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Rubino v. Pennsylvania Gaming Control Board

July 23, 2010


The opinion of the court was delivered by: Senior Judge FLAHERTY*fn1

Argued: April 19, 2010



Gregory J. Rubino and Passport Realty, LLC (collectively, Rubino) petition for review of the September 2, 2009, order of the Pennsylvania Gaming Control Board (Board) which held that real estate agents and brokers are not exempt from the registration and certification requirements of section 437a.1 of the Board's regulations, 58 Pa. Code §437a.1. We affirm.

Rubino is a licensed Pennsylvania real estate agent transacting business through Passport Realty, LLC. Rubino sought to offer professional real estate services to MTR Gaming Group, Inc. (MTR), the parent company of Presque Isle Downs, Inc. (PIDI), which had been awarded a slot machine license by the Board on December 20, 2006. The grant of this license was subject to a statement of conditions (SOC), including SOC 58. SOC 58 required MTR and PIDI to refrain from entering into or engaging in any business activity or transaction with Rubino or his affiliates, with an exception relating to a transaction involving the Green Shingle property.*fn2 PIDI's chairman, Ted Arneault, signed the SOC on August 20, 2007.

Subsequent to the execution of the SOC, the Board promulgated regulations requiring any vendor or person seeking to conduct business with a slot machine applicant or licensee to apply for registration and/or certification from the Board. 58 Pa. Code §437a.1(a), (b). However, the regulations specifically exempt "[p]roviders of professional services including accountants, attorneys, engineers and architects" from the registration and certification requirements. 58 Pa. Code §437a.1(c)(8).*fn3 On February 13, 2008, Rubino filed a petition for relief from SOC 58 with the Board. In furtherance of this objective, Rubino sought a declaration that he and his company are exempt from the certification and registration requirements set forth in the Board's new regulations. The Board's Office of Enforcement Counsel (OEC) filed an answer, and the case ultimately was heard before Linda Lloyd, Director of the Office of Hearings and Appeals (OHA).

On January 30, 2009, Director Lloyd issued a report and recommendation that the Board deny the relief requested in Rubino's petition, finding insufficient evidence to support a change to SOC 58 and noting that PIDI freely signed the SOC. However, Director Lloyd disagreed with OEC's argument that the exemption list found in the Board's regulations is all-inclusive and recommended that a licensed real estate agent or broker be included in this exemption. Rubino and OEC filed exceptions to the report and recommendation.

On September 2, 2009, the Board issued an adjudication and order rejecting the exceptions filed by both parties. The Board first addressed what it deemed to be a threshold issue, i.e., whether a licensed real estate agent or broker is included in the exemption. In its analysis, the Board agreed with Director Lloyd that the regulation's list of exempted professionals is not all-inclusive. Nevertheless, the Board distinguished the type of professions identified in the regulation as professions that required "prolonged courses of specialized education at the collegiate level and beyond," from "[r]eal estate agents, [which], although required to be licensed by the Pennsylvania Real Estate Commission, are not required to complete any secondary education, nor are they required to hold a college or high school diploma." (Board op. at 4.)

The Board reviewed the licensure requirements for a real estate salesperson: an applicant must be eighteen years of age and have completed sixty hours of approved, general real estate coursework before taking and passing an examination.*fn4 The Board also noted the requirements for a real estate broker's license: the applicant must be twenty-one years of age, must be a high school graduate, must complete 240 hours in real estate instruction, and must have been engaged as a licensed real estate salesperson for at least three years.*fn5

Citing Ridley Township v. Pronesti, 431 Pa. 34, 244 A.2d 719 (1968) and Reich v. Reading, 284 A.2d 315 (Pa. Cmwlth. 1971), the Board observed that the mere requirement of licensure of real estate brokers does not, itself, categorize this occupation as a profession. In Ridley Township, our Supreme Court held that a licensed real estate broker was not permitted to operate an office as an accessory use in a single-family dwelling. The applicable ordinance allowed accessory uses that were "customarily incidental" to a permitted use and defined the "customarily incidental" to include the professional office or studio of a doctor, dentist, masseur, teacher, artist, architect, musician, lawyer, magistrate or practitioner of a similar character.

In Reich, this court held that the office of a licensed insurance broker was a "business office" rather than a "professional office" and, therefore, was not a permitted use in a multi-family zoning district. In doing so, we specifically held that the mere fact that an insurance broker was licensed by the state did not, of itself, categorize his occupation as a "profession." "There are various occupations required to be licensed by the Commonwealth but which have been held not to be professions, such as real estate brokers.." Reich, 284 A.2d at 320 (citations omitted). Furthermore, we acknowledged in Reich that an exact definition of the term "profession" and "professional" was difficult, was not limited to the traditional professions of theology, medicine, and law, and included professions such as teaching, architecture, and engineering "for which considerable educational preparation and continuing study are required." Id. 284 A.2d at 320. While acknowledging the occupation of an insurance agent/broker as "important and specialized," after consideration of the provisions of the ordinance at issue, as well as the applicable licensure requirements, we concluded that an insurance office was a business office rather than a professional office. Id.

The Board determined that unlike accountants, engineers, attorneys and architects, which professions require prolonged courses of specialized education at the collegiate level and beyond, real estate agents and brokers are not required to complete any secondary education and thus, real estate agents and brokers are not the type of professionals contemplated by the regulation. (Board's decision at 4, 5.) Accordingly, the Board rejected Director Lloyd's recommendation to extend the exemption to real estate agents and brokers. The Board held in abeyance the remainder of the matter, concerning SOC 58, until such time as Rubino submits certified vendor applications through PIDI and a background investigation is completed. Rubino then filed a petition for review with this Court.*fn6

On appeal, Rubino argues that the Board erred as a matter of law in concluding that real estate agents and brokers are not exempt from Board jurisdiction by virtue of the regulatory exemption of certain "professionals" found at 58 Pa. Code §437a.1(c)(8).*fn7 We disagree.

We begin by noting that a reviewing court must give considerable weight and deference to an agency's interpretation of a regulation the agency is charged with enforcing. Bayada Nurses, Inc. v. Department of Labor and Industry, 958 A.2d 1050 (Pa. Cmwlth. 2008). Moreover, an agency's interpretation of its regulation is controlling unless the interpretation is plainly erroneous, inconsistent with the ...

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