MLS of Jackson v. Cent. 21 Cantrell Real Estate: Mississippi Supreme Court Upholds Board of REALTORS® Power to Discipline Members

In Multiple Listing Service of Jackson v. Century 21 Cantrell Real Estate, the Supreme Court of Mississippi addressed whether a private organization may discipline its members for violations of its standards of professional conduct. The court held that a voluntary association may discipline members, but that before a fine can be levied, there must be a schedule of maximum fines to which each member agrees to be bound.

Cantrell belonged to the Jackson Board of REALTORS® (Board) and Multiple Listing Service of Jackson (MLS). The MLS and Board received two complaints against Cantrell. The first alleged that Cantrell allowed a non-MLS/Board-member broker to show property after the broker was denied permission by the listing broker. The second asserted that Cantrell materially altered a withdrawal notice. In both cases, the evidence substantiated the Board's finding that Cantrell violated the NATIONAL ASSOCIATION of REALTORS® (NAR) Code of Ethics.

As a result of its findings, the Board imposed sanctions consisting of a six-month probationary period, a 30-day membership suspension, and a fine of $300. Cantrell sued to enjoin enforcement of the sanctions. The Chancery Court, Hinds County, found for Cantrell and enjoined all three sanctions. The Board and MLS appealed.

Regarding the probationary period, the Supreme Court of Mississippi noted that administrative remedies must be exhausted before resorting to the courts. The supreme court found that the Board's constitution and bylaws provided an appeal mechanism, that Cantrell was aware of this mechanism, and that she elected not to follow it. The court held that because Cantrell did not exhaust her remedies, the six-month probation could not be enjoined.

Regarding the 30-day suspension, the Supreme Court of Mississippi stated "judicial review of disciplinary proceedings of a voluntary association should be limited to determining only whether the member disciplined received procedural due process as required by the Fourteenth Amendment to the United States Constitution, and whether the association has conducted its inquiry in accordance with its own rules of procedure." The court found no violation of procedural due process, nor any instance of fraud or lack of good faith by the Board. Thus, the court held that the suspension could not be enjoined.

Regarding the $300 fine, the Supreme Court of Mississippi held that for a fine to be enforceable by a voluntary association, it "must be determined according to some method, to which the member has agreed, at least impliedly by joining the association, not only as to the imposition of the fine, but also as to the maximum amount thereof." The court stated that to "hold that an association might arbitrarily prescribe fines for each individual offense as it sees fit would make possible and invite an abuse of authority." The court noted that a fixed, reasonable fine, in the nature of liquidated damages, would be upheld, but that an arbitrary fine, such as the one imposed here, could not be enforced. Thus, the supreme court held that the chancery court properly enjoined the enforcement of the fine.

Multiple Listing Service of Jackson v. Century 21 Cantrell Real Estate, 390 So. 2d 982 (Miss. 1980).