The following e-filed documents for Motion Sequence 01, listed by NYSCEF document numbers “17,” “18,” “18,” “19″, “20″, “21″, “22″, “23″, “24″, “25″, “26″, “28″, “29″, “32″ and exhibits attached thereto have been read on this motion:: Notice of Petition, Petition and Affidavits/Affirmations X Answer, Affidavit/Affirmation in Opposition X Memorandum of Law in Opposition X The petitioners commenced this Article 78 proceeding for an order vacating respondent Commissioner Gregory A. May’s (“Commissioner”) Administrative Order of Disposition of the Office of Consumer Affairs of Nassau County, dated June 1, 2021 (“Administrative Order”) and directing the Nassau County Office of Consumer Affairs (“Consumer Affairs”) to dismiss Patrick Malloy’s complaint with prejudice. The petitioners submit the affidavits of Boris Baumblit and Jorden Baumblit, dated September 28, 2021 and an affirmation in support by their attorney. The respondents submit an answer to the petition, an affirmation in opposition by their attorney and a Memorandum of Objections in Point of Law. The petition alleges that on or about May 31, 2017, petitioner Green Earth Builder, Inc. (“Green Earth”) entered a contract with Mr. Malloy to rebuild Mr. Malloy’s home located in Oceanside, New York. The petitioners claim that the original contract price was reduced to $749,000 as a result of subsequent negotiations and several “change orders.” The petition concedes that Mr. Malloy paid the respondents $581,200.00 between May 2017 and April 2018. However, in April 2018, Mr. Malloy allegedly “unreasonably terminated the contract” While Green Earth was: still completing the work. On or about June 14, 2018, Mr. Malloy filed a complaint with Consumer Affairs alleging that less than $300,000 worth of “work, labor and materials” were expended by the respondents. A hearing was held before the Honorable Antony D. Perri (“Hearing Officer”) over the course of five days and resulted in the Administrative Order, which suspended Green Earth’s license, directed Green Earth to pay Mr. Malloy $650,000, found Green Earth “guilty” of numerous violations and imposed fines in the amount of $33,500. The petitioners argue that the Administrative Order should be vacated on the grounds that the Hearing Officer considered photographs offered by Mr. Malloy that were not previously disclosed and impermissibly allowed Mr. Malloy to introduced hearsay evidence such as an inspection report from a “plumber specialist,” as well as other inspection reports, without producing the inspectors for cross examination. The Hearing Officer allegedly allowed Mr. Malloy to introduce social media postings to demonstrate that respondent Jorden Baumblit is an owner of Green Earth. The social media postings were also allegedly used to establish that Green Earth used Mr. Malloy’s money to build a home in Bellmore, New York, which was raised by Mr. Malloy during re-direct examination. The petitioners also contend that the Hearing Officer “ignored” that Mr. Malloy “improperly” terminated the contract with Green Earth by failing to give Green Earth any notice to cure the deficiencies or a termination notice. With respect to the Administrative Order’s directive for Green Earth to reimburse Mr. Malloy $650,000, the petitioners argue that the award is $69,000 more than Mr. Malloy paid Green Earth and does not comport with Green Earth’s position that it completed 80 percent, or $300,000 worth, of the work on Mr. Malloy’s home. The Hearing Officer also did not take into account that Green Earth spent $177,500 on subcontractors without having received payments from Mr. Malloy. The petitioners assert that the additional awarded can only be attributable to the Hearing Officer’s attempt to award Mr. Malloy damages for the corrective work that was performed by unlicensed contractors, who are barred from recovering monies. According to the petitioners, the Administrative Order’s findings of “guilty” against the respondents for the violations issued against them are vague, violate the respondents” due process rights, and should be vacated. Among the violations addressed is Violation No. 143689, issued for the “willful failure to notify the commissioner…of change in management.” The petitioners argue that Jorden Baumblit was “merely a project manager, not an officer of Green Earth” and the applicable statute does not state whether a project manager constitutes “management.” Violation Nos. 154467 and 154562 pertain to the boiler that was contracted to be installed at Mr. Malloy’s premises. The petitioners contend said violations are duplicative and negated by the testimony that the parties agreed to the installation of the boiler. The petitioners assert that Violation No. 154561, issued for failing to have addendums signed, is erroneous because the modifications to the contract were agreed to via emails between the parties. Similarly, the petitioners claim that Violation No. 143689, issued for deceptive trade practices for failing to file a bond, is erroneous in that the contract required that a bond be filed upon substantial completion, which was not done in light of the contract being terminated. The petitioners argue that the Administrative Order should have been issued by the Commissioner, not the Hearing Officer. Furthermore, the petitioners assert that the Commissioner’s authority is limited to the “redress of injuries or damage resulting from a violation of the Nassau County Administrative Code.” However, the Administrative Order is issued against Boris Baumnblit and Jorden Baumblit, individually, even though the “the summonses were issued to Green Earth.” The petitioners buttress this argument with the contention that there was no evidence before the Hearing Officer suggesting that either Boris Baumblit or Jorden Baumblit acted in their individual capacities rather than in their corporate capacities. The petitioners conclude that the Hearing Officer acted in excess of jurisdictional authority and that the Administrative Order is arbitrary and capricious, an abuse of discretion, and affected by errors of law. On the contrary, the respondents argue that Mr. Malloy’s complaint filed with Consumer Affairs alleged that the contract price was $823,475, not $749,000, of which Mr. Malloy paid $5 81,200 even though only 50 percent of the work contracted for was completed. Mr. Malloy’s consumer complaint further alleged that Green Earth’s work was not done in “in accordance with the architect’s plans, that items [were] improperly installed, [and] that items that were paid for had not been installed.” Mr. Malloy’s complaint prompted Consumer Affairs to launch an investigation, which resulted in the violations assessed against the petitioners, the hearing and the Administrative Order. The respondents assert that the Hearing Officer is permitted to entertain hearsay evidence such as the inspection report from the “plumber specialist” and the petitioners have failed to demonstrate that said evidence was “seriously controverted” or affected the Administrative Order. The respondents also argue that the “strict rules of evidence do not apply in administrative proceedings.” As such, the respondents maintain that the Hearing Officer correctly considered the evidence presented including the photographs that were not exchanged and Mr. Malloy’s testimony that raised new issues on re-direct examination. Moreover, the respondents aver that it is within the Hearing Officer’s discretion to assess the weight of the evidence and credibility of the witnesses. In response to the petitioners’ claim that Boris Baumblit and Jorden Baumblit should not be held personally liable, the respondents argue that the application for Green Earth’s license was filed by Boris Baumblit, who identified himself as an officer of Green Earth. According to the respondents, Boris Baumblit’s self-identification as an owner and/or operator of a home improvement business makes him a “contractor” and subjects him to the Consumer Affairs’ jurisdiction and sanctions. Likewise, the respondents assert that although Jorden Baumblit was not listed as a principal of Green Earth, he was the project manager vested with the “discretion and judgment” to accomplish the contract making him a contractor subject to the jurisdiction of Consumer Affairs. The respondents further argue that the Hearing Officer ordered the petitioners to “reimburse” Mr. Malloy based upon the evidence presented during the hearing pursuant to the Commissioner’s authority. The Commissioner’s authority is allegedly limited to arranging for the redress of Mr. Malloy’s damages and cannot address the damages Green Earth sustained including the $177,500 it spent on subcontractors. Regarding, the violations issued in the Administrative Order, the respondents argue that the petitioner failed to establish that they were treated “differently than other similarly situated entities…due to an improper motive.” Concerning Violation No. 143689, the respondents state that it was within the Hearing Officer’s discretion to determine that the petitioner’s failure to notify Consumer Affairs that Jorden Baumblit was the project manager is a violation based upon the evidence that he was authorized to “issue proposals, propose change orders and request money for Green Earth’s work.” The respondents also argue that Violation Nos. 154467 and 154562 are not duplicative. Rather, Violation No. 154467 was appropriately issued because the petitioners altered the contract by providing a boiler that did not comply with the terms of the contract whereas Violation No. 154562 was issued because the petitioners charged Mr. Malloy for a “boiler upgrade” after Mr. Malloy determined that the boiler that was initially installed did not meet the specifications stated in the contract. The respondents argue that Violation No. 154561 was also properly issued because the emails between the parties neither establish that the parties “intended to be bound” by the content, nor are they signed. Further, the petitioners allegedly admit that they would not “order and install any changes” unless Mr. Malloy signed off on them in petitioner’s email on October 28, 2017. The terms of the contract contract purportedly required the petitioners to “guarantee material by providing a performance bond,” which supports the finding in Violation No. 143689. The respondents assert that the clause and any other language requiring a bond should have been removed from the contract if the petitioners did not intend to procure a bond. Additionally, the respondents note that the Consumer Affairs’ authority to conduct hearings, make findings and assess fines for violations is grounded in Local Law §5-2018, which amended the Nassau County Administrative Code. Given the evidence supporting the Hearing Officer’s findings that the petitioners’ violations resulted in injury or damage to Mr. Malloy, the Administrative Order did not exceed Consumer Affairs’ jurisdiction. Applicable Law “In a CPLR [A]rticle 78 proceeding to review a determination made by an administrative agency…the court’s inquiry is limited to whether the determination is arbitrary and capricious, or without a rational basis in the record and a reasonable basis in law. An action is arbitrary and capricious when it is taken without sound basis in reason or regard to the facts” (Matter of Migliaccio v. New York State Div. of Hous. & Community Renewal, 161 A.D.3d 747, 750). Generally, a court must defer to an administrative agency’s rational interpretation of its own regulations in its area of expertise when an administrative agency’s determination has been challenged with respect to the proper interpretation of statutes and regulations (Matter of Calenzo v. Shah, 112 A.D.3d 709, 710). “Judicial review of an administrative determination made after a hearing required by law, and at which evidence was taken, is limited to whether that determination is supported by substantial evidence. Substantial evidence has been defined as such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact. It is more than seeming or imaginary, it is less than a preponderance of the evidence, overwhelming evidence or evidence beyond a reasonable doubt. The standard demands only that a given inference is reasonable and plausible, not necessarily the most probable. The strict rules of evidence do not apply to administrative proceedings and hearsay evidence is admissible. Hearsay evidence may constitute substantial evidence if sufficiently relevant and probative and may, under appropriate circumstances, form the sole basis for an agency’s determination, unless it is seriously controverted (internal citations and quotation marks omitted)” (Matter of Bracco’s Clam & Oyster Bar, Inc. v. New York State Liq. Auth., 156 A.D.3d 629, 630-631). Moreover, there is no constitutional right to discovery in administrative proceedings (Matter of Agudio v. State Univ. of NY., 164 A.D.3d 986, 990). Whereas “[j]udicial review of an administrative penalty is limited to whether the measure or mode of penalty or discipline imposed constitutes an abuse of discretion as a matter of law…[A] penalty must be upheld unless it is so disproportionate to the offense as to be shocking to one’s sense of fairness” (Matter of Halpert v. Shah, 107 A.D.3d 800, 802). Discussion At the outset, the petitioners’ contention that only the Commissioner possesses the authority to issue the Administrative Order is belied by statute that confers upon Consumer Affairs the power to receive and investigate complaints, hold hearings, assess and collect fines and penalties, and arrange for the redress of damages (Nassau County Local Law 5-2018 §2158). It follows then that the Hearing Officer acted within statutory authority in issuing the Administrative Order. The petitioners’ argument that the Hearing Officer improperly considered the evidence offered by Mr. Malloy during the hearing is also unpersuasive. The Hearing Officer did not err in allowing Mr. Malloy to refer to photographs that were not disclosed to the respondents as the strict rules of evidence did not apply during the hearing (Matter of Bracco’s Clam & Oyster Bar, Inc., 156 A.D.3d at 630-631). It was also within the Hearing Officers’ discretion to admit into evidence and consider the various inspection reports and documents detailing the plumbing and electrical deficiencies present at Mr. Malloy’s home because they are sufficiently relevant and probative to the issue at bar regardless of whether the documents constituted hearsay (Id.). Additionally, the respondent’s submission of Building Inspector Joe Lieberman’s report stating that Mr. Malloy’s home is “approximately 80 percent completed” does not seriously controvert the evidence of deficiencies offered by Mr. Malloy. Thus, there was not an abuse of discretion by the Hearing Officer by admitting and considering Mr. Malloy’s evidence when rendering the Administrative Order. Furthermore, the Hearing Officer’ interpretation of the Nassau County Administrative Code that the petitioners are “contractors” and subject to Consumer Affairs’ jurisdiction was rationally based upon Green Earth’s licensing application and the petitioner’s admission that Jorden Baumblit was the project manager (Matter of Calenzo, 112 A.D.3d 709, 710). The totality of the record before the court supports a conclusion that the Hearing Officer relied on substantial evidence (217 A.D.2d at 624). Therefore, the findings and damages imposed in the Administrative Order were reasonable, not disproportionate to the offenses or arbitrary and capricious {Matter of Halpert, 107 A.D.3d at 802; Matter of Migliaccio, 161 A.D.3d at 750). Based upon the foregoing, it is hereby ORDERED, that the petitioners’ motion (Motion Sequence 01) for an order vacating the Administrative Order of Disposition of the Office of Consumer Affairs of Nassau County, dated June 1, 2021 and directing the Nassau County Office of Consumer Affairs to dismiss Patrick Malloy’s complaint with prejudice is denied, and it is further The foregoing constitutes the Order of this Court. Dated: March 16, 2022
