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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. From his recent appearance on WRTV to this story here, Frank is everywhere. Couldn't happen to a nicer guy, although he should stop using Eric Schnauffer for his 7th Circuit briefs. They're not THAT hard.

  2. They learn our language prior to coming here. My grandparents who came over on the boat, had to learn English and become familiarize with Americas customs and culture. They are in our land now, speak ENGLISH!!

  3. @ Rebecca D Fell, I am very sorry for your loss. I think it gives the family solace and a bit of closure to go to a road side memorial. Those that oppose them probably did not experience the loss of a child or a loved one.

  4. If it were your child that died maybe you'd be more understanding. Most of us don't have graves to visit. My son was killed on a state road and I will be putting up a memorial where he died. It gives us a sense of peace to be at the location he took his last breath. Some people should be more understanding of that.

  5. Can we please take notice of the connection between the declining state of families across the United States and the RISE OF CPS INVOLVEMENT??? They call themselves "advocates" for "children's rights", however, statistics show those children whom are taken from, even NEGLIGENT homes are LESS likely to become successful, independent adults!!! Not to mention the undeniable lack of respect and lack of responsibility of the children being raised today vs the way we were raised 20 years ago, when families still existed. I was born in 1981 and I didn't even ever hear the term "CPS", in fact, I didn't even know they existed until about ten years ago... Now our children have disagreements between friends and they actually THREATEN EACH OTHER WITH, "I'll call CPS" or "I'll have [my parent] (usually singular) call CPS"!!!! And the truth is, no parent is perfect and we all have flaws and make mistakes, but it is RIGHTFULLY OURS - BY THE CONSTITUTION OF THIS GREAT NATION - to be imperfect. Let's take a good look at what kind of parenting those that are stealing our children are doing, what kind of adults are they producing? WHAT ACTUALLY HAPPENS TO THE CHILDREN THAT HAVE BEEN RIPPED FROM THEIR FAMILY AND THAT CHILD'S SUCCESS - or otherwise - AS AN ADULT.....

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