Doyle v. Maruszczak: Breach of Fiduciary Duty Ruling against Salesperson Reversed
A Florida court has considered whether a lower court properly determined that a real estate salesperson breached his fiduciary duty to his clients when he purchased property that his clients claimed they had informed the salesperson they were also interested in purchasing.
Michael and Lois Maruszczak ("Buyers") hired licensed real estate salesperson Richard Doyle ("Salesperson") to help them locate a desirable property for purchase. The Buyers signed a "transaction broker agreement" ("Agreement") with the Salesperson. The Agreement stated that the Salesperson had a duty to deal "honestly and fairly" with the Buyers. The Salesperson and the Buyers looked at a number of lots for purchase. The Buyers claim that they instructed the Salesperson to negotiate the best price and terms that he could for a particular lot referred to as "Lot 11" ("Lot").
When the listing for the Lot expired, the Salesperson bought the Lot from the owner, Mary Ann Marchant ("Owner"). The Buyers brought a lawsuit against the Salesperson, claiming that he breached his fiduciary duty to them. The trial court entered judgment in favor of the Buyers, and the Salesperson appealed.
The District Court of Appeal of Florida, Fifth District, reversed the trial court and sent the case back to the lower court for further proceedings. The court first considered the evidence before the trial court. To counter the testimony of the Buyers, the Salesperson had submitted an affidavit to the trial court stating that the Buyers "had never told him that they wanted to purchase the [Lot], [the Buyers] never made an offer on any property that he showed to them, and [the Buyers] did not want to make a commitment on any property." He also submitted an affidavit by the Owner, who stated that she would not have sold the Lot to the Buyers even if they had made an offer. The trial court found that the Salesperson never denied that the Buyers had discussed the Lot with him and this fact was sufficient to create a fiduciary relationship between the Buyers and the Salesperson with regard to the Lot. Based on this, the trial court had ruled that the Salesperson had breached his fiduciary duty to the Buyers by purchasing the Lot without giving the Buyers a chance to purchase the Lot first.
Looking at the evidence, the court determined that the trial court had correctly found that a fiduciary relationship existed between the Buyers and the Salesperson, based on the agency relationship which existed between the parties as set forth in the Agreement. Reviewing the relevant law, the court found that when agents purchase property for their own accounts while acting on behalf of their principal, the rule is that all profits and benefits obtained by the agents are held by the agents as trustees in constructive trusts for the benefit of their principals. However, the court ruled that the trial court had improperly entered judgment in this case because there were unresolved fact disputes. The court found that while the Owner's affidavit was implausible (that she wouldn't have sold the Lot to the Buyers under any circumstances), it did create an issue of fact because if a jury believed her testimony, there would be no damages for the Buyers. The court also ruled that a jury needed to weigh the testimony of the Salesperson that the Buyers never told him they wanted to purchase the Lot. Thus, the case was sent back to the trial court for a jury to resolve the disputed fact issues.
One judge dissented from the opinion, finding that because the Agreement between the Salesperson and the Buyers had not expired at the time the Salesperson purchased the Lot, he had breached his fiduciary duty to the Buyers.
Doyle v. Maruszczak, 834 So. 2d 307 (Fla. Dist. Ct. App. 2003).