broker. Defendants argue the evidence at the hearing
provided a sufficient basis for the Director's findings and
conclusions. We agree with defendants.
The Board--and the Director, by adoption--found plain-
tiff violated section 20-10 by (1) holding herself out as a
broker in newspaper advertisements; (2) listing homes for sale in
newspaper advertisements; (3) selling homes in advertisements;
(4) holding herself out as a broker in radio advertisements; (5)
acting, in effect, as a spokesperson for the homeowners in radio
advertisements; (6) referring homeowners to Central's Web site
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which, in turn, gave homeowners tips on selling and marketing
their homes, interacting with buyers, setting and negotiating
price, and finding related service providers such as real estate
appraisers and attorneys; (7) assisting in marketing real estate
by taking photographs of properties and uploading them to Cen-
tral's Web site; (8) assisting in marketing real estate by
providing clients with for-sale-by-owner signs and updating the
signs with respect to the status of the home sale; and (9)
referring prospective buyers and thereby assisting in negotia-
tions of sales. Plaintiff fails to point to evidence or law in
contradiction of these conclusions.
Plaintiff asserts, with respect to the newspaper and
radio advertisements, she never stated she was a real estate
agent and, moreover, often stated she was not a real estate
agent. Similarly, she asserts she never used the words "closing"
or "commission." The Board specifically concluded, "The state-
ments in the ads that [plaintiff] was not a real estate agent did
not change the active role [plaintiff] played, both in the ads
and in servicing the clients outside the ads" (emphasis in
original). The Board found plaintiff's disclaimers essentially
disingenuous and misleading in light of her other representations
and actions. For example, plaintiff's statement she was not a
real estate agent is irreconcilable with her on-air statements
"we go ahead and put the house up on the market" and "we sold a
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half a million [dollars' worth of real estate] last week."
Testimony of the radio host with whom plaintiff advertised showed
plaintiff's advertisements resembled those of licensed brokers.
Plaintiff described specific properties, sometimes in the first
person, giving rise to the conclusion she was acting as a real
estate agent on behalf of the homeowners. This conclusion was
further engendered by plaintiff's failure in the same radio
advertisements to provide contact information for the homeowners.
Although plaintiff contends a reasonable listener would know to
visit Central's Web site for homeowners' contact information, we
decline to find the Board clearly erred in finding plaintiff was
holding herself out as an intermediary between the seller and
prospective buyers.
Moreover, many of plaintiff's disclaimers served the
mere purpose of emphasizing the relative inexpensiveness of
Central's services compared to a licensed broker's, while simul-
taneously suggesting the services were equivalent. For example,
in one of her radio appearances, plaintiff stated, "[Central is]
not a real estate company[,] so there's [sic] no hidden costs or
commissions." The Board decided plaintiff's representations and
actions carried more force than her characterization of her
activities, within an advertising context, as outside the scope
of practicing real estate. We do not find this determination
clearly erroneous.
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Plaintiff further asserts plaintiff's "passive knowl-
edge" of the contents of Central's Web site is insufficient to
find plaintiff violated the Act. The Act, however, imposes a
penalty for directly or indirectly providing licensed activities.
Thus, even though plaintiff was not responsible for the informa-
tion on Central's Web site, her referral of clients to the Web
site for advice on marketing and selling their homes constituted
licensed activity--specifically, assisting or directing in the
negotiation of any transaction intended to result in the sale of
real estate. Central itself admitted its Web content constituted
unlicensed practice of real estate. Plaintiff's active advice to
homeowners, not her passive knowledge of language on Central's
Web site, supports the Board's finding. We do not find the
Board's application of the Act in this respect clearly erroneous.
Plaintiff summarily says she "did not list anything."
She asserts the homeowners themselves put their houses on the
market. However, this contradicts plaintiff's on-air comment to
the effect she and Central "go ahead and put the house on the
market." At a minimum, plaintiff held herself out as listing
homes for sale.
Because our evaluation of the law and facts under the
clearly erroneous standard on these issues sufficiently supports
the Board's findings and conclusions, we decline to address each
of plaintiff's remaining contentions on this argument.
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2. "For Another"
Plaintiff argues next her conduct was not "for another"
and, therefore, was not a licensed activity for which she could
be fined under section 20-10 of the Act (225 ILCS 454/20-10 (West
2002)). Plaintiff's argument relies on a federal district
court's unpublished opinion in which the court interpreted the
language "for another" in the context of New Hampshire's statutes
regulating real estate practice. See Skynet Corp. v. Slattery,
No. 06-cv-218-JM, 2008 WL 924531 (D.N.H. March 31, 2008)
(unpublished opinion). That court concluded "for another" within
New Hampshire's statutory scheme "connotes more of an agency
relationship than merely a conduit service." Skynet, 2008 WL
924531, at *8. Admittedly, the New Hampshire act strikingly
resembles the Illinois Act. However, because we find "for
another" in the Act to be unambiguous, we decline to look to
another jurisdiction--let alone another jurisdiction's unpub-
lished opinion--for aid in interpreting it.
The purpose of the Act, by analogy to its predecessor,
is to protect the public by imposing on real estate brokers and
salespeople minimum competency and character requirements. See
Rabin, 116 Ill. App. 3d at 531, 451 N.E.2d at 1337. Like its
predecessor, the Act includes protective measures intended to
prohibit "sharp, dishonest, or fraudulent practices," which may
prejudice parties to a real estate transaction. Moy v. Depart-
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ment of Registration & Education, 85 Ill. App. 3d 27, 29, 406
N.E.2d 191, 194 (1980). Insofar as it limits application of the
term "broker" under the Act and, thereby, frustrates prosecution
of unlicensed practice that would promote the Act's protective
purpose, we interpret the clause "for another" narrowly.
Keeping this in mind, we conclude "for another" as used
in the definition of "broker" is the Act's mechanism whereby it
exempts parties to real estate transactions from licensing
requirements when acting in their own behalf. Thus, for example,
a homeowner may sell or lease his own home, or open it to the
public for marketing purposes, or negotiate for the purpose of
selling it, where he would otherwise violate section 20-10.
Under this narrow interpretation, it is unnecessary to ascribe a
nebulous agency requirement where we find none in the language of
the Act. Because plaintiff acted for another, merely as opposed
to acting for herself, she was not exempt from the Act's licens-
ing requirements by virtue of this clause in the definition of
"broker."
3. "For Compensation"
Similarly, plaintiff argues her actions were not "for
compensation, or with the intention or expectation of receiving
compensation." 225 ILCS 454/1-10 (West 2002). Plaintiff again
relies on Skynet to argue this language in the Act requires a
nexus between an agency relationship and the compensation re-
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ceived in exchange for performing brokerage services. We reject
plaintiff's argument.
Again, we construe the statute broadly. The Act
defines "compensation" as "the valuable consideration given by
one person or entity to another person or entity in exchange for
the performance of some activity or service." 225 ILCS 454/1-10
(West 2002). The Act does not explicitly require "compensation"
to be given within the context of an agency relationship. It is
sufficient the Board found plaintiff received a commission for
each advertisement she sold, in connection with which she perfor-
med licensed activities.
Indeed, the Board characterized plaintiff's compensa-
tion as "discounted brokerage," and this conclusion is not
clearly erroneous. Essentially, the Board acknowledges plaintiff
did not perform every possible activity of a real estate broker;
rather, she and Central accepted less than full brokerage compen-
sation and, in exchange, performed less than full brokerage. The
Act does not exempt "minor" violations, wherein an unlicensed
broker does not see a sale to its conclusion. Similarly, the Act
does not make exception for compensation amounting to less than
full-blown brokerage commission and fees.
C. Fine
Plaintiff argues her $25,000 fine is excessive and
urges us to vacate it. Although defendants argue plaintiff
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forfeited this issue, we find plaintiff preserved the argument by
raising it in her motion for rehearing before the Director and
renewing it in her brief and oral argument before the circuit
court. In the alternative, defendants argue the amount of the
fine does not constitute error. We agree with plaintiff her fine
is excessive and reduce it to $7,500.
When considering an administrative sanction, a review-
ing court "defers to the administrative agency's expertise and
experience in determining what sanction is appropriate to protect
the public interest." Abrahamson v. Illinois Department of
Professional Regulation, 153 Ill. 2d 76, 99, 606 N.E.2d 1111,
1122 (1992). Our deference in this respect "does not mean,
however, *** that all administrative decisions are sacred and not
within reach of the courts." Dorfman v. Gerber, 29 Ill. 2d 191,
196, 193 N.E.2d 770, 773 (1963). We will reverse a sanction if
it is arbitrary or capricious or amounts to an abuse of discre-
tion. See Deen v. Lustig, 337 Ill. App. 3d 294, 302, 785 N.E.2d
521, 529 (2003); Siddiqui v. Department of Professional Regula-
tion, 307 Ill. App. 3d 753, 763, 718 N.E.2d 217, 228 (1999).
"'Agency action is arbitrary and capricious
only if the agency contravenes the legisla-
ture's intent, fails to consider a crucial
aspect of the problem, or offers an explana-
tion which is so implausible that it runs
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contrary to agency expertise.' [Citation.]
An abuse of discretion is found when a deci-
sion is reached without employing conscien-
tious judgment or when the decision is clear-
ly against logic." Deen, 337 Ill. App. 3d at
302, 785 N.E.2d at 529.
In the specific context of administrative fines, an administra-
tive agency abuses its discretion when it "imposes a sanction
that is (1) overly harsh in view of the mitigating circumstances
or (2) unrelated to the purpose of the statute." Siddiqui, 307
Ill. App. 3d at 763, 718 N.E.2d at 228. An agency may consider
sanctions imposed in similar cases to develop uniformity in
disciplinary proceedings. Siddiqui, 307 Ill. App. 3d at 764, 718
N.E.2d at 228.
Although section 20-10 of the Act allows the Director
to impose a civil fine of up to $25,000 for each violation (225
ILCS 454/20-10 (West 2002)), and although plaintiff violated the
Act numerous times, we nevertheless find the Director's imposi-
tion of a $25,000 fine in this case constitutes error. We note,
significantly, the Department imposed a $7,500 fine upon Central
pursuant to its consent order. While plaintiff's violations were
numerous and reprehensible, we find no justification in logic or
conscientious judgment to impose a fine 233% greater against her
than against Central, which also committed multiple violations of
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the Act.
Plaintiff contends her fine contravenes the Act's
purposes of evaluating the competency of persons involved in the
real estate business and protecting the public against fraudulent
practices. See 225 ILCS 454/1-5 (West 2000). While we disagree
with plaintiff's contention insofar as she neglects her viola-
tions obstructed the evaluation of her competency to practice
real estate and constituted a fraud against the public, we find
the amount of the fine is not commensurate with the legislative
purposes of the Act. Rather, it is overly harsh in light of
plaintiff's violations and the Department's treatment of Central
under similar circumstances. We find reduction of the amount of
plaintiff's fine from $25,000 to $7,500 is necessary to meet the
ends of justice.
We find it unnecessary to remand for the Director to
adjust the amount of the fine. Instead, we find it is within our
appellate powers to vacate the $25,000 fine and impose a $7,500
fine. In a case under the Administrative Review Law (735 ILCS
5/3-101 through 3-113 (West 2008)), the circuit court may, "in
case of affirmance or partial affirmance of an administrative
decision which requires the payment of money, *** enter judgment
for the amount justified by the record." 735 ILCS 5/3-111(a)(8)
(West 2008). In turn, the circuit court's decision "is reviewab-
le by appeal as in other civil cases." 735 ILCS 5/3-112 (West
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2008). In an appeal from a civil judgment, Supreme Court Rule
366(a)(5) empowers this court to "enter any judgment and make any
order that ought to have been given or made, and make any other
and further orders and grant any relief[] *** that the case may
require." 155 Ill. 2d R. 366(a)(5). Accordingly, we modify the
amount of plaintiff's fine to $7,500 in accordance with our
powers under Rule 366(a)(5).
D. First Amendment
Plaintiff argues the Act, as applied to her, violates
the first amendment to the United States Constitution. Defen-
dants argue plaintiff forfeited this argument by failing to raise
it at the administrative hearing and on administrative review.
We agree with defendants.
In general, "if an argument, issue, or defense is not
presented in an administrative hearing, it is procedurally
defaulted and may not be raised for the first time before the
circuit court on administrative review." Cinkus, 228 Ill. 2d at
212, 886 N.E.2d at 1019. "The rule of procedural default specif-
ically requires first raising an issue before the administrative
tribunal rendering a decision from which an appeal is taken to
the courts." Cinkus, 228 Ill. 2d at 213, 886 N.E.2d at 1019.
Even though "an administrative agency lacks the authority to
declare a statute unconstitutional, or even to question its
validity," a litigant must present its constitutional argument on
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the record at the administrative stage. Cinkus, 228 Ill. 2d at
214, 886 N.E.2d at 1020. "Such a practice avoids piecemeal
litigation and, more importantly, allows opposing parties a full
opportunity to refute the constitutional challenge." Cinkus, 228
Ill. 2d at 214, 886 N.E.2d at 1020.
Here, plaintiff mentioned her first-amendment claim
briefly at her administrative hearing and in proceedings before
the circuit court. In her testimony at the hearing, plaintiff
stated, "If I want to talk--I would think freedom of speech would
be a--denied if you're telling me that I have to be a realtor
before I can talk about an ad that's placed on my Internet."
This comment does not rise to the level of an argument, and
plaintiff failed to obtain a ruling from the agency on this
alleged issue. In her motion for judgment before the circuit
court, plaintiff complained, "Essentially, the Department wants
to cap [f]reedom of [s]peech in violation of the United States'
[sic] Constitution for the sake of making an example out of
[plaintiff]." To conclude the argument in plaintiff's reply
brief in support of her motion for judgment, plaintiff's counsel
stated, "Further, [plaintiff] has asked that it be found that ***
her [f]irst[-a]mendment rights have been infringed." However,
none of these utterances was sufficient to preserve the argument
for review. Plaintiff failed to cite any legal authority, and
the Department, defendants, and the court never had occasion to
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reply to plaintiff's assertions because they did not present
sufficiently cogent analysis or argument. Therefore, we hold
plaintiff procedurally defaulted her first-amendment argument.
Nevertheless, plaintiff
"invokes the principle that procedural de-
fault is a limitation on the parties rather
than on this court's jurisdiction, and that
the doctrine of procedural default may be
relaxed when necessary to maintain a uniform
body of precedent or where the interests of
justice so require." Cinkus, 228 Ill. 2d at
215, 886 N.E.2d at 1021.
Courts have made an exception to the general procedural-default
rule for challenges to the facial validity of a statute. See
Arvia v. Madigan, 209 Ill. 2d 520, 527-28, 809 N.E.2d 88, 94
(2004). Such a case "presents an entirely legal question that
does not require fact-finding by the agency or application of the
agency's particular expertise." Arvia, 209 Ill. 2d at 528, 809
N.E.2d at 94. In contrast, a challenge to a statute as applied
to a litigant relies upon certain factual bases. Thus, when a
litigant presents an as-applied challenge, "an evidentiary record
is indispensable because administrative review is confined to the
record created before the agency." Arvia, 209 Ill. 2d at 528,
809 N.E.2d at 94. In such a case, the rule of procedural default
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"allows opposing parties a full opportunity to present evidence
to refute the constitutional challenge." Arvia, 209 Ill. 2d at
528, 809 N.E.2d at 94. In this case, plaintiff deprived defen-
dants of such an opportunity by failing to form her comments into
a constitutional claim until this appeal. The exception to the
rule of procedural default does not apply in this case. There-
fore, we decline to address plaintiff's first-amendment argument.
III. CONCLUSION
For the reasons stated, we affirm the circuit court's
decision affirming the Director's order as modified to reflect
the reduction in plaintiff's fine from $25,000 to $7,500.
Affirmed as modified.
TURNER, J., concurs.
APPLETON, J., dissents.
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JUSTICE APPLETON, dissenting:
While I concur with the majority's decision that the
fine imposed upon plaintiff should be reduced, I disagree that
plaintiff is subject to any penalty at all by reason of her
commercial activities.
The Act (225 ILCS 454/1-1 through 999-99 (West 2002)),
under which these proceedings were brought, provides a comprehen-
sive scheme for the licensing and discipline of brokers and
sellers of real estate in Illinois. Exemptions from the licens-
ing requirements imposed on professionals engaged in the real
estate business are set forth in section 5-20 (225 ILCS 454/5-20
(West 2002)). Two of those exemptions have application here:
"(7) Any multiple listing service or
other information exchange that is engaged in
the collection and dissemination of informa-
tion concerning real estate available for
sale, purchase, lease, or exchange along
which no other licensed activities are pro-
vided.
***
(9) Any medium of advertising in the
routine course of selling or publishing ad-
vertising along with which no other licensed
activities are provided." 225 ILCS 454/5-
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20(7), (9) (West 2008).
I would find that plaintiff's real estate advertising activities
complained of here easily fit within these exemptions.
I am not unmindful of the comments plaintiff made on
the Sam Madonia radio program to the effect that she had "sold" a
certain volume of real estate or that she had a very pretty house
"for sale." Such comments may make her a blabbermouth but not a
realtor. It is clear, in the context of the entirety of her
remarks, that she was engaged in the business of taking pictures
of houses for sale by owner (FSBO) and developing a grouping of
FSBO properties for newspaper advertising.
The essence of the real estate profession is the
activity of bringing buyers and sellers together. Rabin, 116
Ill. App. 3d at 531, 451 N.E.2d at 1337. Plaintiff's activities
stand in stark contrast to that definition. Realtors, whether
brokers or licensed salespersons, actively solicit sales and/or
purchases of real estate, advise their clients as to market value
and sales strategies, and assist in the closing of real estate
sales. Such activities stand in stark contrast to the business
of FSBO, for which plaintiff is an agent. That business plan is
to solicit and place advertising for persons who want to sell
their own property. FSBO's involvement in the sale is taking a
picture of the subject property, grouping the pictures in an
advertisement with other properties for sale, and providing a
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yard sign with the owner's telephone number on it.
A realtor is a fiduciary to his or her client. See
Jeffrey Allen Industries, Inc. v. Sheldon F. Good & Co., 153 Ill.
App. 3d 120, 123, 505 N.E.2d 1104, 1106 (1987); Pawlowic v.
Pearce, 59 Ill. App. 2d 153, 157, 207 N.E.2d 155, 156 (1965).
Plaintiff's activities can in no way be construed as involving a
fiduciary relationship. The record is devoid of any evidence
that she performed a market analysis, suggested a sale price, or
brought willing buyers and sellers together. Realtors are compen-
sated by a percentage of the sale price. Plaintiff, by contrast,
was paid a per-property price of $50 to take pictures and place
advertisements.
I would also find that plaintiff's activities are
protected speech by the first amendment to the United States
Constitution. U.S. Const., amend. I. In Forsalebyowner.com
Corp. v. Zinnemann, 347 F. Supp. 2d 868 (E.D. Cal. 2004), the
California licensing authorities sought to stop the exact same
activities performed by the plaintiff here. The United States
district court found that the real estate licensing laws could
not do so as they constituted unconstitutional content and media-
based regulation. Zinnemann, 347 F. Supp. 2d at 877.
The complaint against Forsalebyowner by the California
licensing authorities was that Forsalebyowner advertised proper-
ties for sale on the Internet. Yet realtors advertised proper-
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ties for sale in newspapers and on the Internet. The district
court held:
"Because FSBO unquestionably has a spee-
ch interest in disseminating real estate
information through its Web site, and because
[d]efendants have not shown any compelling
state interest in requiring a real estate
broker's license for FSBO's Web site but not
for virtually identical newspaper Web sites,
the presumption of unconstitutionality trig-
gered by this disparity of treatment has not
been overcome. Section 10026 [of the Cali-
fornia Business and Professions Code] accord-
ingly fails constitutional muster on that
basis." Zinnemann, 347 F. Supp. 2d at 879.
While it is certainly true that commercial speech is more suscep-
tible to regulations than other forms of expression, the State
has the burden of justifying a restriction on commercial speech.
Coldwell Banker Residential Real Estate Services of Illinois,
Inc. v. Clayton, 105 Ill. 2d 389, 403, 475 N.E.2d 536, 543
(1985). The State has not done so here.
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