Rivkin v. Century 21 Teran Realty, LLC, et al., No. 05-6566 (2d Cir. 2007)
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The court issued a subsequent related opinion or order on July 23, 2008.
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05-6566-cv Rivkin v. Century 21 Teran Realty, LLC, et al. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT -------------------August Term 2006 Argued: March 27, 2007 Decided: July 12, 2007 Docket No. 05-6566-cv ----------------------------------------------X OLEG RIVKIN, Plaintiff-Appellant, - against CENTURY 21 TERAN REALTY LLC, ANDREW PECK, CHLOE DRESSER and JOSHUA LUBORSKY, Defendants-Appellees, SUSAN MARTIN and ROBERT MARTIN, Defendants. ----------------------------------------------X Before: FEINBERG, SOTOMAYOR, and KATZMANN, Circuit Judges. Plaintiff-Appellant Oleg Rivkin appeals from an oral decision and order of the United States District Court for the Northern District of New York (Sharpe, J.) granting DefendantsAppellees motion for summary judgment and dismissing all claims. Rivkin s claims implicate a question regarding the nature of the fiduciary duty owed by a buyer s real estate agent to a principal, which is a significant issue of New York law for which there is no direct precedent. -1- 1 2 3 4 5 6 7 8 9 10 11 Question certified to the New York Court of Appeals. ROBERT J. TOLCHIN, New York, NY, for PlaintiffAppellant. STEPHEN H. VOLKHEIMER, Hiscock & Barclay, LLP, Albany, NY, for Defendants-Appellees. FEINBERG, Circuit Judge: 12 Plaintiff-Appellant Oleg Rivkin appeals from an oral 13 decision and order of the United States District Court for the 14 Northern District of New York (Sharpe, J.) granting Defendants- 15 Appellees motion for summary judgment and dismissing Rivkin s 16 complaint. 17 law regarding the nature of the fiduciary duty a real estate 18 buyer s agent owes to the buyer (sometimes referred to 19 hereafter as the principal ). 20 we certify to the New York Court of Appeals the following 21 question: Did any or all of Defendants-Appellees breach a 22 fiduciary duty to Plaintiff-Appellant Rivkin by failing to 23 disclose, in any form, Defendants-Appellees representation of 24 a competing buyer for the property Rivkin sought to buy? 25 This case raises a significant issue of New York For the reasons stated below, I. BACKGROUND 26 A. Factual and Procedural History 27 The facts, recited below, are mostly undisputed. 28 Plaintiff Rivkin, who is a resident and citizen of New Jersey, 29 contacted Defendant Century 21 Teran Realty LLC ( Teran ) on -2- 1 May 25, 2004, regarding his interest in purchasing a particular 2 lake-front property in Ulster County, New York.1 3 real estate brokerage firm in Woodstock, New York that is co- 4 owned by Defendants Andrew Peck and Chloe Dresser, who are both 5 real estate brokers licensed by the State of New York. 6 was referred to Defendant Luborsky, a real estate associate 7 broker at Teran licensed by the State of New York. 8 suggested to Rivkin a different property (hereafter the 9 Property ), which was listed at $100,000 and seemed to satisfy Teran is a Rivkin Luborksy 10 all of Rivkin s requirements.2 11 Rivkin that he and Teran would like to act as Rivkin s buyer s 12 agent. 13 At that time, Luborsky told The same day, and before Rivkin had seen the Property, 14 Rivkin told Luborsky to offer $75,000 for the Property, sight 15 unseen. 16 and that he understood that lower offers had been made on the 17 Property and rejected. Luborsky said he thought this was a fair opening offer Luborsky communicated the offer to the 1 There is some dispute, which we need not resolve, regarding whether Rivkin contacted Teran on May 24 or 25. 2 Susanne Martin and Robert Martin eventually purchased the Property. They were dismissed as defendants from the case by stipulation of all parties, and are not parties to the appeal. They had contacted Dresser, another associate broker at Teran, and had expressed an interest in the Property five days earlier, on May 20, 2004. -3- 1 sellers agent, Deborah Mills.3 2 Rivkin visited the Property in person for the first time, and 3 at that point signed a written binder, or offer to purchase 4 the Property, for $75,000.4 Several days later, on May 28, 5 During the visit to the Property on May 28, Luborsky 6 presented to Rivkin a Disclosure Regarding Real Estate Agency 7 Relationship, which stated, among other things, that a buyer s 8 agent acts solely on behalf of the buyer and has a fiduciary 9 duty of undivided loyalty ... [and] full disclosure to the 10 buyer. At Luborsky s request, Rivkin signed an acknowledgment 11 that he had received the disclosure form; Luborsky5 also signed 12 the acknowledgment.6 13 During the same conversation on May 28, Rivkin told 14 Luborsky that he was willing to raise his offer to the asking 3 The sellers agent was associated with Century 21 Cherrytown Associates, presumably a franchise of Century 21. Teran is also a franchise of Century 21. However, neither party has made any allegation on the basis of this commonality. 4 Memorial Day that year fell on Monday, May 31. 5 On this form Luborksy was listed as the real estate licensee of the firm Teran. 6 The parties agree that Luborsky did not give Rivkin a Buyer Agency Agreement, which is referred to on Teran s website. However, neither party appears to ascribe any importance to Teran s failure to give Rivkin this form. Rivkin does, however, rely upon the form to bolster his argument regarding the fiduciary duty a buyer s agent owes. -4- 1 price of $100,000. 2 counter-offer from the sellers.7 3 Luborsky advised Rivkin to wait for a The Martins bid $100,000 for the Property on May 30, two 4 days after Rivkin made his $75,000 bid. 5 time to Rivkin and Luborksy, the Martins bid, which was 6 ultimately successful, was submitted on their behalf by 7 Dresser, another Teran agent. 8 9 Unbeknownst at that Rivkin contacted Luborsky on May 30 and May 31 to inquire about the status of his offer. Both times, Luborksy responded 10 that he had not heard anything from the sellers agent and 11 urged Rivkin to wait until after the Memorial Day weekend. 12 When Rivkin contacted Luborsky again on June 1, Luborksy told 13 him he had learned from the sellers agent that there had been 14 other offers on the Property over the weekend. 15 reiterated that he wanted the opportunity to raise his offer 16 and that he was prepared to do so. 17 to find out from the sellers agent whether the sellers were 18 going to make a counter-offer or whether they wanted to receive 19 best and final offers from all bidders. 20 21 Rivkin Luborsky said he would try Later that day (June 1), Luborsky called Rivkin and said that the sellers had accepted another offer and Rivkin was out 7 According to Luborksy, he contacted the sellers broker on May 29 to confirm that the offer had been received. The broker stated that the sellers were traveling over the weekend so it would be difficult to reach them that weekend. The broker also said that the property might be shown over the weekend. -5- 1 of the running for the Property. 2 contact the sellers, presumably in hopes of convincing them to 3 at least hear what Rivkin s best offer was. 4 called Luborsky, who said that he was unable to get any 5 information from sellers agent and that the sellers were 6 apparently not entertaining any more offers. 7 Rivkin asked Luborsky to On June 2, Rivkin The same day (June 2), Rivkin himself contacted the 8 sellers agent, who said the sellers had orally accepted a full 9 price offer on the Property. According to the amended 10 complaint, she further stated: I don t know if I should be 11 telling you this, but I think you should know that the full- 12 price offer came from your own broker s office. 13 asked Luborksy about this, Luborsky confirmed that the full 14 price offer came from Teran. 15 sellers directly and asked her if she was aware of Rivkin s 16 offer. 17 that it was too low, and that Rivkin should deal with her 18 broker and should not call her again. 19 the other seller. 20 When Rivkin Rivkin then called one of the The seller responded that she was aware of the offer, Rivkin then also called Shortly thereafter, Rivkin told Luborsky to offer 21 $101,000, contingent only on a water well inspection. 22 According to Luborksy, he advised Rivkin that under the 23 circumstances he should consider raising his offer to $105,000 24 or $110,000. After contacting the seller with Rivkin s offer -6- 1 of $101,000 on June 2, Luborsky told Rivkin that the sellers 2 were not entertaining his offer and that the full price offer 3 had no conditions attached. 4 Luborsky to offer $105,000 with no contingencies. 5 June 2, Rivkin again called one of the sellers to personally 6 relay his $105,000 offer. 7 he would consider his offer. 8 9 On the same day, Rivkin instructed Still on The seller indicated to Rivkin that At this stage, according to their respective testimony, Dresser did not know Luborsky s client was bidding on the 10 Property,8 and Peck did not know that two agents associated 11 with Teran were bidding on the same property. 12 On June 3, Rivkin contacted the sellers broker regarding 13 his offer; he also sent a follow-up letter confirming the 14 substance of the conversation. 15 relationship with Luborsky and Teran. 16 That day, Rivkin terminated his Between June 6 and June 11 there was some suggestion that 17 the Martins offer might not go through. 18 the Martins signed a written contract for the purchase of the 19 Property and they closed on the Property on August 18. 20 21 However, on June 11 Luborsky never spoke with Dresser regarding the Property before it was sold. However, Teran had no system to check if 8 According to the testimony of Dresser (the competing buyer s agent), she learned for the first time on June 4 that Luborsky s client was one of the other parties interested in the Property. -7- 1 its agents were representing multiple buyers bidding on the 2 same property. 3 Following the Martins purchase of the property, Rivkin 4 filed this suit, in which he bases subject matter jurisdiction 5 on diversity of citizenship, 28 U.S.C. § 1332(a)(1), and 6 advances 10 claims. 7 the first, against all Defendants-Appellants, for breach of 8 fiduciary duty.9 9 parties filed summary judgment motions. For our purposes, the most pertinent is After the completion of discovery, the Rivkin moved for 10 partial summary judgment on the issue of liability, seeking a 11 holding that Teran had breached its duties to him. 12 Defendants sought to dismiss Rivkin s entire case. 13 The The district court granted Defendants motion, entered 14 judgment in Defendants favor and dismissed the case. 15 judge framed the issue as whether or not ... [there should be] 16 a per se rule that under circumstances like this, two employees 17 of the same agency cannot, absent full disclosure, represent 18 competing buyers for a piece of property. 9 The The judge noted The 10 claims are: (1) breach of fiduciary duty; (2) fraud and fraudulent concealment; (3) fraud under § 349 of New York General Business Law; (4) aiding and abetting fraud; (5) unjust enrichment; (6) under the faithless agent doctrine; (7) tortious interference with prospective economic advantage and pre-contractual relations; (8) breach of contract; (9) injunction; and (10) constructive trust. The first seven claims are against all Defendants-Appellees; the eighth is against Teran only. All damages alleged stem from Rivkin s loss of the Property. -8- 1 there was no New York case holding that facts similar to those 2 here amounted to a violation of law. 3 hold that on these facts ... there is any per se rule that 4 would preclude representation by two employees of the same 5 agency. 6 [was] probably unnecessary for [the court] to even reach that 7 issue, because on the facts, as everybody concedes them, there 8 simply is no basis whatsoever to associate the harm in the 9 representation from Luborsky to the harm to the plaintiff from 10 The court decline[d] to He further stated that [i]t is also true ... that it losing the [P]roperty. 11 Rivkin then filed this timely appeal. 12 B. 13 The use of a real estate agent exclusively by a potential Buyer s Agents 14 buyer of property -- rather than by (1) a seller or (2) a 15 seller and buyer together -- is apparently a somewhat new 16 phenomenon in the real estate industry in New York. 17 example, Defendant Peck advertised in an article posted on 18 Teran s website that Teran was the first firm in Ulster County 19 to begin, in 2001, to work with buyers only as their agents, 20 never as subagents for sellers." 21 Agent Agreement?", http://www.teranrealty.com/advice.htm (last 22 visited on July 5, 2007). 23 use of buyer s agents in residential real estate apparently 24 began in the mid-1980's. For See "Why Consider a Buyer's Nationwide, the trend towards the See Ronald Benton Brown, Joseph M. -9- 1 Grohman, Manuel R. Valcarcel, Real Estate Brokerage: Recent 2 Changes in Relationships and a Proposed Cure, 29 Creighton L. 3 Rev. 25, 42 & 67 (1995). 4 which includes provisions for buyer s agents, was passed in 5 1991 and took effect in 1992. 6 Black, Proposed Alternatives to Traditional Real Property 7 Agency: Restructuring the Brokerage Relationship, 22 Real Est. 8 L.J. 201, 209 (1994); N.Y. Real Prop. Law § 443 (McKinney s 9 2004). 10 New York s agency disclosure law, See id. at 67; see also Roy T. In contrast to the more commonly-used seller s agent, a 11 buyer s agent represents individuals who are interested in 12 purchasing property. 13 finds property that a purchaser may be interested in, advises 14 the purchaser regarding price, and negotiates on behalf of the 15 purchaser. 16 requirements for buyer s agents. 17 agent is required to give the buyer a disclosure form, which 18 states in part that a buyer s agent has, without limitation, 19 the following fiduciary duties to the buyer: reasonable care, 20 undivided loyalty, confidentiality, full disclosure, obedience 21 and duty to account. 10 22 2004). 10 Among other services, a buyer s agent New York s Real Property Law dictates various In particular, a buyer s N.Y. Real Prop. Law § 443 (McKinney s As noted above, Luborsky gave Rivkin this form on May 25. -10- 1 II. DISCUSSION 2 A. Standard of Review 3 We review the determination of a district court on a 4 motion for summary judgment de novo. See Cellular Tel. Co. v. 5 Town of Oyster Bay, 166 F.3d 490, 492 (2d Cir. 1999). 6 judgment will be granted if the moving party shows that there 7 is no genuine issue of material fact and that the moving party 8 is entitled to that judgment as a matter of law. See Celotex 9 Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Fed. R. Summary 10 Civ. P. 56(c). This Court must view the evidence in the light 11 most favorable to Rivkin, and draw all reasonable inferences in 12 his favor, because he is the party opposing the summary 13 judgment motion granted below. 14 Inc., 369 U.S. 654, 655 (1962); see also Hemphill v. Schott, 15 141 F.3d 412, 415 (2d Cir. 1998). See United States v. Diebold, 16 However, it is well-established that the controlling 17 interpretation of state laws should normally be given by state 18 rather than federal courts. 19 Admin. Ret. Plan, 263 F.3d 196, 203 (2d Cir. 2001). Yoon v. Fordham Univ. Faculty & 20 B. The Parties Central Arguments 21 On appeal, Rivkin argues that a real estate broker is a 22 fiduciary with a duty of loyalty and full disclosure to the 23 principal. 24 broker s interests or loyalties are divided due to ... Quoting New York law, Rivkin contends that if a -11- 1 representation of multiple parties, the broker must disclose to 2 the principal ... the material facts illuminating the broker s 3 divided loyalties. 4 (2001). 5 Dubbs v. Stribling, 96 N.Y.2d 337, 340 Rivkin further argues that Defendants-Appellees breached 6 this duty by representing both Rivkin and the Martins on the 7 same property without disclosing, in some form, this dual 8 representation. 9 testified in his deposition that if Teran represented competing Rivkin notes that even Teran co-owner Peck 10 buyers who were given confidential information regarding the 11 other s past and future bids, Teran would be unable to fulfill 12 that portion of [its] function as a buyer s agent which 13 involves discussion of what a fair price for the property would 14 be. 15 very people you hired to work for you should not be the ones 16 who are working against you. 17 As summarized at oral argument, Rivkin contends that the Although Rivkin does not discuss the exact contours of the 18 fiduciary duty owed, nor the scope and timing of any requisite 19 disclosure, he argues that like a law firm, a real estate firm 20 should at least be required to have a conflict checking 21 system, and if the brokerage firm represents more than one 22 principal bidding on a single property, the firm must disclose 23 this completely to the principals. 24 there is no New York case law regarding buyer s agents, but he -12- Rivkin acknowledges that 1 thinks the case can be decided under the well-established real 2 estate agency rule that a broker must not represent any 3 interests adverse to those of his or her principal in 4 transactions [that] involve the subject matter of the agency 5 relationship, without the principal s full knowledge and 6 consent, nor may the broker act as agent for both parties in a 7 transaction without the full and free consent of both parties, 8 12 C.J.S. Brokers § 124 (2007). 9 Rivkin insists, moreover, that his agency relationship was 10 with Luborsky and Teran. He points out, for example, that 11 Teran repeatedly referred to Rivkin as a client of the firm, 12 that Defendants-Appellees admitted in their Answer that 13 Luborsky is employed by Teran, and that Luborsky admitted 14 that he told Rivkin that he and his company, Teran would like 15 to act as Rivkin s buyer s agent. 16 duty to know of and disclose any conflicts of interest between 17 its brokers. Teran, Rivkin argues, had a 18 Furthermore, Rivkin argues, the breach caused him harm 19 because had he been told the full story he would have been able 20 to protect his own position.11 He would have known that he 11 Defendants-Appellees argue that Rivkin has not preserved the issue of causation for appeal because he did not address this aspect of the district court s holding in his opening brief. We note that Rivkin did address causation, if not explicitly by name, by advancing the argument noted above about how he would have acted if given what he terms full disclosure. In addition, to the extent his opening brief can be construed to have omitted -13- 1 should immediately increase his bid rather than wait for a 2 counter-offer as Luborsky recommended. He would have known not 3 to rely on anybody at Teran for advice. And he would not have 4 found himself in the position of hassling the sellers after 5 they had orally agreed to accept another offer, which 6 understandably made him an unattractive purchaser in the 7 sellers eyes. 8 that whether his damage was caused by Defendants-Appellees is 9 an issue of fact that is unsuitable for summary adjudication. 10 Finally, Rivkin argues, in the alternative, Defendants-Appellees respond, in part, that Rivkin s claim 11 fails because even assuming a breach of fiduciary duty 12 occurred, any breach could not have caused him harm. 13 did not discuss the sale with Dresser before it was final; he 14 also followed all of Rivkin s directions with respect to the 15 Property. 16 Defendants-Appellees to steer the Property to the Martins. 17 has Rivkin shown, Defendants-Appellees say, that Rivkin would 18 have acted differently (thus affecting whether the sellers of 19 the Property would have accepted his bid) had he known that Luborsky Rivkin has not established any active collusion by Nor the issue, and in light of the ample argument devoted to the question of causation in the opposition and reply briefs, we exercise our discretion and decline to deem the issue waived for purposes of appeal. See Fed. R. App. P. 2 (giving a Court of Appeals the discretion to overlook a failure to raise an issue on appeal if manifest unjustice otherwise would result); see also United States v. Allen, 127 F.3d 260, 264 (2d Cir. 1997). -14- 1 Teran was simultaneously representing another principal bidding 2 on the Property. 3 they breached a fiduciary duty in this case by representing 4 competing buyers on the Property without full disclosure, the 5 breach was not a substantial factor see Milbank, Tweed, 6 Hadley & McCloy v. Chan Cher Boon, 13 F.3d 537, 543 (2d Cir. 7 1994), in causing an identifiable loss to Rivkin. 8 9 Thus, Defendants-Appellees argue, even if In addition, Defendants-Appellees counter that an associate broker is an independent contractor, not an employee, 10 of the brokerage firm. The clients of one associate broker 11 are, they argue, unrelated to the clients of another broker in 12 the same firm. 13 also that associate brokers do not receive a wage from Teran 14 but are paid a commission related to specific transactions.12 15 In other words, real estate brokers are not comparable to 16 lawyers in a firm: they are more like a franchiser and 17 franchisee, and the only fiduciary duty that is owed is between 18 the associate broker and the principal. 19 did not breach this duty because he did not disclose 20 confidential information that Rivkin provided to him, he worked Peck testified to this relationship, noting 12 Luborsky, they say, Peck also testified that he supervises the associate brokers, and that the associate brokers cannot work unless they work under a licensed broker and that for Teran he is the licensed broker. -15- 1 in Rivkin s best interests (given the information he had), and 2 he gave Rivkin undivided loyalty. 3 Finally, Defendants-Appellees argue that it would damage 4 the real estate industry in New York to hold that a broker 5 breaches his fiduciary duty if two brokers in that brokerage 6 firm represent clients bidding on the same property without 7 full disclosure. 8 C. 9 Certification General Certification Law 10 Certification is appropriate [w]henever it appears . . . 11 that determinative questions of New York law are involved in a 12 [pending case] for which no controlling precedent of the [New 13 York] Court of Appeals exists. 14 tit. 22, § 500.27(a) (2006)13; see also Local Rules of the 15 United States Court of Appeals for the Second Circuit § 0.2714. 13 14 N.Y. Comp. Codes R. & Regs. This statute reads, in relevant part: Section 500.27 Discretionary proceedings to review certified questions from Federal courts and other courts of last resort. (a) Whenever it appears to the Supreme Court of the United States, any United States Court of Appeals, or a court of last resort of any other state that determinative questions of New York law are involved in a case pending before that court for which no controlling precedent of the Court of Appeals exists, the court may certify the dispositive questions of law to the Court of Appeals. The Rule reads, in full: Certification of Questions of State Law -16- 1 In other words, certification may be proper if existing state 2 law is so uncertain that we can make no reasonable prediction 3 as to how the New York Court of Appeals would resolve the 4 question. 5 2005). DiBella v. Hopkins, 403 F.3d 102, 111 (2d Cir. 6 However, questions are not to be routinely certified 7 simply because a certification procedure is available, Kidney 8 by Kidney v. Kolmar Labs., Inc., 808 F.2d 955, 957 (2d Cir. 9 1987). Factors justifying certification include the absence 10 of authoritative state court interpretations of the state 11 statute, the importance of the issue to the state and the 12 likelihood that the question will recur, and the capacity of 13 certification to resolve the litigation. 14 219 F.3d 52, 60 (2d Cir. 2000). 15 whether the question implicates issues of state public policy. Green v. Montgomery, This Court may also consider Where authorized by state law, this Court may certify to the highest court of a state an unsettled and significant question of state law that will control the outcome of a case pending before this Court. Such certification may be made by this Court sua sponte or on motion of a party filed with the clerk of this Court. Certification will be in accordance with the procedures provided by the state s legislature or highest state court rules, e.g., Conn. Public Act No. 85111; New York Court of Appeals Rule 500.7. Certification may stay the proceedings in this Court pending the state court s decision whether to accept the certification and its decision of the certified question. -17- 1 See Krohn v. New York City Police Dep t, 341 F.3d 177, 180 (2d 2 Cir. 2003). 3 The Appropriateness of Certification Here 4 This case turns on an unsettled question of state law 5 for which there is no direct precedent. 6 Alexander Servs., Inc. v. Lloyd s Syndicate 317, 902 F.2d 165, 7 169 (2d Cir. 1990) (certifying to the New York Court of Appeals 8 a question with no direct precedent ... rather than having the 9 only precedent on point be that of a federal court, which may 10 be mistaken ); Israel v. State Farm Mut. Auto. Ins. Co., 239 11 F.3d 127, 136 (2d Cir. 2000) (certifying a case in which the 12 Court found no Connecticut precedent directly addressing the 13 questions presented ).15 14 See Alexander & The issues here concern the nature and extent of a buyer s 15 agent s obligation to avoid or mitigate conflicts of interest 16 among its principals. 17 various fiduciary duties to their clients under New York s It is clear that buyer s agents owe 15 At oral argument before us, Rivkin argued that certification would be appropriate in this case. The district court, without addressing certification, noted in its oral decision that there is no New York case on these facts that has held that that kind of conduct in the real estate industry violates the law. Defendants, for their part, acknowledged at oral argument the there is no New York Court of Appeals case describing the nature of a buyer s agent s fiduciary duty, but argued that Sonnenschein v. Douglas Elliman-Gibbons & Ives, 96 N.Y.2d 369 (2001), should apply by analogy. They argued, further, that certification was inappropriate because any lack of disclosure did not cause any harm to Rivkin. -18- 1 property law. N.Y. Real Prop. Law § 443 (McKinney s 2004); 2 see also Dubbs, 96 N.Y.2d at 340; see also section I.B., above. 3 As noted above, Rivkin points to Dubbs, 96 N.Y.2d 337, for 4 support. 5 made the general statement that "it is well settled that a real 6 estate broker is a fiduciary with a duty of loyalty and an 7 obligation to act in the best interests of the principal," id. 8 at 340, Dubbs addressed the duties of seller s agents rather 9 than buyer s agents. 10 Although in that case the New York Court of Appeals Indeed, it appears that no New York case deals with a 11 buyer s -- rather than a seller s -- agent s duties. 12 estate marketplace may, for various reasons, dictate different 13 duties for these two kinds of agents. 14 were to presume that sellers and buyers agents owe identical 15 fiduciary duties, the facts of the New York cases that deal 16 with sellers agents duties are materially different from 17 those here: Dubbs, for example, involved allegations of an 18 improper personal stake in the transaction, and Sonnenschein 19 addressed whether a seller s broker may offer the properties of 20 all of its principals to a potential customer. 21 cases neither answer the questions in this case nor can be used 22 with confidence to reasonably predict the answer. 23 24 The real In addition, even if we Thus, these The question certified in this case is also determinative, N.Y. Comp. Codes R. & Regs. tit. 22, § -19- 1 500.27(a) (2006). 2 whether Rivkin has raised a triable issue of fact regarding 3 whether Teran s alleged breach of fiduciary duties caused his 4 injury. 5 of disclosure that New York law requires a buyer s agent to 6 make. 7 This Court will ultimately need to decide However, the causation analysis will turn on the type First, assume Teran s duty was to wall off the two agents 8 to ensure that they did not communicate confidential 9 information to one another. Because Rivkin does not contend 10 that Luborsky actually divulged confidential information about 11 his representation to Dresser, or vice versa, Teran s failure 12 to screen off the two agents or otherwise prevent them from 13 exchanging confidential information, even if a breach of its 14 duties, could not have resulted in any injury to Rivkin. 15 If Teran s duty of disclosure required it to disclose only 16 the fact of a conflict (and not any particular information 17 about the competing client s bids), then there may or may not 18 be a triable question on causation. 19 undisputed that Rivkin knew that the property was being shown 20 to other prospective buyers. 21 for the property and decided to stay with his opening bid. 22 is not clear how the knowledge that one of those buyers was 23 also represented by Teran would have affected Rivkin s choices. 24 The proximate cause of his failure to prevail in the bidding, On the one hand, it is Rivkin knew he had a competitor -20- It 1 then, could be seen as the sellers apparent decision to accept 2 the first reasonable offer. 3 been told at the outset that Teran was representing another 4 buyer interested in the Property, perhaps (as Rivkin argues), 5 Rivkin would have chosen not to rely on Teran for advice 6 regarding how much to bid (or he might have ended his 7 relationship with the firm altogether, as he did on June 3). 8 Luborsky indisputably agreed with Rivkin that $75,000 was a 9 reasonable opening bid. On the other hand, if Rivkin had Perhaps, then, there would be a 10 triable issue regarding whether, absent a breach of duty so- 11 defined, Rivkin would have submitted a higher, successful, 12 initial bid on May 25, which would have been two days before 13 the Martins first (and successful) bid. 14 Meanwhile, if Teran s duty of disclosure required Luborsky 15 to disclose to Rivkin the amount and terms of a competing 16 client s bid, and to do so before placing Rivkin s bid, Rivkin 17 could have a triable issue of fact on causation given his 18 testimony that he was prepared to make an initial bid at the 19 asking price and told this to Luborsky. 20 information might have led him to raise his bid rather than 21 wait for a counteroffer; and the sellers might have accepted 22 the higher offer or begun a bidding war. 23 this disclosure would have been required only after placing 24 Rivkin s bid, there might be a triable question whether Rivkin -21- In other words, this Similarly, even if 1 would have been able to make a counterbid quickly enough to 2 dissuade the sellers from accepting the Martins bid. 3 In sum, we can only speculate regarding whether there is a 4 triable issue regarding causation because resolution of the 5 issue is directly tied to the nature of Teran s fiduciary duty 6 to Rivkin. 7 case is thus determinative. 8 9 The substance of the fiduciary duty owed in this Because this issue relates to the relationship between real estate agents and their clients and affects the real 10 estate market in New York, the question is significant, 11 implicates important public policy for the State of New York 12 and is likely to be repeated. 13 States Court of Appeals for the Second Circuit § 0.27. 14 reasons detailed above, we believe that the New York Court of 15 Appeals can best resolve the issue of real estate law that we 16 are certifying and we solicit its views rather than having the 17 only precedent on point be that of a federal court, which may 18 be mistaken. 19 See Local Rules of the United For the Alexander & Alexander, 902 F.2d at 169. III. Conclusion 20 Because of the absence of authoritative state court 21 precedent, the fact that the question is important, likely to 22 recur and determinative, and because of the policy implications 23 for the State, we hereby respectfully certify the following 24 question to the New York Court of Appeals: Did any or all of -22- 1 Defendants-Appellees breach a fiduciary duty to Rivkin by 2 failing to disclose, in any form, Defendants-Appellees 3 representation of a competing buyer for the property Rivkin 4 sought to buy? 5 The certified question may be deemed expanded to cover any 6 further pertinent question of New York law involved in this 7 appeal that the Court of Appeals chooses to answer. 8 retains jurisdiction and will consider any issues that may 9 remain on appeal once the New York Court of Appeals has either This panel 10 provided us with its guidance, or declined certification. 11 It is therefore ordered that the Clerk of this Court 12 transmit to the Clerk of the Court of Appeals of the State of 13 New York a Certificate, as set forth below, together with a 14 complete set of briefs, appendices, and record filed by the 15 parties with this Court. 16 bear equally such fees and costs, if any, as may be required by 17 the New York Court of Appeals. 18 19 The parties are further ordered to Certificate The foregoing is hereby certified to the Court of Appeals 20 of the State of New York, pursuant to 2d Cir. R. § 0.27 and 21 N.Y. Comp. Codes R. & Regs. tit. 22, § 500.27, as ordered by 22 the United States Court of Appeals for the Second Circuit. -23-
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