Kendler v. Rutledge: Illinois Court of Appeals Reviews Fairness of Board of REALTORS® Disciplinary Procedures

In Kendler v. Rutledge, the Appellate Court of Illinois addressed the fairness of disciplinary procedures followed by a Board of REALTORS®. The court held that the Board violated its own by-laws by allowing an Ethics Committee member to review the appeal of a decision in which he had previously participated.

Kendler was a licensed broker and member of the Evanston-North Shore Board of REALTORS® (Board). In response to a complaint against Kendler, the Board scheduled an Ethics Committee hearing to determine whether he violated the NATIONAL ASSOCIATION OF REALTORS® (NAR) Code of Ethics. Prior to the hearing, Gardner, Kendler's attorney, made several motions regarding the structure of the hearing and possible prejudice by the Committee, which consisted of ten of the Board's Directors. At the start of the hearing, Kahn, the Committee Chairman, dismissed the motions. After hearing testimony, the Committee found a violation of the Code of Ethics and imposed sanctions on Kendler and his company.

Kendler appealed the sanctions to the Board's Appeals Board, which consisted of ten new Directors. The Appeals Board reversed two procedural issues and remanded the remaining issues for further evidentiary hearings to be assigned to a Special Ethics Committee, "no member of which shall have participated in the original hearings or this appeal." A Board bylaw contained language similar to that just quoted. The second Ethics Committee found against Kendler. The second Appeals Board, of which Kahn was a member, affirmed. Kendler sued the Board, asserting that Kahn's presence on the second Appeals Board violated Kendler's right to a fair and impartial hearing. The court granted the Board's Motion to Dismiss and Kendler appealed.

The Appellate Court of Illinois noted that when Kendler joined the Board, he agreed to be bound by its rules and regulations. The court also noted that the Board must adhere to the same rules and regulations. In this context, the court stated that judicial review is "limited to ascertaining whether the [association's] power was exercised in conformity with the association's internal law and the member's fundamental fair hearing rights." Kendler asserted that Kahn's presence on the second Appeals Board prejudiced his right to a fair hearing.

The Appellate Court of Illinois called the Board's review a quasi-judicial proceeding, roughly analogous to a court of law. The court stated that it is "elementary that no judge may sit in review of a case decided by him." The court noted that this not only avoids the appearance of impropriety, but also guarantees that those who sit in review have open minds. The court also referred to the bylaw and the first Appeals Board's decision, both of which provided that no member should review a decision in which they participated.

The Appellate Court of Illinois held that Kahn's participation rendered the second Appeals Board decision void, as it was contrary to the Board's procedural rules. The appellate court reversed the circuit court and remanded the case with orders to reverse the findings of the Appeals Board, and to direct the Board to grant Kendler a new hearing in conformity with the Board's bylaws.

Kendler v. Rutledge, 78 Ill. App. 3d 312, 396 N.E.2d 1309 (1979).


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