Doherty v. Cuomo

• Decision Date: 10 July 1980
• Citation: 76 A.D.2d 14,430 N.Y.S.2d 168
• Parties: In the Matter of the Application of Robert Timothy DOHERTY, Petitioner, v. Mario M. CUOMO, as Secretary of State of the State of New York, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 168

430 N.Y.S.2d 168

76 A.D.2d 14

In the Matter of the Application of Robert Timothy DOHERTY, Petitioner, v. Mario M. CUOMO, as Secretary of State of the State of New York, Respondent.

Supreme Court, Appellate Division, Fourth Department.

July 10, 1980.

John Manning Regan, Rochester, for petitioner.

Robert Abrams, Atty. Gen., Albany, for respondent (Vincent Barone, Asst. Atty. Gen., Rochester, of counsel).

Before SIMONS, J. P., and HANCOCK, SCHNEPP, CALLAHAN and MOULE, JJ.

SCHNEPP, Justice.

Petitioner, Robert T. Doherty, a licensed real estate broker, seeks to annul a determination of the respondent, Secretary of State, revoking his broker's license. In this Article 78 proceeding he claims, in essence, that respondent is attempting to punish him twice for the same prohibited act. Because a substantial evidence question was raised, Special Term transferred the proceeding to this court (CPLR 7804, subd. (g)).

This case has a complex procedural history. In a complaint dated October 26, 1976, respondent charged petitioner with violations of sections 440-a ¹ and 441 (subd. 1-A, par. (e)) ² of the Real Property Law and section 175.2 of Title 19 of the New York Code of Rules and Regulations ³ for employing Richard Barnes and Anthony Wigington, knowing that they were neither duly licensed real estate salesmen nor holders of temporary rent collector's permits, to collect rents during the months of December 1975, and February, March and April 1976 from tenants in buildings owned by John Campbell and Mary King, who had individually contracted with petitioner to manage their properties. A formal hearing was held on these charges on November 18, 1976. By decision dated January 19, 1977 the hearing officer, Bernard Silberman, concluded that petitioner had knowingly so employed unlicensed persons, ⁴ thereby demonstrating his "untrustworthiness", and revoked petitioner's license pursuant to section 441-c of the Real Property Law. ⁵ Respondent concurred with this determination. The petitioner then instituted an Article 78 proceeding; the Secretary of State's revocation order was stayed and the matter transferred to this court in early May 1977.

While this proceeding was pending, respondent served petitioner with a further complaint dated May 26, 1977 charging him with violations of sections 440-a and 442 ⁶ of the Real Property Law and section 175.2 of Title 19 of the New York Code of Rules and Regulations for employing Barnes and Wigington with knowledge that they were neither duly licensed real estate salesmen nor holders of temporary rent collector's permits to collect rents during the months of January, February, March and April 1976 from tenants on property owned by Dr. Richard Schlessinger, who had contracted with petitioner to manage his real property. A hearing on this complaint was conducted on June 8, 1977 before hearing officer Silberman, the same officer who presided over the first hearing. Petitioner objected to Silberman's appointment as hearing officer on the grounds of bias. This objection and others in point of law were denied. By order to show cause dated July 14, 1977, which stayed further proceedings, petitioner instituted the instant Article 78 proceeding in the nature of prohibition. On July 21, 1977 the hearing officer determined that petitioner permitted Barnes and Wigington to collect rents for Schlessinger, despite the fact that neither was licensed as a real estate salesman, and thereby demonstrated his "untrustworthiness" as a real estate broker and again ordered the revocation of his license pursuant to section 441-c of the Real Property Law. Respondent concurred with this determination. By order dated November 17, 1977 Special Term dismissed the Article 78 petition on respondent's motion without prejudice to an application by petitioner for leave to file a supplementary petition. Thereafter, by order dated December 1, 1977, the court granted the petitioner's application to amend and supplement the original petition to permit a review of the July 21, 1977 order of revocation and stayed its effect. In the supplemental petition dated November 14, 1977 petitioner contended that the proceedings conducted on June 8, 1977 violated lawful procedure and that the respondent's determination was arbitrary and capricious and unsupported by substantial evidence in the record.

On July 13, 1978 this court confirmed the respondent's determination of January 19, 1977 relating to the October 26, 1976 complaint, finding that there was ample evidence in the record to support the hearing examiner's finding that the petitioner knowingly violated section 440-a and 441 (subd. 1-A, par. (e)), but that the penalty of revocation should be reduced to a suspension of petitioner's license for a period of six months and a fine of two hundred dollars (Matter of Doherty v. Cuomo, 64 A.D.2d 847, 848, 407 N.Y.S.2d 337, app. dsmd., 45 N.Y.2d 960, 411 N.Y.S.2d 566, 383 N.E.2d 1159). Matters lay dormant pending petitioner's application for a review in the Court of Appeals until February 13, 1979 when petitioner filed a second supplemental petition alleging that this court determined the appropriate penalty for his violations and that under the principle of res judicata the second order of revocation should be cancelled or annulled.

The central question raised on this appeal is whether the respondent Secretary of State, after he once claimed and determined that the petitioner demonstrated his "untrustworthiness" based on violations of the Real Property Law for hiring unlicensed persons to collect rents and punished him for that offense, is precluded under the principle of res judicata from later making the same claim for the same specific act based on different evidence.

The doctrine of res judicata is stated in section 1 of the Restatement of Judgments (1942): "Where a reasonable opportunity has been afforded to the parties to litigate a claim before a court which has jurisdiction over the parties and the cause of action, and the court has finally decided the controversy, the interests of the state and of the parties require that the validity of the claim in any issue actually litigated in the action shall not be litigated again by them." (See also, Gramatan Home Investors Corp. v. Lopez, 46 N.Y.2d 481, 414 N.Y.S.2d 308, 386 N.E.2d 1328). "A final judgment on the merits . . . is conclusive as to the rights of the parties . . . and has the effect of merger or bar only as to any subsequent action involving the same cause of action" (5 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 5011.14). The underlying policy of the doctrine of res judicata is two-fold: (1) "public policy and necessity, which make it to the interest of the state that there should be an end to litigation", and (2) "the hardship on the individual that he should be vexed twice for the same cause" (50 C.J.S. Judgments § 592, p. 11). Chief Judge Cardozo in Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N.Y. 304, 306-307, 165 N.E.2d 456, 457, summed up the principle in this way: "A judgment in one action is conclusive in a later one not only as to matters actually litigated therein, but also as to any that might have been so litigated, when the two causes of action have such a measure of identity that a different judgment in the second would destroy or impair rights or interests established by the first" (see also, Matter of Reilly v. Reid, 45 N.Y.2d 24, 407 N.Y.S.2d 645, 379 N.E.2d 172; Drago v. Buller, 60 A.D.2d 518, 399 N.Y.S.2d 681).

The doctrine of res judicata is applicable to certain administrative proceedings (see, e. g. Matter of Venes v. Community School Bd. of Dist. 26, 43 N.Y.2d 520, 402 N.Y.S.2d 807, 373 N.E.2d 987; see generally, Siegel, New York Practice, § 456). As the United States Supreme Court stated in United States v. Utah Constr. Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642. "When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose." ⁷

It is evident that the doctrine of res judicata could be applied to the administrative action taken by the respondent. In both proceedings, the respondent acted in a quasi-judicial capacity. Indeed, prior to respondent's order of revocation in each case there were adversary proceedings before a hearing officer who reviewed the evidence and made findings of fact. In short, these proceedings constitute adjudications (see Matter of Venes v. Community School Bd. of Dist. 26, supra, 43 N.Y.2d p. 525, 402 N.Y.S.2d 807, 373 N.E.2d 987). As Professor Davis points out (Administrative Law Text, § 18.08, at p. 368): "In name and tradition 'res judicata' means things adjudicated. Only what is adjudicated can be res judicata. Administrative action other than adjudication cannot be res judicata."

In the instant case petitioner argues, in substance, that because the issue of his "untrustworthiness" for employing Barnes and Wigington, nonlicensed persons, to collect rents during December 1975 and the early months of 1976 has already been litigated in a previous proceeding and this court has reviewed the penalty imposed (Matter of Doherty v. Cuomo, 64 A.D.2d 847, 407 N.Y.S.2d 337, supra), the Secretary of State should be estopped from relitigating the issue. The "theoretical subdivision" of the res judicata doctrine which petitioner would have us employ here is the doctrine of merger (see generally, Siegel New York Practice, § 450). Under the doctrine of merger, "(a) claim or demand which is put in suit and passes to final judgment is merged or swallowed up in the judgment . . .. The judgment extinguishes the original cause of action, which loses its vitality and cannot thereafter be litigated . . .." (50 C.J.S. Judgments § 599, pp. 20-21; see, also, Restatement, Judgments 2d, § 47 (Tent. Draft No. 1,...