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Carol E. Gruwell, Appeal From v. the Illinois Department of Financial ) No.

November 30, 2010

CAROL E. GRUWELL, APPEAL FROM PLAINTIFF-APPELLANT,
v.
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.



Appeal from Circuit Court of Sangamon County

The opinion of the court was delivered by: Justice Knecht

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 Professional 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, plaintiff 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 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 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 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 layouts 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 advertisements did not provide contact information for the homeowners whose houses were advertised. Some, but not all, of these 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 disclaimer 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 advertisement 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 Springfield, 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 plaintiff 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 January 2000 until March 2004; and a written and signed disclaimer 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 companies 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, 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, 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 administrative 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 administrative 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 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 deferential.'" Provena Covenant Medical Center v. Department of Revenue, 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 legislature'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, 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, purchase, rent, or ...


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