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Bauer v. Pennsylvania State Board of Auctioneer Examiners

Commonwealth Court of Pennsylvania

February 16, 2017

Drew J. Bauer, individually and d/b/a AmbroseBauer Trains (LLC), Petitioner
Pennsylvania State Board of Auctioneer Examiners, Respondent

          Submitted: June 10, 2016



          JAMES GARDNER COLINS, Senior Judge

         Drew J. Bauer (Bauer), individually and doing business as "AmbroseBauer Trains (LLC), " petitions for review of an order of the State Board of Auctioneer Examiners (Board) upholding citations issued against him and AmbroseBauer Trains, LLC (ABT) for violations of the Auctioneer Licensing and Trading Assistant Registration Act (the Act).[1] We affirm.

         In 2009 and 2010, Bauer auctioned toy trains using AuctionsByTM, a computer auction program that he owned. (Certified Record (C.R.) Item 34, Exs. C-5, C-6, C-7 & D-1 ¶¶4-6, Reproduced Record (R.R.) at 212-246, 248.) Bauer conducted these auctions through his company, ABT. (Id., Exs. C-5, C-6, C-7 & D-1 ¶5, R.R. at 212-246, 248.) Section 3(a) of the Act provides that it is unlawful for any person to engage in the profession of auctioneer, hold himself out as an auctioneer, conduct an auction, or offer to conduct auctions in this Commonwealth without a license. 63 P.S. § 734.3.[2] In addition, the Act requires a license for operation of an auction company. Former 63 P.S. § 734.10(a); see also 63 P.S. § 734.3(a)(1), (e.1)(1).[3] Bauer is an attorney licensed to practice law in

         Pennsylvania. (C.R. Item 34, Hearing Transcript (H.T.) at 52 & Ex. D-1 ¶1 & D-5, R.R. at 186, 247, 426.) Bauer, however, held no license to practice auctioneering and ABT held no license to operate as an auction company. (Id., H.T. at 26 & Ex. C-1, R.R. at 160, 193-94.)

         On May 20, 2010, the Commonwealth filed citations against Bauer and ABT charging that Bauer had conducted auctions without a license, charging that ABT had operated as an unlicensed auction company, and imposing a $1, 000 fine on Bauer and a $500 fine on ABT. (C.R. Items 2 & 3, Citations, R.R. at 5-6.)[4]

         Bauer and ABT denied the violations but did not appear at an August 2010 hearing on the citations and the hearing examiner issued orders sustaining the citations. Bauer and ABT appealed these orders to the Board, asserting, inter alia, that they had reason to believe that the hearing would not be held on that date, and the Board, on November 15, 2013, vacated the orders and remanded the matter to the hearing officer for a new hearing.

         Before the new hearing was scheduled, Bauer and ABT filed preliminary objections seeking dismissal of the citations on the ground that Bauer was an attorney, which the Board overruled on March 13, 2014. Bauer also filed a petition for review in this Court's original jurisdiction against the Commonwealth, the Board and other Commonwealth parties docketed at No. 287 M.D. 2014 (Commonwealth Court action), and sought a preliminary injunction to enjoin the hearing on the citations, which was scheduled for August 11, 2014. On August 7, 2014, following a hearing at which the parties presented a stipulation of facts and argument, this Court denied Bauer's motion for preliminary injunction for failure to exhaust administrative remedies and on the ground that the petition for review "is not likely to succeed on the merits in that Petitioners have failed to state that conducting auctions is comparable to the practice of law." (8/7/14 Order in 287 M.D. 2014, R.R. at 770-771.)[5]

         On August 11, 2014, the hearing examiner held a hearing on the citations at which Bauer appeared on his own behalf and as attorney for ABT. At this hearing, Bauer and a Department of State professional conduct investigator testified. The parties also introduced documentary evidence, including a 2009 client agreement hiring Bauer to sell a consignment of toy trains by auction, April 2010 and May 2010 printouts from ABT's website,, and the stipulation of facts entered into by Bauer and the respondents in the Commonwealth Court action. The parties were given the opportunity to file post-hearing briefs and filed such briefs after the hearing. On December 18, 2014, the hearing examiner issued a 61-page proposed adjudication and order concluding that Bauer had engaged in the practice of auctioneering without a license in violation of Section 3(a) of the Act, concluding that ABT had operated as an auction company without a license in violation of Section 10(a) of the Act, and upholding both citations. Bauer and ABT filed exceptions to the hearing examiner's proposed adjudication and order. On September 15, 2015, the Board issued an order adopting the hearing examiner's proposed adjudication and upholding the citations. This appeal followed.[6]

         Bauer argues that the Act's license requirements cannot apply to him because he is an attorney, contending that the Act cannot constitutionally apply to attorneys and that auctions by attorneys fall within the Act's exemptions from license requirements.[7] We do not agree.

         The Pennsylvania Supreme Court has exclusive jurisdiction to regulate the conduct of attorneys in the practice of law in this Commonwealth. Pa. Const., art. V, § 10(c) ("The Supreme Court shall have the power to prescribe general rules . . . for admission to the bar and to practice law, and the administration of all courts and supervision of all officers of the Judicial Branch"); Commonwealth v. Stern, 701 A.2d 568, 570, 572-73 (Pa. 1997); Maunus v. State Ethics Commission, 544 A.2d 1324, 1325-26 (Pa. 1988). The fact that a statute regulates both lawyers and non-lawyers does not automatically make its application to lawyers constitutional. Shaulis v. Pennsylvania State Ethics Commission, 833 A.2d 123, 132-33 (Pa. 2003); Gmerek v. State Ethics Commission, 751 A.2d 1241, 1254 (Pa. Cmwlth. 2000) (en banc), aff'd by an equally divided court, 807 A.2d 812 (Pa. 2002). The application to attorneys of statutes governing conduct unrelated to the legal profession, however, does not constitute regulation of the practice of law and is not barred by the Supreme Court's exclusive jurisdiction over the practice of law. P.J.S. v. Pennsylvania State Ethics Commission, 723 A.2d 174, 178 (Pa. 1999); Gmerek, 751 A.2d at 1252-54. As the Supreme Court has made clear,

the jurisdiction of this court is not infringed when a regulation aimed at conduct is applied to all persons, and some of those persons happen to be attorneys.
To hold … that the mere status of "attorney" exempts one from meeting the necessary professional regulations which flow from whatever position one holds in addition to that of "attorney" is absurd.

P.J.S., 723 A.2d at 178.

         Whether a statute governing the actions of both lawyers and non-lawyers constitutes an unconstitutional regulation of the practice of law depends on whether it attempts to control the conduct of lawyers in rendering professional legal services to their clients. Gmerek, 751 A.2d at 1254. The types of services that have been held to constitute professional legal services are generally those involving legal advice to clients, preparation of documents for clients involving legal principles beyond the knowledge of ordinary laypersons, and the appearance on behalf of clients before tribunals whose actions could affect the clients' rights. Office of Disciplinary Counsel v. Marcone, 855 A.2d 654, 660 (Pa. 2004); Gmerek, 751 A.2d at 1255.

         Bauer's conduct here does not constitute the rendering of professional legal services. Bauer's services in conducting auctions consisted of selling toy trains at auction, not providing legal advice to his clients, preparing documents for his clients that required legal training, or appearing before any tribunal. Bauer's client contracts provided that the client hires Bauer "for the limited purpose of selling the Consignment, " which it defined as "certain toy train(s) and/or related item(s)" owned by the client, and provided that the "relationship arising from this Agreement is limited solely to the offer, sale and transfer of the Consignment and that the Attorney [Bauer] does not represent the Client, or provide the Client legal advise [sic], or legal service, in or on any other matter." (C.R. Item 34, Ex. C-7 ¶¶2, 4, 5 & D-3 ¶¶2, 4, 5, R.R. at 236, 255.) The auctioning of toy trains or other merchandise does not constitute the practice of law. While Bauer's auctions may involve specialized knowledge or skill concerning how to run an auction so as to obtain the highest or most favorable offer or concerning the valuation of the items being sold, that knowledge and skill is unrelated to legal training and competence in the practice of law. Requiring Bauer to obtain an auctioneering license therefore does not violate the Supreme Court's exclusive jurisdiction over the practice of law.

         Bauer argues that even if his auctions do not constitute legal services, the Rules of Professional Conduct adopted by the Supreme Court regulate the providing by lawyers of nonlegal services and that the Act conflicts with the confidentiality requirements of Rule 1.6 of the Rules of Professional Conduct and with other Rules of Professional Conduct. The flaw in these arguments is that the Rules of Professional Conduct apply to nonlegal services only where the attorney is also providing legal services to the client or the nonlegal services could reasonably be understood by the client to be legal services. Rule 5.7 provides that the Rules of Professional Conduct apply to nonlegal services "that might reasonably be performed in conjunction with and in substance are related to the provision of legal services" where there is potential for confusion because the nonlegal services "are not distinct from legal services provided to that recipient" or because the recipient could reasonably believe that he is receiving legal services. Pa. R.P.C. 5.7(a)-(c), (e). Here, Bauer's contracts demonstrate that he was conducting auctions for clients for whom he was providing no other services and the auctioning of toy trains is not an activity that would reasonably be understood as involving legal services unless it was provided in conjunction with other services that involved legal advice or the exercise of legal training.

         Bauer's claim that the Act by its terms does not apply to attorneys likewise fails. At the time of the events at issue here, Section 3(h)(3) of the Act provided that "[t]he requirement to obtain a license under this act does not apply to sales at auction in the following circumstances: … (3) To a sale conducted by or on behalf of a person appointed by judicial order or decree." Former 63 P.S. § 734.3(h)(3).[8] Contrary to Bauer's assertions, this does not exempt attorneys from the requirement of an auctioneering license. Rather, the clear intent of this exemption is to permit auctions by persons appointed by a court to conduct an auction or to sell the property being auctioned, not to authorize individuals to auction property without a license simply because they have been appointed by a court to some position or responsibility completely unconnected to any auction of any property. The fact that Bauer has been admitted by the Pennsylvania Supreme Court to practice law in Pennsylvania is not an appointment to sell or auction property; it is a determination by the Supreme Court that he may practice law. As explained above, auctioning toy trains is not the practice of law. Because Bauer did not show that he was appointed by a court to auction property or that he was appointed by a court to sell the toy trains that he auctioned in 2009 and 2010, the exemption for persons appointed by judicial order or decree does not apply here and cannot provide a defense to the citations.[9]

         Nor does the exemption in the Act for sales from a decedent's estate bar the citations against Bauer and ABT. At the time of the events at issue here, Section 3(h)(4) of the Act provided an exemption from licensure for "a sale conducted in the settlement of any decedent's estate." Former 63 P.S. § 734.3(h)(4).[10] While Bauer has represented decedents' estates and has sold toy trains for decedents' estates, he testified that estates constituted only approximately one-third of the clients for whom he has auctioned toy trains. (C.R. Item 34, H.T. at 46 & Ex. D-1 ¶2, R.R. at 180, 247.) Indeed, nothing in the 2009 client agreement indicated that a decedent's estate was involved or that the toy trains to be auctioned under that agreement were owned by an estate. (Id., Ex. C-7, R.R. at 236-246.) Because Bauer's testimony established that most of his sales did not fall within the ...

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