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Judges reverse summary judgment for agent, partner

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A case involving a Bloomington real estate transaction required the Indiana Court of Appeals to decipher the statutes in question without the aid of previous interpretations because of a lack of previous caselaw interpreting them.

Sheree Demming sued real estate agent Cheryl Underwood and her business partner Kenneth Kinney for breach of fiduciary duty, constructive fraud, and vicarious liability, and she requested the imposition of a constructive trust ordering Underwood and Kinney to convey title of the properties at issue to Demming.

Demming renovated and leased or sold properties in Bloomington and had her eye on two properties near Indiana University’s campus. She had Underwood contact the property owners’ real estate agent many times over the course of several years to see if the owners would be interested in selling, and the two discussed strategies in order for Demming to get the properties. Underwood was to be paid when Demming purchased the properties. When Underwood learned the owner would entertain offers after the death of her husband, instead of informing Demming, Underwood and Kinney submitted an offer and purchased the properties.

The trial court granted summary judgment to Underwood and Kinney on all of the claims, concluding that there were no genuine issues of material fact and no agency relationship existed between Demming and Underwood.

But in Sheree Demming v. Cheryl Underwood and Kenneth Kinney, No. 53A01-1005-PL-252, the Court of Appeals judges found several genuine issues of material fact regarding whether Demming exercised sufficient control over Underwood’s activities to support the existence of an agency relationship and whether Underwood breached a common law fiduciary duty owed to Demming.

On the matter of whether Underwood breached a fiduciary duty owed to Demming under Indiana’s real estate agency statutes, Judge Paul Mathias pointed out that the applicable statutes in Indiana Code Chapter 25-34.1-10 (referred to as the agency chapter) are nearly opaque and there is a dearth of caselaw interpreting them.

The definitions of “customer” and “client” highlight “the perplexities inherent in the Agency Chapter. Section 25-34.1-10-9.5(a)(2) provides that a real estate licensee has an agency relationship with and is representing the person with whom the licensee is working unless the licensee is assisting that person as a customer without compensation. But a customer is someone who is not a client, and client is defined as someone who has entered into an agency relationship with a licensee. Thus, under section 25-34.1-10-9.5(a)(2), a person with whom a licensee is working is a client unless he or she is not a client and is not paying for the licensee’s services,” he wrote.

The trial court concluded Demming was merely a customer, relying on the definition of real estate transaction under Section 25-34.1-10-8, to rule that a “cold call” to find out if a property not on the market could be purchased was not “the sale or lease of any legal or equitable interest in real estate” and was not a “real estate transaction.”

The judges held the fact that the properties weren’t listed for sale at the time Underwood contacted the other real estate agent doesn’t necessarily preclude the conclusion that Underwood was Demming’s agent under the agency chapter. They also held that Underwood breached the fiduciary duties owed to Demming under statute.

The judges ruled that genuine issues of material fact preclude summary judgment on the breach of fiduciary duty and constructive fraud claims and that summary judgment was an “inappropriate vehicle for the trial court to dispose of Demming’s request for the imposition of a constructive trust.” They also reversed summary judgment in favor of Kinney on the claim of vicarious liability and remanded for further proceedings.
 

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  1. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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