Mitchell, Maxwell & Jackson, the once high-flying appraisal firm, has taken the unusual step of asking a court to force a top-ranking New York State official to rule immediately on a case that threatens the heart of their business.
The extended proceedings between MMJ and the New York State Department of State hinge on whether the executives of the firm can be held liable for employee misconduct. And while sources said this would normally be a straightforward administrative case, the most recent filing only underscores the number of twists and turns the saga has taken.
The request, known as a writ of mandamus, asks the court to direct Secretary of State Cesar Perales, who oversees state-regulated licenses for real estate appraisers, to rule on an appeal “forthwith.” The appraisal firm filed the mandamus in New York State Supreme Court on Friday.
For MMJ, the issue is a loss of business as the case has made its way through the department’s administrative docket, according to co-founder Steven Knobel.
“People don’t know what’s going on so they decide not to send you work, so I’m sitting here waiting for them,” Knobel said of the DOS. “I think that they take their sweet time.”
A spokesperson for the DOS declined to comment.
A former MMJ manager, Marianne Mueller, touched off the case in 2009, when she accused Knobel and Jeffrey Jackson of allowing co-workers to electronically sign her name on appraisal forms she had never seen, let alone approved. Though the DOS initially chose not to pursue the investigation for lack of evidence, according to a document seen by The Real Deal, the department reinstated the probe and later found that the company’s founders had “actual knowledge” of the improper activities.
(Knobel claims that the DOS reopened the case after Mueller complained to the Appraisal Institute, an industry group he said is heavily stacked with MMJ’s competitors. However, this sequence of events could not be independently confirmed.)
This past December, a DOS administrative judge suspended MMJ’s license — a rare occurrence in the appraisal industry, sources said — but the firm successfully appealed the order in January, and the license was reinstated.
The judge was found to have used the wrong legal test to determine whether Knobel and Jackson were at fault, using the standard applied to a real estate brokerage — where the broker of record is responsible for the behavior of any salesperson under the shingle — rather than for an appraisal firm.
By this point, MMJ had fired their attorney, Knobel said, after he exchanged angry words with a lawyer for the DOS.
The stakes got even higher — and the tale even more convoluted — in late February, when the DOS opposed the appeal of the license suspension, pushing the matter to the Secretary of State, a department spokesperson told The Real Deal at the time. But Perales had no timeframe to make his decision, the spokesperson said, leaving MMJ in limbo.
Knobel said yesterday he is ready to be put the affair behind him.
“The state is not moving as quick as they should be,” he said.
Meanwhile, Mueller is pursuing a 2010 civil suit against MMJ for allegedly misappropriating funds, misclassifying her as an independent contractor, wrongfully firing her and failing to compensate her according to her contract.
Even if the DOS’ pursuit of MMJ is found to be without merit, the firm will still have Mueller’s civil case to sort out, and their business has likely been irrevocably damaged by the whole affair, said industry sources who asked not to be named.
“They think there is no harm to me because I am still allowed to do appraisals,” Knobel said, referring to the DOS. “We filed the mandamus trying to show that we’ve been harmed by them not doing [anything].”