A Westchester Supreme Court judge has certified a lawsuit against Houlihan Lawrence Inc. as a class action, in a case that alleges that the Rye Brook real estate broker has run up hundreds of millions of dollars in profits by improperly representing both sides in the same transactions.
Justice Linda S. Jamieson certified the class action on behalf of home buyers and sellers in Westchester, Putnam and Dutchess counties where both were represented by Houlihan Lawrence in the same deals from 2011 through July 14, 2018.
She appointed the four people who sued the agency in 2018 as representatives of the class, in the Jan. 24 decision, and she appointed their law firms — Boies Schiller Flexner, of Armonk, and Mintz, of Manhattan — as co-counsel.
Houlihan Lawrence said in a prepared statement that it disagrees with the ruling and intends to appeal it.
“We are confident in our business practices,” the firm said, “and continue to represent our buyer and seller clients with integrity.”
Houlihan Lawrence is the dominant residential real estate agency in the region, with 30 offices and more than 1,450 agents.
The 2018 complaint accused the company of acting as a dual agent in about 10,000 sales, representing both the buyers and the sellers in each deal and collecting the entire commissions rather than splitting the profits with competing agents.
Dual agency is not illegal in New York, but it is considered risky for clients because it can divide the agent’s loyalty and lead to a conflict of interest.
The arrangement must be fully disclosed and the clients must give informed, written consent.
The plaintiffs in this case allege that they were unaware of the dual agency arrangements and were led into unfavorable transactions.
Pamela N. Goldstein claims that she was pressured to ignore problems identified in an inspection report and to pay $37,100 more than the initial asking price when in 2017 she bought a four-bedroom colonial in Greenburgh for $637,000.
Ellyn & Tony Berk claim that Houlihan Lawrence failed to publicly list the White Plains home of their deceased mother, Winifred Berk, in 2014, instead marketing it internally to its agents. The house sold for $479,000, “well below the sale price of comparable properties,” the complaint states.
Paul Benjamin says that the $1.6 million he paid in 2016 for a house in Bedford was $125,000 above the list price.
Houlihan Lawrence has responded in a court filing that “nothing was hidden” and clients “were not deceived.”
Judge Jamieson considered several legal standards in reaching her decision. She found, for example, that it would be impractical and too costly for thousands of buyers and sellers to individually bring lawsuits against the real estate firm, and that separate lawsuits would waste judicial resources and possibly lead to inconsistent outcomes.
