Showing posts with label broker. Show all posts
Showing posts with label broker. Show all posts

Wednesday, September 3, 2014

Ohio Supreme Court Reminder That Acts of Agents Do Not Always Impose Vicarious Liability

Last week, the Ohio Supreme Court reversed the lower court judgments imposing vicarious liability upon a real estate broker for the fraudulent actions of its real estate agent without requiring the plaintiff to prove that the agent was acting within the scope of her agency.  Auer v. Paliath, Slip Opinion No. 2014-Ohio-3632.  In Auer, the plaintiff alleged and the jury found the defendant agent and broker to be liable for fraudulently inducing the plaintiff to purchase five properties (for which the agent and broker received sales commissions) and hire the agent’s personal rehabilitation business to maintain them.  The properties were never maintained as promised and the plaintiff lost her $430K investment.   The lower courts concluded that the broker was vicariously liable as a matter of law because Revised Code § 4735.21 imposed liability as a matter of law since the agent could not sell the properties and collect funds without the broker’s consent.  In essence, the court of appeals’ decision holds that a broker is always liable as a matter of law for the tortious conduct of rogue agents whenever the broker receives a portion of the agent’s sales commission.”   The Court rejected this “bright-line rule” and held that “in order to impose vicarious liability, a jury first has to make a factual determination that the agent was acting within the scope of her agency when she committed the torts at issue.” 

Whether the agent’s actions were authorized by the broker is always a factual question to be resolved by a jury.   In this case, the agent’s fraud was arguably to further her rehabilitation business, not to further the business of the broker.  Accordingly, the trial court should have left it to a jury to decide whether the broker should also be held liable for the agent’s fraud.   

The dissent concluded that the omission of a few words from the jury instruction was harmless error.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.