may not be cited except as provided by
Minn. Stat.§ 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Peter C. Remes,
Burnet Realty, Inc., et al.,
Filed March 4, 1997
Affirmed in part, Reversed in part, and Remanded
Hennepin County District Court
File No. 9514888
Richard A. Lind, William L. Davidson, Tamara J. Byram, Lind, Jensen & Sullivan, 150 South Fifth Street, Suite 1700, Minneapolis, MN 55402 (for Appellants)
Considered and decided by Norton, Presiding Judge, Toussaint, Chief Judge, and Kalitowski, Judge.
Appellants Burnet Realty, Inc. (Burnet) and Bruce Fagan challenge the district court's grant of summary judgment in favor of respondent Peter Remes. Appellants argue: (1) the district court erred in finding they materially breached their fiduciary duty to Remes; and (2) the damages the court awarded are speculative, improper, and incorrect. We affirm as to the breach of fiduciary duty, but reverse and remand for a trial on damages.
Upon the execution of a listing agreement, a broker becomes the agent of the seller and is subject to the general rules governing the principal-agent relationship. The broker owes the utmost good faith and loyalty to his principal. It is the broker's duty to communicate to the seller "all facts of which he has knowledge which might affect the principal's rights or interests."
Id. at 564 (citations omitted).
Appellants concede that Fagan, as Remes's selling agent, had a fiduciary relationship with Remes and owed him the duty of utmost good faith and loyalty. Appellants argue, however, that this duty does not include the obligation to inform a seller of oral offers. Appellants contend that no "Minnesota rule, statute, or case requires brokers or agents to submit an oral offer to a seller." The district court rejected this argument, stating:
The agent's duty to disclose material information to his principal is not dependent on the form in which the agent receives that information; the duty arises once the agent has knowledge of facts which affect the principal's rights or interests. Once the agent has received information which affects or could affect the rights or interests of his principal, there is an incumbent duty to disclose that information to the principal regardless of how it was communicated to the agent.
In Holmes v. Cathcart, 88 Minn. 213, 92 N.W. 956 (1903), the supreme court discussed the duty of an agent when acting for a seller. According to the court,
[h]e is bound to the exercise of the most perfect good faith, and to keep his principal informed of facts coming to his knowledge affecting his rights and interests. If, after receiving instructions to sell property on certain specified terms, the agent learns that other and more advantageous terms can be obtained, it is his plain duty, and he is under every legal and moral obligation, to communicate the facts to the principal, that he may act advisedly in the premises.
Id. at 216, 92 N.W. at 957.
The supreme court again discussed the obligations of a real estate agent in Olson v. Penkert, 252 Minn. 334, 90 N.W.2d 193 (1958), stating:
A broker is always bound to make a full and fair disclosure to his principal of all facts within his knowledge affecting the rights or interests of the principal in the sale. The agent must deal fairly with his principal to the extent that he must lay bare the truth, without ambiguity or reservation in all its stark significance.
Id. at 342, 90 N.W.2d at 200.
Finally, in White, the agent failed to disclose the financial situation of a prospective purchaser. The supreme court noted that it appeared to be "standard practice within the real estate profession to treat the buyer's finances as relatively unimportant in the case of a contract for deed sale." White, 322 N.W.2d at 565. As such, the agent argued, it had "no duty to disclose to the [sellers] the financial information provided by the [buyers]." Id. The supreme court rejected this argument, stating:
It would seem, however, that [the agent] ignores the scope of a realtor's duty to his principal. The agent is bound to disclose to the seller all facts of which he has knowledge which might reasonably affect the principal's rights and interests. What might be "the best thing" for the seller must ultimately be the seller's decision, not the agent's.
Id. at 565-66.
Here, it is undisputed that Fagan knew Colter was willing to "meet or beat any offer" before Remes signed the Schilling purchase agreement, and Fagan did not convey this information to Remes. Because Colter was one of only two bidders interested in the property, his willingness to "meet or beat any offer" would likely increase the price Remes could receive for his property. Thus, this information "might reasonably affect the principal's rights and interests." Further, contrary to appellants' argument, because Fagan's failure to convey information denied Remes the opportunity to even consider a potentially more lucrative offer, the information was material.
Finally, the district court granted summary judgment in favor of Remes only on the breach of fiduciary duty claim and not on the negligence claim. Therefore, appellants' reliance on Wartnick regarding the need for expert testimony is misplaced. See Wartnick, 490 N.W.2d at 116 (in a professional malpractice action, generally, expert testimony is required to establish the standard of care and whether the standard was breached, "unless the conduct can be evaluated by a jury in the absence of expert testimony").
We conclude the district court did not err in granting summary judgment in favor of Remes as to liability because Fagan's failure to inform Remes of a prospective purchaser's willingness to "meet or beat any offer" constituted a breach of fiduciary duty as a matter of law.
We agree that it was inappropriate for the district court to determine and award damages in a summary judgment. We therefore reverse and remand for a trial on damages.
Affirmed in part, reversed in part, and remanded.