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FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018
NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024
EXHIBIT 6
FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018
NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024
Page 1
1 VIDEO TELECONFERENCE DEPOSITION
THOMAS CUSACK
2 VOLUME 1
3
4
5 STATE OF NEW YORK
SUPREME COURT : COUNTY OF WESTCHESTER
6
7 ----------------------------------------
PAMELA GOLDSTEIN,
8 ELLYN & TONY BERK, As Administrators
of the Estate of Winifred Berk,
9 And PAUL BENJAMIN, on behalf of
themselves and all others similarly
10 situated,
Plaintiffs,
11
- vs - Index No.
12 60767/2018
13 HOULIHAN/LAWRENCE INC.,
14 Defendant.
----------------------------------------
15
16
17 Video deposition of THOMAS CUSACK, taken
18 pursuant to Notice under Article 31 of the Civil
19 Practice Law and Rules, at the Cusack Center, 5500
20
21 Main Street, Williamsville, New York, on
22
23 September 28, 2023, commencing at 12:00 p.m.,
24
25 before MEGAN TITUS, Notary Public.
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1 Thomas Cusack
2 Q. Okay. And does your affidavit and your
3 report -- between those two documents, do they set
4 forth all of the opinions that you intend to give
5 in this case?
6 A. It's just too broad.
7 Q. Pardon?
8 A. It's too broad. All of the opinions
9 that I have about the case, no. They didn't --
10 they're not all of what -- what -- how I --
11 opinions that I have about the real estate business
12 and practice. They don't include all of those
13 opinions that I have. But -- but they -- they
14 address my assessment of Houlihan Lawrence's
15 performance.
16 Q. All right. I'm going to try that
17 question again.
18 And just -- my question, sir, is: Does the
19 affidavit and the report that you prepared in this
20 case set forth all of the opinions that you intend
21 to testify to in this case?
22 A. In relation to Houlihan Lawrence's
23 practice. I answered that question, yes. Okay?
24 Yes.
25 Q. Are there --
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1 Thomas Cusack
2 A. In relation to Houlihan Lawrence's
3 practice.
4 Q. Are there opinions that you intend to
5 give in this case that are not reflected in your
6 affidavit or your report?
7 A. No, I'm not.
8 Q. Now, are you a -- currently a licensed
9 real estate broker in New York?
10 A. Interestingly, no, because to operate a
11 school -- to operate a school -- to own a school
12 and operate it, I could not have a license because
13 in the perception of the Department of State, it
14 would be a conflict of interest.
15 Q. Okay.
16 A. Okay?
17 Q. When did you last hold a real estate
18 broker's license in New York?
19 A. In 1990 --
20 Q. And --
21 A. -- when I opened the school.
22 Q. -- And is the same true with respect to
23 a license as a salesperson? You don't currently
24 have a license as a salesperson in New York; is
25 that correct?
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1 Thomas Cusack
2 A. I don't have any real estate license.
3 I have a license to instruct, but I don't have a
4 license to practice.
5 Q. So you don't currently practice as a
6 real estate agent in New York; is that correct?
7 A. No, because -- because in the
8 perception of the Department of State, it would be
9 a conflict of interest.
10 Q. When was the last time you actually
11 acted as a real estate broker or sales person in
12 New York?
13 A. When my license was renewed.
14 Q. So in 1990?
15 A. I think maybe it was there. I had to
16 send my license back to the Department of State.
17 So they would hold it. They would put it in
18 abeyance.
19 And then when it expired, I would get
20 communications from the Department of State, you
21 better renew this. You better renew it. And I
22 said, I can't renew it. Your license has been --
23 you should renew it. It's coming up for
24 expiration. I said, I can't. I own the school.
25 So -- and the reason is they didn't want
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1 Thomas Cusack
2 MR. VEST: I just want to make sure that --
3 that --
4 MR. MURRAY: I do.
5 MR. VEST: -- we're clear as to what your
6 request is.
7 THE WITNESS: We only have ten hours.
8 BY MR. MURRAY:
9 Q. So you --
10 A. We only have ten hours.
11 Q. So is it your position it would take
12 ten hours --
13 A. No, no, no.
14 Q. -- for an agent --
15 A. No, no. I'm saying --
16 Q. Sir, let me --
17 A. I'm saying --
18 Q. -- please, let me get the question out.
19 MR. VEST: Mr. Cusack, please.
20 THE WITNESS: I'm sorry.
21 BY MR. MURRAY:
22 Q. So, sir, you've been retained in this
23 case to give expert testimony on what is expected
24 in the industry for licensees when disclosing dual
25 agency and dual agency with designated agents,
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1 Thomas Cusack
2 correct?
3 A. There is -- there is -- has to be a
4 disclosure.
5 Q. Okay.
6 A. And --
7 Q. And you've -- you've conducted reviews
8 of e-mails to determine whether you think e-mail
9 disclosures were sufficient in your opinion,
10 correct?
11 A. Yes.
12 Q. And you say you're an expert on the
13 disclosure form, correct?
14 A. An expert on the form?
15 Q. Yes. Do you --
16 A. Say that another way.
17 Q. -- do you consider yourself an expert
18 on the disclosure form?
19 A. Understanding how the form should be
20 explained?
21 Q. Yes.
22 A. I'm -- that's up to -- that's up to
23 someone else to say that I'm an expert. If they
24 contacted me, I know what I know. But that I'm an
25 expert. That's not one of the things that I
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1 Thomas Cusack
2 would -- that I would classify myself.
3 But I want to say to you and the Court and
4 before -- for the testimony is that the agency
5 disclosure form says you got to carefully consider
6 the consequences. I'm asking you to sign this; and
7 I am your agent. I must, must help you to
8 understand what the consequences are.
9 Q. So --
10 A. That's duty bound.
11 Q. -- so --
12 A. So if I could've seen one or two or
13 three, not -- not voluminous. I didn't see it. I
14 didn't see it.
15 Q. Sir, do you consider yourself an expert
16 on how the disclosure form should be presented to
17 clients?
18 A. With as much humility as I can assert,
19 I know how to translate the standard of disclosure
20 to the practice of real estate. And I know I can
21 look at it and say, you got a little air missing in
22 one of the tires of your car and there seems to be
23 not -- the steering wheel isn't really that good,
24 but you did at least this amount. You -- you told
25 me some of the consequences.
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1 Thomas Cusack
2 And -- and I -- I love the real estate
3 business. I love the people who practice in it.
4 And I am not about -- I'm not about trying to do
5 anything harmful to them. I'm just saying to them,
6 look, we've got an industry here. And if we do it
7 the way it's supposed to be done, we will preserve
8 the industry. But if we don't do it the way it's
9 supposed to be done, then, in my opinion, we could
10 go the way of travel agents.
11 Q. Sir, do you consider yourself an expert
12 in how the disclosure form is actually presented to
13 clients in the industry?
14 A. I think I have knowledge about more
15 than the minimal amount of disclosure. If that
16 categorized me -- categorizes me as an expert, then
17 so be it. But I know that when I look at the form
18 and when I look at how it is being communicated
19 that it is not -- it is not rising to the minimum
20 level, the very basic level of disclosure.
21 Q. Do you think most in New York don't
22 describe the disclosure form correctly to their
23 clients?
24 MR. VEST: Objection. Calls for
25 speculation. Overbroad.
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1 Thomas Cusack
2 prior to enactment of 443? Or are you saying that
3 the 443 imposed a requirement to get written
4 consent? Or are you saying something else?
5 A. I --
6 MR. VEST: Objection. Vague and ambiguous.
7 THE WITNESS: -- I -- I know now that the
8 form says written informed consent. So I interpret
9 this as when I wrote it, I would have to go back
10 and -- and think about exactly what I was referring
11 to here. In a major victory, 443(6) preserved the
12 New York State Common Law prohibition on less than
13 a total regulate full disclosure and obtain both
14 parties' written informed consent.
15 And I -- the -- I know now that the form
16 says it's got to be written informed consent. And
17 it says that in the form. So I was simply, at that
18 time, not -- not trying to say that the common law
19 says written informed consent. I was saying that
20 the -- the legislature said that they want written
21 informed consent.
22 BY MR. MURRAY:
23 Q. Okay. And that was my question.
24 MR. VEST: Yeah. Counsel, can we take a
25 break? About 15 minutes.
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1 Thomas Cusack
2 MR. MURRAY: Sure.
3 THE VIDEOGRAPHER: Okay. Going off the
4 record. Time is 16:09.
5 (Off the record: 4:09 p.m.).
6 THE VIDEOGRAPHER: All right. Going back on
7 the record. Time is 16:20.
8 BY MR. MURRAY:
9 Q. Sir, on Page 3 of your report, you have
10 some pictures showing a pamphlet that you say was
11 distributed by the Department of State.
12 Do you see that?
13 A. Yes.
14 Q. Do you know when that pamphlet was
15 distributed?
16 A. I don't know.
17 Q. Do you know whether it was distributed
18 at any time during the class period in this case?
19 A. I don't know that. I think -- I don't
20 know.
21 Q. You think what?
22 A. I don't -- I don't know.
23 Q. In Paragraph 9 of your affidavit, you
24 say that most agents --
25 MR. VEST: Counsel, if you could just give
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1 Thomas Cusack
2 one second to get it in front of him.
3 MR. MURRAY: Sure.
4 THE WITNESS: Page 9?
5 BY MR. MURRAY:
6 Q. Paragraph 9.
7 A. Paragraph 9. Okay. All right.
8 Q. In that first sentence, you say most
9 agents are incapable of making the required
10 disclosures.
11 Do you see that?
12 A. Yes.
13 Q. And do you actually know whether most
14 agents in New York are incapable of making the
15 required disclosures?
16 A. I say here: Because most agents are
17 incapable of making the disclosure -- required
18 disclosure. And -- and that in my affidavit,
19 it's -- I don't know whether there are no agents
20 who could make it, but most. And it's unless
21 they're properly trained and instructed on how to
22 do it.
23 Q. Well, the sentence just says dual
24 agency is risky business because most agents are
25 incapable of making the required disclosures.
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1 Thomas Cusack
2 A. My -- my experience is that most of
3 them are not able to make it. That's my -- that's
4 my experience.
5 Q. And you're basing that on your personal
6 interactions with agents --
7 A. Yes.
8 Q. -- who you personally come into contact
9 over the course of your career?
10 MR. VEST: Mischaracterizes the affidavit.
11 Calls ...
12 THE WITNESS: Yeah. Were -- yeah. So what
13 I was trying to say there is -- and -- and maybe I
14 didn't say it accurately -- but what I was trying
15 to say was: From my interaction with most agents
16 is they're incapable of making the required
17 disclosure. So I stand by that.
18 BY MR. MURRAY:
19 Q. Do you tell your students at any time
20 that they are incapable of properly disclosing --
21 A. Do I -- do I tell them --
22 Q. -- the dual agency risks, consequences,
23 and conflicts?
24 MR. VEST: You're talking about during
25 class.
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1 Thomas Cusack
2 MR. MURRAY: Yeah.
3 BY MR. MURRAY:
4 Q. Do you warn -- do you warn your
5 students -- when they're about to graduate from
6 your class, do you warn them, hey, don't do
7 anything dual agency-related because you're not
8 capable of it?
9 A. No. I tell them that it's between --
10 it's up to them and their broker about how the
11 broker is going to guide you in doing it. I'm
12 telling you it's risky business; and you should be
13 wary of it; and you better make sure you're doing
14 it right because you can forfeit your right -- one
15 of the consequences of not doing it, you forfeit
16 your right to commission.
17 Q. Do you tell your students that the
18 training that you have provided to them in your
19 courses is inadequate for them to be able to
20 practice dual agency correctly?
21 A. It's the beginning of you understanding
22 and putting together with guidance from your
23 broker. My role -- can I tell you what my role is
24 in the class? It's the -- there is -- there is --
25 I try to help them to remember, to understand, and
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1 Thomas Cusack
2 apply certain principles.
3 The -- the in depth execution of those
4 principles is in the -- in the role and the
5 responsibility of the broker. To analyze,
6 evaluate, and create solutions for their
7 application of the principles is the responsibility
8 of the broker.
9 So I say to them, here's -- you become aware
10 of the fact that it is dangerous. It is risky. It
11 is -- it is -- it is -- can be harmful to your --
12 to the client. It's risky. So your broker is
13 going to be the one who's responsible for making
14 sure that you do it. And as I said here -- what do
15 we got there -- and so that you can be capable of
16 making the required disclosure.
17 Q. Okay. So you view your role as an
18 instructor at your center to introduce the agents
19 to the concepts related to dual agency --
20 MR. VEST: Counsel, if you could --
21 BY MR. MURRAY:
22 Q. -- but you view it as the role of the
23 broker to actually instruct those agents on how to
24 satisfy their obligations to disclose the -- the --
25 MR. VEST: Mr. Cusack --
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1 Thomas Cusack
2 BY MR. MURRAY:
3 Q. -- the risks, consequences, and
4 conflicts of dual agency; is that fair?
5 MR. VEST: Mr. Cusack, I'm having -- I
6 object on that it's vague and ambiguous. And ask
7 Counsel just to clarify whether you're talking
8 about the salesperson course or the broker's
9 course.
10 THE WITNESS: Yeah. That's what I was going
11 to ask. Is it the salesperson's course or the
12 broker's course?
13 BY MR. MURRAY:
14 Q. So do you -- you view you role
15 differently between those courses?
16 A. Well, yeah.
17 Q. Okay. So for the salesperson course --
18 Which is where you have the most contact
19 with agents, correct?
20 THE REPORTER: Yes?
21 BY MR. MURRAY:
22 Q. You've had most of your contact with
23 agents --
24 A. Yes.
25 Q. -- in the salesperson's course?
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1 Thomas Cusack
2 do it. I can't do it without telling you about
3 what happens when we have dual agency situations or
4 dual agency with designated sales associates. We
5 just -- we got to -- we got to -- we got to open
6 that stuff up.
7 Q. Have you made any attempt to determine
8 whether Houlihan Lawrence engages in more dual
9 agency transactions than other brokers in New York?
10 A. I -- I'm not comparing them. I don't
11 study that. I saw in a report about Chris Meyers
12 that they're at 43 percent. They're at 43 percent.
13 But I'm not -- I'm not comparing them with one
14 another. I'm just looking at what they did.
15 That's all I did. That's all I can testify --
16 certify to -- or testify to.
17 Q. Sir, are you an expert on how agents
18 are compensated in New York?
19 MR. VEST: Objection. Vague.
20 THE WITNESS: How they're compensated?
21 BY MR. MURRAY:
22 Q. Yes.
23 A. You mean by -- by percentage of the
24 sale price or flat fee?
25 Q. Well, you referred to inhouse bonuses
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1 Thomas Cusack
2 earlier.
3 A. Yes.
4 Q. Do you have any idea how prevalent
5 inhouse bonuses are in New York?
6 A. No, I don't know. But I'm not -- I'm
7 not assessing New York --
8 Q. I'm just asking you what you know and
9 you don't know, sir?
10 A. Oh, okay. Yeah.
11 Q. Do you -- do you know whether it's a
12 common practice in New York for agents to be
13 eligible for production bonuses?
14 A. Don't know.
15 Q. Do you know whether agents in New York
16 who are eligible for production bonuses ever
17 disclose that eligibility to their consumers?
18 MR. VEST: Objection. Vague.
19 THE WITNESS: I don't know, but they should.
20 BY MR. MURRAY:
21 Q. Do you know whether agents in New York
22 who are eligible for inhouse bonuses disclose that
23 fact to their clients?
24 A. I don't know, but they should.
25 Q. You say in your report that a
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1 Thomas Cusack
2 designated agent cannot provide undivided loyalty;
3 is that right?
4 A. Yeah, because it says it in the form.
5 Q. Well, and that's my question. Is it
6 your position, sir, that a designated agent cannot,
7 as a factual matter, provide undivided loyalty? Or
8 as a legal matter they cannot provide undivided
9 loyalty?
10 MR. VEST: Objection. False distinction.
11 THE WITNESS: I -- in that situation, I
12 can't make that distinction between legal or not.
13 I don't -- I'm not -- I'm just saying that as long
14 as they tell them that they're not getting --
15 they're not providing undivided loyalty and the
16 reason why they're not, then it's up to the
17 consumer to decide whether or not they want to
18 go -- tell them and it's their decision. Tell
19 them, it's their decision.
20 BY MR. MURRAY:
21 Q. Well, do you agree, sir, that fiduciary
22 duties can be modified by contract?
23 MR. VEST: Objection. Vague. Lacks
24 foundation.
25 BY MR. MURRAY:
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FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 EXHIBIT 6 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 1 1 VIDEO TELECONFERENCE DEPOSITION THOMAS CUSACK 2 VOLUME 1 3 4 5 STATE OF NEW YORK SUPREME COURT : COUNTY OF WESTCHESTER 6 7 ---------------------------------------- PAMELA GOLDSTEIN, 8 ELLYN & TONY BERK, As Administrators of the Estate of Winifred Berk, 9 And PAUL BENJAMIN, on behalf of themselves and all others similarly 10 situated, Plaintiffs, 11 - vs - Index No. 12 60767/2018 13 HOULIHAN/LAWRENCE INC., 14 Defendant. ---------------------------------------- 15 16 17 Video deposition of THOMAS CUSACK, taken 18 pursuant to Notice under Article 31 of the Civil 19 Practice Law and Rules, at the Cusack Center, 5500 20 21 Main Street, Williamsville, New York, on 22 23 September 28, 2023, commencing at 12:00 p.m., 24 25 before MEGAN TITUS, Notary Public. Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 30 1 Thomas Cusack 2 Q. Okay. And does your affidavit and your 3 report -- between those two documents, do they set 4 forth all of the opinions that you intend to give 5 in this case? 6 A. It's just too broad. 7 Q. Pardon? 8 A. It's too broad. All of the opinions 9 that I have about the case, no. They didn't -- 10 they're not all of what -- what -- how I -- 11 opinions that I have about the real estate business 12 and practice. They don't include all of those 13 opinions that I have. But -- but they -- they 14 address my assessment of Houlihan Lawrence's 15 performance. 16 Q. All right. I'm going to try that 17 question again. 18 And just -- my question, sir, is: Does the 19 affidavit and the report that you prepared in this 20 case set forth all of the opinions that you intend 21 to testify to in this case? 22 A. In relation to Houlihan Lawrence's 23 practice. I answered that question, yes. Okay? 24 Yes. 25 Q. Are there -- Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 31 1 Thomas Cusack 2 A. In relation to Houlihan Lawrence's 3 practice. 4 Q. Are there opinions that you intend to 5 give in this case that are not reflected in your 6 affidavit or your report? 7 A. No, I'm not. 8 Q. Now, are you a -- currently a licensed 9 real estate broker in New York? 10 A. Interestingly, no, because to operate a 11 school -- to operate a school -- to own a school 12 and operate it, I could not have a license because 13 in the perception of the Department of State, it 14 would be a conflict of interest. 15 Q. Okay. 16 A. Okay? 17 Q. When did you last hold a real estate 18 broker's license in New York? 19 A. In 1990 -- 20 Q. And -- 21 A. -- when I opened the school. 22 Q. -- And is the same true with respect to 23 a license as a salesperson? You don't currently 24 have a license as a salesperson in New York; is 25 that correct? Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 32 1 Thomas Cusack 2 A. I don't have any real estate license. 3 I have a license to instruct, but I don't have a 4 license to practice. 5 Q. So you don't currently practice as a 6 real estate agent in New York; is that correct? 7 A. No, because -- because in the 8 perception of the Department of State, it would be 9 a conflict of interest. 10 Q. When was the last time you actually 11 acted as a real estate broker or sales person in 12 New York? 13 A. When my license was renewed. 14 Q. So in 1990? 15 A. I think maybe it was there. I had to 16 send my license back to the Department of State. 17 So they would hold it. They would put it in 18 abeyance. 19 And then when it expired, I would get 20 communications from the Department of State, you 21 better renew this. You better renew it. And I 22 said, I can't renew it. Your license has been -- 23 you should renew it. It's coming up for 24 expiration. I said, I can't. I own the school. 25 So -- and the reason is they didn't want Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 63 1 Thomas Cusack 2 MR. VEST: I just want to make sure that -- 3 that -- 4 MR. MURRAY: I do. 5 MR. VEST: -- we're clear as to what your 6 request is. 7 THE WITNESS: We only have ten hours. 8 BY MR. MURRAY: 9 Q. So you -- 10 A. We only have ten hours. 11 Q. So is it your position it would take 12 ten hours -- 13 A. No, no, no. 14 Q. -- for an agent -- 15 A. No, no. I'm saying -- 16 Q. Sir, let me -- 17 A. I'm saying -- 18 Q. -- please, let me get the question out. 19 MR. VEST: Mr. Cusack, please. 20 THE WITNESS: I'm sorry. 21 BY MR. MURRAY: 22 Q. So, sir, you've been retained in this 23 case to give expert testimony on what is expected 24 in the industry for licensees when disclosing dual 25 agency and dual agency with designated agents, Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 64 1 Thomas Cusack 2 correct? 3 A. There is -- there is -- has to be a 4 disclosure. 5 Q. Okay. 6 A. And -- 7 Q. And you've -- you've conducted reviews 8 of e-mails to determine whether you think e-mail 9 disclosures were sufficient in your opinion, 10 correct? 11 A. Yes. 12 Q. And you say you're an expert on the 13 disclosure form, correct? 14 A. An expert on the form? 15 Q. Yes. Do you -- 16 A. Say that another way. 17 Q. -- do you consider yourself an expert 18 on the disclosure form? 19 A. Understanding how the form should be 20 explained? 21 Q. Yes. 22 A. I'm -- that's up to -- that's up to 23 someone else to say that I'm an expert. If they 24 contacted me, I know what I know. But that I'm an 25 expert. That's not one of the things that I Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 65 1 Thomas Cusack 2 would -- that I would classify myself. 3 But I want to say to you and the Court and 4 before -- for the testimony is that the agency 5 disclosure form says you got to carefully consider 6 the consequences. I'm asking you to sign this; and 7 I am your agent. I must, must help you to 8 understand what the consequences are. 9 Q. So -- 10 A. That's duty bound. 11 Q. -- so -- 12 A. So if I could've seen one or two or 13 three, not -- not voluminous. I didn't see it. I 14 didn't see it. 15 Q. Sir, do you consider yourself an expert 16 on how the disclosure form should be presented to 17 clients? 18 A. With as much humility as I can assert, 19 I know how to translate the standard of disclosure 20 to the practice of real estate. And I know I can 21 look at it and say, you got a little air missing in 22 one of the tires of your car and there seems to be 23 not -- the steering wheel isn't really that good, 24 but you did at least this amount. You -- you told 25 me some of the consequences. Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 66 1 Thomas Cusack 2 And -- and I -- I love the real estate 3 business. I love the people who practice in it. 4 And I am not about -- I'm not about trying to do 5 anything harmful to them. I'm just saying to them, 6 look, we've got an industry here. And if we do it 7 the way it's supposed to be done, we will preserve 8 the industry. But if we don't do it the way it's 9 supposed to be done, then, in my opinion, we could 10 go the way of travel agents. 11 Q. Sir, do you consider yourself an expert 12 in how the disclosure form is actually presented to 13 clients in the industry? 14 A. I think I have knowledge about more 15 than the minimal amount of disclosure. If that 16 categorized me -- categorizes me as an expert, then 17 so be it. But I know that when I look at the form 18 and when I look at how it is being communicated 19 that it is not -- it is not rising to the minimum 20 level, the very basic level of disclosure. 21 Q. Do you think most in New York don't 22 describe the disclosure form correctly to their 23 clients? 24 MR. VEST: Objection. Calls for 25 speculation. Overbroad. Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 148 1 Thomas Cusack 2 prior to enactment of 443? Or are you saying that 3 the 443 imposed a requirement to get written 4 consent? Or are you saying something else? 5 A. I -- 6 MR. VEST: Objection. Vague and ambiguous. 7 THE WITNESS: -- I -- I know now that the 8 form says written informed consent. So I interpret 9 this as when I wrote it, I would have to go back 10 and -- and think about exactly what I was referring 11 to here. In a major victory, 443(6) preserved the 12 New York State Common Law prohibition on less than 13 a total regulate full disclosure and obtain both 14 parties' written informed consent. 15 And I -- the -- I know now that the form 16 says it's got to be written informed consent. And 17 it says that in the form. So I was simply, at that 18 time, not -- not trying to say that the common law 19 says written informed consent. I was saying that 20 the -- the legislature said that they want written 21 informed consent. 22 BY MR. MURRAY: 23 Q. Okay. And that was my question. 24 MR. VEST: Yeah. Counsel, can we take a 25 break? About 15 minutes. Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 149 1 Thomas Cusack 2 MR. MURRAY: Sure. 3 THE VIDEOGRAPHER: Okay. Going off the 4 record. Time is 16:09. 5 (Off the record: 4:09 p.m.). 6 THE VIDEOGRAPHER: All right. Going back on 7 the record. Time is 16:20. 8 BY MR. MURRAY: 9 Q. Sir, on Page 3 of your report, you have 10 some pictures showing a pamphlet that you say was 11 distributed by the Department of State. 12 Do you see that? 13 A. Yes. 14 Q. Do you know when that pamphlet was 15 distributed? 16 A. I don't know. 17 Q. Do you know whether it was distributed 18 at any time during the class period in this case? 19 A. I don't know that. I think -- I don't 20 know. 21 Q. You think what? 22 A. I don't -- I don't know. 23 Q. In Paragraph 9 of your affidavit, you 24 say that most agents -- 25 MR. VEST: Counsel, if you could just give Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 150 1 Thomas Cusack 2 one second to get it in front of him. 3 MR. MURRAY: Sure. 4 THE WITNESS: Page 9? 5 BY MR. MURRAY: 6 Q. Paragraph 9. 7 A. Paragraph 9. Okay. All right. 8 Q. In that first sentence, you say most 9 agents are incapable of making the required 10 disclosures. 11 Do you see that? 12 A. Yes. 13 Q. And do you actually know whether most 14 agents in New York are incapable of making the 15 required disclosures? 16 A. I say here: Because most agents are 17 incapable of making the disclosure -- required 18 disclosure. And -- and that in my affidavit, 19 it's -- I don't know whether there are no agents 20 who could make it, but most. And it's unless 21 they're properly trained and instructed on how to 22 do it. 23 Q. Well, the sentence just says dual 24 agency is risky business because most agents are 25 incapable of making the required disclosures. Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 151 1 Thomas Cusack 2 A. My -- my experience is that most of 3 them are not able to make it. That's my -- that's 4 my experience. 5 Q. And you're basing that on your personal 6 interactions with agents -- 7 A. Yes. 8 Q. -- who you personally come into contact 9 over the course of your career? 10 MR. VEST: Mischaracterizes the affidavit. 11 Calls ... 12 THE WITNESS: Yeah. Were -- yeah. So what 13 I was trying to say there is -- and -- and maybe I 14 didn't say it accurately -- but what I was trying 15 to say was: From my interaction with most agents 16 is they're incapable of making the required 17 disclosure. So I stand by that. 18 BY MR. MURRAY: 19 Q. Do you tell your students at any time 20 that they are incapable of properly disclosing -- 21 A. Do I -- do I tell them -- 22 Q. -- the dual agency risks, consequences, 23 and conflicts? 24 MR. VEST: You're talking about during 25 class. Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 152 1 Thomas Cusack 2 MR. MURRAY: Yeah. 3 BY MR. MURRAY: 4 Q. Do you warn -- do you warn your 5 students -- when they're about to graduate from 6 your class, do you warn them, hey, don't do 7 anything dual agency-related because you're not 8 capable of it? 9 A. No. I tell them that it's between -- 10 it's up to them and their broker about how the 11 broker is going to guide you in doing it. I'm 12 telling you it's risky business; and you should be 13 wary of it; and you better make sure you're doing 14 it right because you can forfeit your right -- one 15 of the consequences of not doing it, you forfeit 16 your right to commission. 17 Q. Do you tell your students that the 18 training that you have provided to them in your 19 courses is inadequate for them to be able to 20 practice dual agency correctly? 21 A. It's the beginning of you understanding 22 and putting together with guidance from your 23 broker. My role -- can I tell you what my role is 24 in the class? It's the -- there is -- there is -- 25 I try to help them to remember, to understand, and Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 153 1 Thomas Cusack 2 apply certain principles. 3 The -- the in depth execution of those 4 principles is in the -- in the role and the 5 responsibility of the broker. To analyze, 6 evaluate, and create solutions for their 7 application of the principles is the responsibility 8 of the broker. 9 So I say to them, here's -- you become aware 10 of the fact that it is dangerous. It is risky. It 11 is -- it is -- it is -- can be harmful to your -- 12 to the client. It's risky. So your broker is 13 going to be the one who's responsible for making 14 sure that you do it. And as I said here -- what do 15 we got there -- and so that you can be capable of 16 making the required disclosure. 17 Q. Okay. So you view your role as an 18 instructor at your center to introduce the agents 19 to the concepts related to dual agency -- 20 MR. VEST: Counsel, if you could -- 21 BY MR. MURRAY: 22 Q. -- but you view it as the role of the 23 broker to actually instruct those agents on how to 24 satisfy their obligations to disclose the -- the -- 25 MR. VEST: Mr. Cusack -- Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 154 1 Thomas Cusack 2 BY MR. MURRAY: 3 Q. -- the risks, consequences, and 4 conflicts of dual agency; is that fair? 5 MR. VEST: Mr. Cusack, I'm having -- I 6 object on that it's vague and ambiguous. And ask 7 Counsel just to clarify whether you're talking 8 about the salesperson course or the broker's 9 course. 10 THE WITNESS: Yeah. That's what I was going 11 to ask. Is it the salesperson's course or the 12 broker's course? 13 BY MR. MURRAY: 14 Q. So do you -- you view you role 15 differently between those courses? 16 A. Well, yeah. 17 Q. Okay. So for the salesperson course -- 18 Which is where you have the most contact 19 with agents, correct? 20 THE REPORTER: Yes? 21 BY MR. MURRAY: 22 Q. You've had most of your contact with 23 agents -- 24 A. Yes. 25 Q. -- in the salesperson's course? Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 193 1 Thomas Cusack 2 do it. I can't do it without telling you about 3 what happens when we have dual agency situations or 4 dual agency with designated sales associates. We 5 just -- we got to -- we got to -- we got to open 6 that stuff up. 7 Q. Have you made any attempt to determine 8 whether Houlihan Lawrence engages in more dual 9 agency transactions than other brokers in New York? 10 A. I -- I'm not comparing them. I don't 11 study that. I saw in a report about Chris Meyers 12 that they're at 43 percent. They're at 43 percent. 13 But I'm not -- I'm not comparing them with one 14 another. I'm just looking at what they did. 15 That's all I did. That's all I can testify -- 16 certify to -- or testify to. 17 Q. Sir, are you an expert on how agents 18 are compensated in New York? 19 MR. VEST: Objection. Vague. 20 THE WITNESS: How they're compensated? 21 BY MR. MURRAY: 22 Q. Yes. 23 A. You mean by -- by percentage of the 24 sale price or flat fee? 25 Q. Well, you referred to inhouse bonuses Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 194 1 Thomas Cusack 2 earlier. 3 A. Yes. 4 Q. Do you have any idea how prevalent 5 inhouse bonuses are in New York? 6 A. No, I don't know. But I'm not -- I'm 7 not assessing New York -- 8 Q. I'm just asking you what you know and 9 you don't know, sir? 10 A. Oh, okay. Yeah. 11 Q. Do you -- do you know whether it's a 12 common practice in New York for agents to be 13 eligible for production bonuses? 14 A. Don't know. 15 Q. Do you know whether agents in New York 16 who are eligible for production bonuses ever 17 disclose that eligibility to their consumers? 18 MR. VEST: Objection. Vague. 19 THE WITNESS: I don't know, but they should. 20 BY MR. MURRAY: 21 Q. Do you know whether agents in New York 22 who are eligible for inhouse bonuses disclose that 23 fact to their clients? 24 A. I don't know, but they should. 25 Q. You say in your report that a Veritext Legal Solutions www.veritext.com 888-391-3376 FILED: WESTCHESTER COUNTY CLERK 04/22/2024 05:55 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1842 RECEIVED NYSCEF: 04/22/2024 Page 195 1 Thomas Cusack 2 designated agent cannot provide undivided loyalty; 3 is that right? 4 A. Yeah, because it says it in the form. 5 Q. Well, and that's my question. Is it 6 your position, sir, that a designated agent cannot, 7 as a factual matter, provide undivided loyalty? Or 8 as a legal matter they cannot provide undivided 9 loyalty? 10 MR. VEST: Objection. False distinction. 11 THE WITNESS: I -- in that situation, I 12 can't make that distinction between legal or not. 13 I don't -- I'm not -- I'm just saying that as long 14 as they tell them that they're not getting -- 15 they're not providing undivided loyalty and the 16 reason why they're not, then it's up to the 17 consumer to decide whether or not they want to 18 go -- tell them and it's their decision. Tell 19 them, it's their decision. 20 BY MR. MURRAY: 21 Q. Well, do you agree, sir, that fiduciary 22 duties can be modified by contract? 23 MR. VEST: Objection. Vague. Lacks 24 foundation. 25 BY MR. MURRAY: Veritext Legal Solutions www.veritext.com 888-391-3376