SHAW v. MARQUES

• Decision Date: 04 April 2011
• Docket Number: C.A. No. PC 10-0550
• Parties: AMY SHAW V. MICHAEL MARQUES, in his capacity as DIRECTOR, DEPARTMENT OF BUSINESS REGULATION
• Court: Rhode Island Superior Court

AMY SHAW

V.

MICHAEL MARQUES, in his capacity as DIRECTOR,

DEPARTMENT OF BUSINESS REGULATION

C.A. No. PC 10-0550

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS

PROVIDENCE, SC.

SUPERIOR COURT

FILED: April 4, 2011

DECISION

CARNES, J. This matter came before the Court upon a timely appeal by Amy Shaw ("Appellant" or "Ms. Shaw") of a January 20, 2010 order of the Department of Business Regulation ("DBR"), which suspended her auctioneer license for twenty days and fined her two thousand dollars.¹ In her appeal, Ms. Shaw requests this Court to reverse DBR's order. Jurisdiction is pursuant to G.L. 1956 § 42-35-15.

A

Facts and Travel

This appeal arose from a DBR decision and order finding Ms. Shaw responsible for violations of DBR, Division of Commercial Licensing, Commercial Licensing Regulation 2—Auctioneers ("CLR 2"). The underlying dispute involved a pair of boxing gloves that Frank Thibault ("Mr. Thibault") left with Kenneth Shaw ("Mr. Shaw") and Ms. Shaw, in their capacity as auctioneers, with the intention of selling them at publicauction. Mr. Thibault filed a complaint with DBR after he was notified that his gloves sold for eighty-five dollars.

Mr. Shaw and Ms. Shaw hold auctioneer licenses pursuant to G.L. § 5-58-1 et seq. (Admin. Hr'g Tr. Tape 1 ("Tr. Tape 1") at 3:09-35.) Pursuant to a consent agreement, Mr. Shaw is licensed as an apprentice auctioneer, and Ms. Shaw is the licensed auctioneer who is his supervisor. Id. at 3:35. The Consent Agreement, signed by Ms. Shaw, is the document which created this apprentice/supervisor relationship. Ms. Shaw has held her auctioneer license for approximately five years, and Mr. Shaw acted as her apprentice for about two years. (Admin. Hr'g Tr. Tape 3 ("Tr. Tape 3") at 0:13.)

Mr. Shaw and Ms. Shaw work at Barrington Antique and Auction, where Mr. Thibault contacted with the intention of selling his gloves in February 2008. Mr. Thibault believed that his gloves were autographed by Rocky Marciano and were worth at least six hundred dollars, as he had a previous offer for that amount. (Mr. Thibault's Ex. 1, Auctioneer Comp. Form ("Thibault Ex. 1.")) Mr. Thibault and Mr. Shaw then met and discussed the possible auction of the gloves. Mr. Thibault contends that during this meeting, Mr. Shaw told him that he would auction the gloves in April and expected to receive between $2000 and $3000 for them. Id. Subsequently, Mr. Thibault and Mr. Shaw executed a consignment control agreement which stated in pertinent part:

"I commission you to sell the items listed above to the highest bidder by public auction. . . . I agree to hold harmless the auctioneer against any claims of the nature referred to in the agreement. Retractions of items by consignors may be subject to a fee for time/research invested. We reserve the right to place an item in the venue we deem best suited for that particular item." (Appellee's Ex. 2., Consignment Control Agreement.)

This agreement gave Mr. Shaw a twenty percent commission and was signed by both Mr. Thibault and Mr. Shaw. Id. Neither a date nor a minimum price appears on this agreement. Id.

At the hearing, Mr. Shaw testified that he believed he had a discussion with Mr. Thibault concerning the explanation of a reserve price, as a minimum price at which an item is to be sold. ((Admin. Hr'g Tr. Tape 2 ("Tr. Tape 2") at 32:50.) Upon clarification, he testified that he told Mr. Thibault that he would not reserve the gloves; he said "if they are authentic, they're going to take care of themselves." Id. at 33:30. He then stated that he "believes he did" explain that a reserve is a minimum price. Id. at 33:41. He further testified that he "figured in [his] head that six hundred dollars was probably a fair place to put a reserve at," but then that he "didn't even know if [he] said that to him" because "in his head he thought if [Mr. Thibault] can get six hundred dollars [he] can probably get that too." Id. at 34:17. After this testimony, Mr. Shaw then conceded that he cannot remember if he, in fact, explained the reserve price. Id. at 34:37. He later testified, however, that the two never discussed how low the potential price for the gloves could become. Id. at 38:15. Mr. Shaw and Ms. Shaw responded that when the bidding became as low as fifty dollars in the first auction,² they passed the gloves "realizing that the consignor would not be happy with $20 or $30." (Appellee's Ex. 1, Response to Mr. Thibault's Comp.)

After this April auction, Mr. Thibault contends that Mr. Shaw notified him that a buyer offered $1200 for the gloves. (Thibault Ex. 1.) This buyer, however, never bought the gloves. Ms. Shaw testified that Mr. Shaw had difficulty selling the gloves because nocertificate or writing as to its authenticity existed with the gloves. (Tr. Tape 2 at 19:05.) Ms. Shaw further testified that she told Mr. Shaw to return the gloves to Mr. Thibault, as they were not selling. Id. at 19:25. When the Hearing Officer attempted to clarify the level of Ms. Shaw's supervision of Mr. Shaw, Ms. Shaw stated that Mr. Shaw did not need to keep records because he had a good memory and also that she did not supervise him "a whole lot." Id. at 1:16.

Mr. Shaw testified, however, that he could not return the gloves because he did not have an accurate address for Mr. Thibault as a result of Mr. Thibault's moving process. Id. Mr. Shaw further testified that at the end of every conversation he had with Mr. Thibault, he offered to return the gloves, but Mr. Thibault testified that that "there was never a point in time" in which Mr. Thibault requested the gloves back; instead, Mr. Shaw testified, Mr. Thibault insisted that Mr. Shaw "keep trying." Id. at 24:53. Mr. Shaw excused any communication problems between himself and Mr. Thibault to the fact that auctions are hectic and busy.

The gloves went to auction a second time on August 18, 2008. Id. at 20; Ex. 7, "Follow-up to Hearing" materials from Amy Shaw and Kenneth Shaw.) At this auction, the gloves sold for twenty-five dollars. (Ex. 1; Ex. 7.) Ms. Shaw testified that she received the check for all of the items sold at the auction, including Mr. Thibault's gloves, two weeks following the August auction. Id. at 45:49. She then confirmed that they waited a month and a half to send the check to Mr. Thibault. The check that Ms. Shaw and Mr. Shaw mailed to Mr. Thibault was for eighty-five dollars, despite the sale of the gloves for twenty-five dollars.

At the end of the hearing, the Hearing Officer declared that she would leave the record open for a week to receive any other evidence, such as advertisements for the auctions. (Tr. Tape 4 at 0:09.) She then stated that she would provide each party with any evidence she receives. Id. Mr. Shaw and Ms. Shaw submitted advertisements made prior to auction for the gloves.

The Hearing Officer issued her decision on January 19, 2010. As a preliminary matter, she found that § 5-58-8 permits DBR, after a hearing, to suspend or revoke a license, when it is shown that the licensee has engaged in certain conduct prohibited by the statute. (DBR Decision, Jan. 19, 2010 "Decision" at 10.) She further found that section to provide that DBR may assess an administrative penalty not exceeding $1000 for any violation under the chapter or of other rules and regulations. Id.

The Hearing Officer first analyzed the alleged violation of CLR 2 § 9(a)(5), which she found allows DBR to suspend or revoke a license upon proof of "bad faith, dishonesty, incompetence, or untruthfulness." (Decision at 10.) The Hearing Officer noted that CLR 2 did not define these terms; therefore, she employed the Black's Law Dictionary definition of bad faith, dishonesty, incompetency, and untruthfulness. Id. She also explained that the fiduciary relationship existing between auctioneers and consignors must be based on truthfulness and complete disclosure because the auctioneer often is selling personal property when the consignor is not present to observe. Id. at 11. Therefore, she found that the Hearing Officer must examine the totality of the circumstances surrounding the fiduciary relationship. Id.

The Hearing Officer then found that Mr. Thibault's complaint and Mr. and Ms. Shaw's response tell "two very different versions of the events that transpired during thesale of the gloves in question." Id. She found that Mr. Thibault's version stated that when the gloves failed to sell at the first auction and the subsequent buyer never bought them, he requested that the gloves be returned, but instead they were sold without his knowledge for a price below the offers conveyed and expected. Id. In contrast, the Hearing Officer found that Mr. Shaw and Ms. Shaw's version alleges that Mr. Thibault repeatedly informed Mr. Shaw and Ms. Shaw that he needed money and that the gloves had to be sold, and specifically authorized the gloves to be sold at the Cornerstone Galleries Auction. Id.

The Hearing Officer found another inconsistency in the version of events within the explanation of the reserve process. Id. The Hearing Officer explained that while Mr. Shaw and Ms. Shaw claim to have explained the no reserve process and received an indication from Mr. Thibault of his understanding, Mr. Shaw testified that he, in fact, has no recollection of actually explaining this process to Mr. Thibault. Id. at 11-12.

After presenting the contrasting versions of events, the Hearing Officer assessed Mr. Thibault's claims, beginning with that of incompetency. She found that "[a]lthough proof of termination . . . was not presented at hearing, the balance of the evidence presented is sufficient to indicate incompetency on part of the Respondents." Id. Specifically, the Hearing Officer found that the uncertainty of the intent of Mr. Thibault in selling this property at the second auction represents incompetence on the part of both Mr. Shaw and Ms. Shaw, because they had a duty to return the gloves to him, "since they understood that the...