Ark Assoc. of Nassau, Inc. v Hill

[*1] Ark Assoc. of Nassau, Inc. v Hill 2005 NYSlipOp 50437(U) Decided on March 31, 2005 Appellate Term, Second Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 31, 2005
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS
PRESENT: March 31, 2005 SUPREME COURT OF THE STATE OF NEW YORK APPELLATE TERM : 9th and 10th JUDICIAL DISTRICTS PRESENT : McCABE, P.J., COVELLO and TANENBAUM, JJ.
2004-1116 N C

ARK ASSOCIATES OF NASSAU, INC., Appellant,

against

STEPHEN B. HILL and KATHLEEN M. HILL, Respondents.

Appeal by plaintiff from an order of the District Court, Nassau County (K. Gartner, J.), entered February 10, 2004, which denied its motion for summary judgment.

Order unanimously affirmed without costs.

Plaintiff instituted this breach of contract action due to defendants' refusal to pay plaintiff the commission earned pursuant to a written brokerage agreement following defendants' sale of the subject premises to purchasers procured by plaintiff. In opposition to plaintiff's motion for summary judgment, defendants alleged a breach of plaintiff's fiduciary duty.

Generally, a real estate broker is a fiduciary with a duty and obligation to act in the best interest of the principal (see Dubbs v Stribling & Assocs., 86 NY2d 337, 340 [2001]). The broker's duty to refrain from taking any action adverse to its principal's interest is necessarily tied to the transaction that formed the agency relationship in the first instance (Lamdin v Broadway Surface Advertising Corp., 272 NY 133, 138 [1936]). "An agent is held uberrima fides in his dealings with his principal, and if he acts adversely to his employer in any part of the transaction, or omits to disclose any interest which would naturally influence his conduct or dealing with the subject of the employment, it amounts to such a fraud upon the principal as to forfeit any right to compensation for services" (Murray v Beard, 102 NY 505, 508 [1886]). In other words, in dealing with its principal, a broker is required to act honestly and candidly, and must disclose all material information that it may possess or obtain concerning the transaction involved (Precision Glass Tinting, Inc. v Long, 293 AD2d 594 [2002]). The breach of said duty [*2]by a real estate broker is fraud for which it is answerable in damages, and any compensation paid it may be forfeited (JPL Assoc. v Helmsley-Spear, Inc., 146 AD2d 468, 471 [1989]). In the case at bar, defendants alleged that plaintiff, the listing broker, failed to disclose to defendants, its principals, that its agent, upon whom defendants' relied for setting an asking price and negotiating with the purchasers on their behalf, had a relationship with one of the purchasers and said purchaser's family going back to childhood. Said alleged failure to disclose the relationship together with the particular circumstances surrounding the sale raises an issue of fact as to whether plaintiff breached its duty as a fiduciary.
Decision Date: March 31, 2005