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Torts—Real Estate Broker Not Employer of Sales Agents

Posted by Ted A. Schmidt | Sep 09, 2016 | 0 Comments

Santorii v. Martinezrusso, LLC, 746 Ariz. Adv. Rep. 22 (App. Div. I, August 23, 2016) (J. Cattani)

REAL ESTATE SALES PERSONS ARE INDEPENDENT CONTRACTORS NOT EMPLOYEES OF REAL ESTATE BROKERS

Plaintiffs' husband was killed in a head on collision with defendant's real estate salesman as he was returning from a sales appointment. Plaintiff brought this wrongful death action alleging the agent was the employee of the defendant real estate brokerage firm.  The defendant moved for summary judgment claiming the agent was an independent contractor and there was no vicarious liability running to the defendant. The plaintiff filed a cross motion for partial summary judgment on the same issue. The trial court granted defendant's motion and denied plaintiff's cross motion. The Arizona Court of Appeals affirmed.

The court held that while the real estate statutes and administrative regulations in Arizona require sales agents work for only one brokerage firm and that that the brokerage firm closely supervise the agent and provide workers compensation coverage, agents are independent contractors.  These statutes and regulations only require supervision of the real estate transaction itself and not the other aspects of the agents work and the definition of an employee under workers compensation is much broader and beyond the more narrow tort definition of employee.

Here the agent had almost complete discretion with regard to the time, manner and means in which he travelled to meet clients. His contract with defendant expressly identified him as an independent contractor “free to devout” his time, energy, effort and skill as he saw fit. He was not required to attend sales meetings, meet quotas or keep track of his time. The defendant did provide optional office space, leads and training but the agent paid a monthly fee for these services. The agent choose his own territory, developed his own advertisement, prospected for clients, set up his own appointments drove his own car, worked from his home office and worked solely for commission. As such he met the clear definition of an independent contractor as a matter of law.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".

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