Aiming to send a message to the real estate industry, former Corcoran Group agent Sarit Shmueli has filed to appeal a recent court ruling stripping her of punitive damages a jury awarded her after she claimed the company stole her electronic client list.
Three years ago, the New York State Supreme Court found in favor of Shmueli, who had sued the company alleging that Corcoran, and in particular, executive vice president Tresa Hall, had stolen her client list “deliberately and maliciously” from her computer after Shmueli was fired. Shmueli was awarded $400,000 in compensation and $1.2 million in punitive damages.
Corcoran appealed the decision, and the Appellate Division in December 2009 upheld the compensatory damages ruling, but decided to vacate the punitive damage award on the grounds that “precluding a terminated employee from having access to its computer system does not evince a high degree of moral turpitude,” according to court documents.
On Jan. 6, Shmueli filed a request for the case to be heard by a higher court, the New York Court of Appeals. In the request, Shmueli’s attorney, Herald Price Fahringer, argued that the Appellate Division made a mistake when it referred to her as an “employee” of the Corcoran Group. Rather, like most city real estate agents, Shmueli was an independent contractor, he said.
This “misapprehension was absolutely critical to the outcome of the case because there are vast differences between the rights of employees and independent contractors,” Fahringer argued in court documents. “The law is clear that customer information — such as client lists — stored on a computer leased and utilized by an independent contractor remains the personal property of the independent contractor — not the computer’s owner.”
Moreover, the denial of access to the computer was “only one of many acts involving moral turpitude inflicted upon Sarit Shmueli by Corcoran,” Fahringer’s request said.
Shmueli was an agent at Corcoran from 1996 to 2002. In 2002, her suit claimed that Corcoran asked her to “falsely testify” in response to a lawsuit alleging that the company had failed to disclose material information to the purchaser of the apartment. When Shmueli refused, she claimed, she was fired, and prevented from returning to the computer where her client list was stored.
“Corcoran unconscionably and flagrantly retaliated against Shmueli because of her refusal to commit perjury for Corcoran in a separate civil lawsuit,” Fahringer argued in court documents.
Corcoran has since claimed that Shmueli was fired because she swore in the office.
Fahringer told The Real Deal that the case has far-reaching consequences for the real estate industry, and that Corcoran should be publicly punished for its conduct.
“The whole purpose of punitive damages is to warn the public that we won’t tolerate this,” he said. “This is an important case to stress to realtors that you can’t behave in this way, and if you do, you’re going to be punished.”
Corcoran said it could not comment on pending litigation, and its attorney, Lawrence Eagel of Brager Wexler Eagel & Squire, did not respond to phone calls from The Real Deal.
Fahringer said he’s asked real estate organizations to file “amicus briefs,” stating that they have an interest in the outcome of the case, in support of his request that it be heard by the New York Court of the Appeals.
The closely-watched case has also attracted attention because Hall, Shmueli’s former manager, won a lifetime achievement award in October from the Real Estate Board of New York for “outstanding achievement in the residential real estate market, but has also displayed outstanding ethical conduct in the profession.”
After the December ruling, Shmueli and others in the industry called for Hall to be stripped of her award.
Hall “should absolutely return the award, because she was found guilty,” Shmueli told The Real Deal by phone.
Hall was not immediately available for comment.
But Real Estate Board of New York President Steven Spinola said the organization is not considering such a move.
“Her peers gave [Hall] the award for a lifetime commitment to our industry,” he said. He added that the outcry surrounding the case “can’t take away the respect and love she has earned along with that lifetime achievement award.”
Shmueli said she believes Corcoran has “a monopoly” in REBNY decisions because its parent company, NRT, also operates a number of other New York real estate firms, including Sotheby’s International Realty.
Hall’s award likely won’t have much impact on the facts of the case, Fahringer said, but it does demonstrate that Corcoran has considerable influence in the industry.
“What I think is under the surface of this case is that these large organizations feel they can do whatever they want to do,” Fahringer said. “They forget they have to abide by the law as everyone else does. They’re so accustomed to having things their own way that they can sometimes form some very bad habits.”
Shmueli said she now has her own real estate company, called Sarit, Inc. But she said it’s been difficult to rebuild her business.
“I’m not as active as I used to be,” she said. “I don’t have my clients — Corcoran has my clients.”