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FILED: WESTCHESTER COUNTY CLERK 03/11/2024 10:30 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 1696 RECEIVED NYSCEF: 03/11/2024
HL EXHIBIT 23
JANET KOVACS AFFIDAVIT
FILED: WESTCHESTER COUNTY CLERK 03/11/2024 10:30 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 1696 RECEIVED NYSCEF: 03/11/2024
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER
PAMELA GOLDSTEIN, )
ELLYN & TONY BERK as Administrators of )
the Estate of Winifred Berk, and PAUL )
BENJAMIN, on behalf of themselves and all ) AFFIDAVIT
others similarly situated, )
) index No. 60767/2018
Plaintiffs, ) Hon. Linda S. Jamieson
)
vs. )
)
HOULIHAN/LAWRENCE INC., )
)
Defendant. )
)
AFFIDAVIT
Janet Kovacs, being first duly sworn, deposes and says:
1. My name is Janet Kovacs. I am 48 years old, and I live in Westchester, New
York. I am married and have two children. I grew up in Westchester County, and I have lived
here for the past twenty years.
2. I first began practicing as a real estate agent in New York in 2013. In order to
become a real estate agent, I had to obtain a license, which required me to complete dozens of
hours of courses that are required by the State of New York. I also had to take and pass a State-
administered test. The required license courses covered many topics related to being a real estate
agent, including agency law, license law, finance, construction and development, taxes, Fair
Housing and Fair Lending, and other similar topics. To maintain my license, I have to complete a
required number of additional continuing-education classes every two years.
3. As a real estate agent, I have represented numerous sellers and buyers in real
estate transactions in New York. Sometimes I represent the seller of the home. Sometimes I
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represent the buyer of the home. In every transaction, I try my best to give good advice to my
client and to provide great customer service. My goal is to make the transaction as easy as
possible for my clients and to help them to achieve their objectives.
4. In my experience, every real estate transaction is unique. Some home sellers are
under time pressure and want to sell as quickly as possible. Other home sellers are more patient
"perfect"
and are willing to wait for the so-called offer. Some homebuyers want to see every
house on the market and will spend months looking at properties. Other homebuyers buy the first
house they go through. Regardless, my job as a real estate agent is to do everything that I
reasonably can to make sure my client is happy with their transaction.
5. Positive referrals are key to becoming a successful real estate agent. When I
successfully represent a client and that client is happy with the services I have provided, that
client may then recommend me to their friends and family members who are looking for a real
estate agent. And if that client decides to sell or buy another house a few years later, a satisfied
client will often become a repeat client. I would say that the vast majority of my business today
comes to me based on my prior work, either in the form of positive referrals from previous
clients, repeat business from previous clients, or people who have sought me out because of the
good reputation I have built up over the years. In my opinion, if clients were not generally happy
with the services and advice I provide, I would not have been able to remain in this business as a
successful agent.
6. I first became affiliated with Houlihan Lawrence in 2013. When I first joined
Houlihan Lawrence, I worked solely as a real estate agent, which means that 1 was an
independent contractor who worked purely on commission. One of the things that I always liked
about being a real estate agent was the freedom 1 had to decide how to run my business. As a real
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estate agent, I generally decided how much I worked, how I marketed my services, which listings
and/or clients I wanted to accept, how many hours I wanted to work in any given day, where I
wanted to work from (i.e., from a Houlihan Lawrence office, from my home, etc.). Of course,
when I was working with a particular client or listing a particular house for sale, I always had to
be responsive to my client's needs or the needs of a potential buyer. But I generally got to decide
how I responded to those needs. From my perspective, being a real estate agent is like running
your own small business.
7. In 2016, I became a manager for Houlihan Lawrence in its Irvington office and
the Ardsley office, both of which are located in Westchester County, New York. In this role, I
managed approximately 50 agents between these two offices.
8. In 2022, I became Product Manager for Houlihan Lawrence at the corporate
office. As Product Manager, I work to help ensure that technology and software that Houlihan
Lawrence makes available to its agents is implemented successfully. I also interface between the
information technology department and the training department to help agents successfully
utilize the software.
9. As an office manager, and as Product Manager, I was/am an employee of
Houlihan Lawrence.
10. As part of my duties as an office manager, I was responsible for supervising the
administrative support staff in the office. I was also responsible for recruiting new agents to join
our office, retaining our agents (the most successful of whom are often recruited by other
brokerage companies), keeping agents updated on developments within the real estate industry,
providing support to agents as requested, organizing office events, and assisting in resolving any
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disputes between agents, interfacing with various customers and clients on an as-needed basis,
among many other tasks.
11. As a former office manager, I am familiar with the types of training and support
services offered by Houlihan Lawrence to its agents.
12. As a preliminary matter, all real estate training courses and materials offered by
Houlihan Lawrence to its real estate agents are optional. During my time both as an agent with
Houlihan Lawrence and an office manager, Houlihan Lawrence has never required its real estate
agents to attend any particular training. Rather, the Houlihan Lawrence training is offered as an
optional benefit of affiliation with Houlihan Lawrence.
13. In my experience, Houlihan Lawrence real estate agents receive both formal and
informal training from a variety of sources. First and foremost, as I stated earlier, most real estate
agents in New York have completed the State-required courses to become licensed either as a
salesperson or a broker under New York law. To maintain such a license, the agent must take
continuing education courses. In addition, most real estate agents are members of the National
Association of REALTORS®, the New York State Association of REALTORS®, and local
boards of REALTORS® (such as the Hudson Gateway Association of REALTORS®). These
associations host numerous events and gatherings throughout the course of the year, and many of
these events include presentations and training on various topics related to being a real estate
agent.
14. I understand that there is a lawsuit currently pending against Houlihan Lawrence
in the Supreme Court of New York in Westchester County and that this affidavit will be
submitted to the Court in that matter. I understand that the plaintiffs in this lawsuit allege that
Houlihan Lawrence and its agents systematically fail to obtain informed consent from their
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clients when acting as either a dual agent or a dual agent with designated salespersons.
Specifically, I understand that the plaintiffs allege that Houlihan Lawrence has imposed some
script"
type of "uniform such that all Houlihan Lawrence agents provide the same information to
clients about dual and designated agency when obtaining their consent. Based on my own
personal experience, I can say that these allegations are wrong.
15. As a preliminary matter, all real estate agents in New York are required to provide
their clients with a State-mandated form with describes the types of agency relationships
Form"
permitted under New York law. I generally refer to this form as the "Agency Disclosure
Form." "443"
or the "443 Disclosure (The refers to the section of New York's Real Property
Law that imposes this requirement.)
16. The Agency Disclosure Form is the primary document I used when discussing
dual and designated agency with my clients. The Agency Disclosure Form specifically warns
clients of the default position under New York law that neither dual nor designated agents
provide undivided loyalty to their clients.
17. In my own practice, generally, when I obtained consent to dual and/or designated
agency from my clients, I went through the Agency Disclosure Form with my clients. I generally
highlighted the different types of agency described on the form, I explained who I would be
representing in the transaction and in what capacity I would be acting (i.e., as a seller agent,
buyer agent, designated agent, or dual agent), and I answered any questions the client had.
18. In my experience, the conversation about the Agency Disclosure Fonn varied
from one transaction to the next. Some of my clients asked questions about the form; others did
not. Some of my clients bought and sold homes before and had already been told about the
different types of agency; others had not. Some of my clients were very sophisticated with
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respect to real estate transactions and fiduciary duties (for example, real estate lawyers, bankers,
real estate developers, real estate investors, etc.); others were not. Some of my clients asked to
send the Agency Disclosure Form and other documents to their lawyers before signing; others
did not. Some of my clients told me they do not need me to explain any of the forms; others
wanted the explanation.
"script"
19. During my tenure, Houlihan Lawrence has never imposed any type of on
its agents for how to handle the Agency Disclosure Form. Instead, Houlihan Lawrence has relied
on its agents to use their own training and experience, which includes the State-mandated
training required to obtain and maintain a real estate license under New York law, when
presenting the Agency Disclosure Form and obtaining consent to dual and designated agency.
20. I understand that the plaintiffs in this lawsuit allege that Houlihan Lawrence has
attempted to increase the number of dual agency and designated agency transactions by requiring
agents to mischaracterize their fiduciary duties in such transactions or by mischaracterizing the
"risks"
of such transactions. Based on my own personal experience, this is not true. I never
experienced any pressure to increase the number of dual or designated agency transactions or to
favor such transactions over non-dual agency transactions. Nor did I, as a manager, ever put such
pressure on any other agent.
21. Nor was I ever been required or encouraged by anyone at Houlihan Lawrence to
"risks"
mischaracterize my fiduciary duties or to mischaracterize the when acting as a dual or
designated agent. Nor did I ever require or encourage any of the agents whom I managed to
"risks"
mischaracterize their fiduciary duties or to mischaracterize the of acting as a dual or
designated agent.
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22. To the contrary, during my tenure, Houlihan Lawrence has always sought to
ensure that all agents present the State-required Agency Disclosure Form to their clients and
obtain their written, informed consent before acting as a dual or designated agent.
23. I understand that one of the documents that the plaintiffs have focused on in this
Sheet."
case is a document entitled "Disclosure and Prompt In connection with preparing this
affidavit, I was shown a copy of the Disclosure and Prompt Sheet by counsel. Prior to the filing
of this case, I do not recall having ever seen the Disclosure and Prompt Sheet. I have never used
"script"
the Disclosure and Prompt Sheet as a for obtaining consent to dual or designated agency,
nor have I used the Disclosure and Prpmpt Sheet for any other purpose. The same is true for the
work I did in my capacity as a manager-I do not recall ever having seen the Disclosure and
Prompt Sheet; and I never required or encouraged agents in my office to use the Disclosure and
Prompt Sheet for any purpose.
24. I understand that the plaintiffs in this lawsuit have alleged that Lewis Arlt was
"guru"
Houlihan Lawrence's on dual agency and that he was somehow instrumental in Houlihan
Lawrence's supposed efforts to mischaracterize dual and designated agency relationships. Mr.
Arlt was a manager in Houlihan Lawrence's Scarsdale office for part of the time at issue in the
lawsuit. I never worked directly with Mr. Arlt. Moreover, during my tenure with Houlihan
Lawrence, I never received any training, direction, or advice from Mr. Arlt related to dual or
designated agency.
25. As a former manager, I generally did not participate in the disclosure
conversations between Houlihan Lawrence agents and their clients. Therefore, I generally do not
know what any particular agent said to any particular client when obtaining their consent to dual
and/or designated agency. I generally trusted the agents who worked in my offices to comply
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with their obligations to obtain informed, written consent to dual and designated agency, and I do
not have any reason to think that the agents who worked in my offices fail to do so.
26. Prior to the filing of this lawsuit, 1 am not aware of any client who ever
complained about the fact that Houlihan Lawrence and its agents acted as dual or designated
agents in a particular transaction. In my experience, it is very common for the larger brokerage
companies in New York to regularly act as dual and/or designated agents. Generally, the more
agents who are affiliated with a particular brokerage company in a given area, the more likely it
is that a dual or designated agency transaction will occur because it is more likely that a potential
buyer will happen to be working with an agent affiliated with the same company as the agent
working with the seller. In other words, the more successful a real estate brokerage company is at
growing its number of agents, the more dual and designated agency transactions it will have.
27. In my experience both as an agent and a manager, it would not be a good business
practice to favor dual and designated agency transactions over non-dual agency transactions.
Successful real estate agents rely on positive referrals to grow and maintain their businesses. If
an agent were to push a seller to accept an inferior offer or a buyer to overpay for a house just
because it would result in a dual or designated agency transaction, that agent would be risking
the long-term value of positive referrals. In my experience, agents are unlikely to take that risk.
28. I understand that the plaintiffs in this lawsuit allege that Houlihan Lawrence's in-
house bonus program is part of some alleged strategy to increase dual and designated agency
transactions. In all of my years as an agent and manager for Houlihan Lawrence, I have not seen
any evidence to support this allegation.
29. Not all Houlihan Lawrence agents are eligible for in-house bonuses. Moreover, I
have not seen any evidence that the in-house bonus plays any role in causing a dual or designated
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transaction to occur. in my it is the opposite - a dual or designated
agency Instead, experience,
agency transaction occurs because a particular buyer wants to purchase a particular house and
presents the most compelling offer, and the agent then may happen to receive an in-house bonus
if they are eligible. But the presence or absence of an in-house bonus does not drive agent
behavior. Indeed, over the years, as agent compensation has become increasingly agent-friendly
(meaning that agents retain an increasing percentage of the total commission), the in-house
bonus has become less and less common.
30. I have not seen anything during my tenure at Houlihan Lawrence that leads me to
believe that Houlihan Lawrence has some kind of orchestrated strategy to increase the number of
dual and designated agency transactions that occur.
31. I am a citizen of the United States, and I am competent to give testimony in this
matter. Unless stated otherwise, the above testimony is based on my own personal knowledge.
And although counsel assisted in preparing this affidavit, I reviewed it carefully, made changes
where I thought it was appropriate, and affirm that the contents of this affidavit are true and
accurate.
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STATE OF NEW YORK )
) ss:
COUNTY OF WESTCHESTER )
Kovacs
Sworn to and subscribed before me
this day of F 6,2024.
NOTARY PUBLIC
JUDIE MacSHANE SEAL
New York
Notary Public, Stote of
No. 01MA6000323
Qualified in Westchester County
-
Commission Expires /a / T-cR s
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Certificate of Counsel
Pursuant to Connnercial Division Rule 17
I, Robert D. MacGill, counsel for Defendant, hereby certify, pursuant to
Commercial Division Rule 17, that the word count for the foregoing document, excluding
the caption, table of contents, table of authorities, and signature block, is 2649 words.
This document therefore complies with the rule that limits briefs, memoranda,
affirmations, and affidavits to 7,000 words. I certify that the Microsoft Word generated
word count for this document is 2649 words.
Dated: Indianapolis, Indiana
March 11, 2024
/s/Robert D. MacGill