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SETTLEMENT WITH BROKER OF FRAUDULENT REAL ESTATE AGENT

2/15/2019   Harrisburg, PA.   This week we completed a non-jury trial against a real estate brokerage company.  We alleged the company negligently failed to supervise one of its agents.  This was a type of Real Estate Broker malpractice. The agent had operated a real estate investment Ponzi type scam targeting first generation Vietnamese Americans.

Our client, her husband , her daughters in trial preparation with attorney Bobbie Kalia from this office

The real estate salesperson and two associates ran their real estate business out of an unlicensed office in Harrisburg, Dauphin County.  The brokerage company was across the river in Cumberland County.  The broker claimed she had no knowledge of the illicit activities. 

We showed that although the broker had received complaints, and was aware of pending litigation against her agent. despite this, she took no steps to investigate or provide additional levels of supervision. 

In the 2017 trial against the salesperson it was established that our client’s funds were used to purchase a Harrisburg home. During that 2107 trial, the brokerage company nevertheless arranged a sale of that home and allowed the money to be divided between the rogue agent and her mother. 

Following trial we reached a settlement with the broker’s insurance company which required the company to pay the policy limits of $1 Million.   This addressed a question in the press about whether or not a broker would be liable for failing to supervise a fraudulent activity.

In the previous trial, we had obtained a verdict for $813,950 in compensatory damages for our client, $500,000 in punitive damages and about $500,000 in pre-judgment interest.

Our justice system is the greatest in the world.  An immigrant (and proud US citizen) with a 5th grade education and almost no English abilities was able to take on a prominent brokerage company and win in a case involving more than 24 transactions and tens of thousands of potential exhibits.

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SPECIFIC PERFORMANCE APPEAL

2/15/2019   We just received an opinion from the Superior Court reversing a decision of the Court of Common Pleas of Chester County in a case claiming specific performance against a defaulting buyer. 

The case involved clients who agreed to sell their home to a developer.  The developer wanted only an easement so she could put in a road and develop her property in the rear.  Our clients did not want to sell an easement and find themselves next to a road.  The contract was prepared and signed giving the property owners the right to force the developer to buy the property if she defaulted. When the developer the Common Pleas Court refused to grant specific performance, rather saying the homeowners could keep the down payment (which was less than the developer offered for an easement!).   The Superior Court reversed, saying it was an error for the Common Pleas Court to not award the entire purchase price as damages. This case is important because it clarifies the sometimes confusing damage paragraph of the standard PA Association of Relators® Agreement of Sale. 

See full decision here

That clause allows a seller, who has not allowed the buyer to limit damages by checking a box in the form, to apply the deposit against the purchase price and sue the defaulting buyer for the full price of the home.  This clause previously caused great confusion because may believe prior appellate authority made specific performance (forcing the buyer to actually buy) difficult if not impossible to achieve. This changes the focus to damages and allows the seller to force the buyer to pay damages in the full amount of the purchase price. This is a thin distinction from specific performance, but a meaningful distinction.