Florida appellate court finds that fact issues remained as to whether the broker ratified the salesperson’s conduct and made the brokerage vicariously liable for his actions.
A 93-year old woman (“Client”) retained a real estate salesperson (“Salesperson”) to help her renovate and then sell a condominium. While the Salesperson was compensated the separately for the renovation work, the Client entered into a listing agreement with the Salesperson’s brokerage firm (“Brokerage”) and so the Brokerage received a commission upon the sale of the unit.
Next, the Salesperson allegedly convinced the Client to purchase three additional units: one for the Client’s personal use; one for renovation and resale; and one for the Salesperson’s personal use that was placed into a trust created by the Salesperson. The Brokerage collected commissions from all the transactions, and the managing broker (“Broker”) acted as a salesperson in the transaction for the Salesperson’s unit.
The Client filed a lawsuit alleging that the Salesperson took advantage of her and used her money for his own expenses, including purchasing a condominium for himself. The Client also alleged that the Brokerage was vicariously liable for the Salesperson’s conduct because it facilitated the Salesperson’s actions and collected commissions from the transaction. The trial court ruled in favor of the Brokerage, finding the firm was not vicariously liable for the Salesperson’s conduct. The Client appealed.
The District Court of Appeals of Florida, Fourth District, reversed the trial court and sent the case back to the trial court for further proceedings. A principal can be vicariously liable for the actions of its agents when the agent is working within the scope of its authority or working to further a purpose of the principal; additionally, a principal can be vicariously liable the acts of an agent acting outside the scope of the agent’s authority if the principal subsequently ratifies the agent’s actions.
The court ruled that there were fact issues about whether the Brokerage could be vicariously liable for the conduct of the Salesperson and so the case was sent back to the trial court for further proceedings. The Client argued that by accepting commissions from the transactions, the Brokerage had ratified the Salesperson’s conduct.
An earlier Florida case had found that a brokerage’s receipt of a commission potentially made it liable for its salesperson’s conduct in a real estate transaction if the salesperson committed fraud, even though the transaction had involved the salesperson’s separate business. Here, the Brokerage received commissions from multiple transactions involving the Salesperson and the Client. Additionally, there were allegations that the Broker was aware of the Salesperson’s potential wrongful conduct, such as the fact that the Salesperson used the Client’s funds to purchase a condominium for himself. Because of these fact issues, the court reversed the judgment in favor of the Brokerage and sent the case back to the trial court for further proceedings.
Trevarthen v. Wilson, 219 So. 3d 69 (Fla. Dist. Ct. App. 2017).