When is a brokerage liable for agents’ misdeeds?

A ruling on a case recently heard by the Ohio Supreme Court could clarify when a brokerage may be held liable for its agents’ alleged misconduct.

The case involves Dayton, Ohio, brokerage Keller Williams Home Town Realty and its independent contractor agent Jamie Paliath, who represented California-based buyer Torri Auer on purchases of several multi-unit rentals in Dayton. Paliath and Auer had also formed a company, which purchased a separate 12-unit building elsewhere in Dayton. The units Auer purchased proved difficult to rent.

Auer, based on Paliath’s alleged misrepresentation about the rentability of the units, eventually sued the brokerage and Paliath in Montgomery County Common Pleas Court, which awarded Auer $135,000 from Home Town Realty and $135,200 from Paliath. The Ohio Second District Court of Appeals upheld the verdict, and Keller Williams Home Town Realty appealed to the Ohio Supreme Court.

Home Town’s lawyers argue that Paliath was not operating in the scope of her employment in the company because she participated in a competing company, and that the firm, even though it received commissions from the sale of the buildings Paliath coordinated, should not be liable because it had no knowledge of Paliath’s illicit activities.

Auer’s lawyers claim that Home Town didn’t properly train or oversee Paliath and therefore should be held liable.

Cleveland.com notes that it typically takes weeks or months for the Ohio Supreme Court to return a decision after it’s heard a case.

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Source: Cleveland.com


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