By Amanda Fung

Published: November 18, 2009 - 2:11 pm

The Corcoran Group, one of the city's largest residential brokerages, is seeking to reverse a landmark ruling which declared that Corcoran stole a terminated broker's electronic client list. The decision is seen as important because it states that brokers' clients lists-on paper as well as those stored on a computer-are property of the broker not the brokerage.

The New York state Supreme Court Appellate Division heard oral arguments for the case Tuesday afternoon and a decision is expected before the end of the year. Three years ago, the state Supreme Court charged Corcoran and one of its executive vice presidents, Tresa Hall, with "deliberately and maliciously stealing computerized valuable client lists of Sarit Shmueli upon her termination," according to court filings. The jury awarded Sarit Shmueli, who sued the brokerage for stealing her client list, $1.2 million in punitive damages and $400,000 in compensatory damages. Corcoran immediately appealed the ruling.

"I don't believe based on yesterday's hearing that the Appellate Division will give Corcoran the license to steal again," said Ms. Shmueli, who is representing herself in the case. She predicts that if the court did rule against her that it would mean that "agents would have to turn over their livelihood-client lists-to corporations."

Corcoran said it does not comment on pending litigation and the brokerage's legal representative Lawrence Eagel, a partner at Bragar Wexler Eagel & Squir, did not return calls for comment.

In 2002, Ms. Shmueli, formerly one of Corcoran's Top 10 brokers citywide, was fired from Corcoran for cursing in the office, according to court filings. When she returned to her desk she found she no longer had access to a list of 1,400 clients stored in a computer, information she amassed during 14 years as a broker.

"Ms. Shmueli's personal code to her computer was changed upon her termination. Corcoran denied her access to her client lists," wrote Justice Herman Cahn, in the original court ruling. "The client lists is the property of the agents, not the company."

"The ruling was important because it is not limited to broker relationships with their firms," said Lee Nolan Jacobs of the law firm of Abrams Fensterman Fensterman Eisman Greenberg Formato & Einiger, who authored an article in The Journal of Law and Policy on the case. In addition, the ruling determined that intangible property, such as electronic files, can physically be stolen, according to legal experts.

"Corcoran's conduct was indefensible and intentionally meant to harm her," said Barry Viuker, a partner at Morris Duffy Alonso & Faley who represented Ms. Shmueli in the lawsuit but is not involved in the appeal. "The jury verdict should be affirmed."

Ms. Shmueli said if the appellate court rules in favor of Corcoran she will appeal the decision.

Separately, earlier this week Manhattan Supreme Court Judge Charles Ramos ruled that Corcoran "willfully" misled a Brooklyn couple into buying a defective, water-leaking "lemon" apartment in Park Slope and then failed to disclose potentially damaging e-mail evidence. Allegedly, the e-mails were also improperly stored.

This case was also seen as a landmark case. Corcoran was fined a minimum of $35,000 in legal fees that the plaintiff accumulated in the discovery process of the case.

"It establishes for the first time that in New York state, parties in a lawsuit must preserve and protect electronic documents just as if they were on paper," said Jay Itkowitz of Itkowitz and Harwood, the attorney representing the purchasers.

"We completely disagree with the discovery ruling and intend to file an appeal," said a Corcoran spokeswoman. "This case is still in the discovery phase and no decision has yet been made on the merits of the case."