Law School Case Brief
Carter v. Gugliuzzi - 168 Vt. 48, 716 A.2d 17 (1998)
A fundamental tenet of agency law holds that the knowledge of an agent acting within the scope of his or her authority is chargeable to the principal, regardless of whether that knowledge is actually communicated.
In 1990, Flavia Gugliuzzi and Ana Barreto (sellers) asked Ruth Bennett, a licensed real estate salesperson, to list their house for sale. Bennett worked under the supervision of David Crane, a licensed real estate broker and an officer, director, and shareholder of the Synergy Group, Inc., doing business as Smith Bell Real Estate. Bennett prepared a Multiple Listing Service (MLS) sheet, which stated that the house was “in pristine condition.” The information contained in the MLS sheet was confirmed by the sellers. However, the sheet contained a number of errors and omissions. Subsequently, the house was bought by Diana Carter, who was attracted by the fact that the house was listed as being “in pristine” condition. Furthermore, Carter was assured that there had been full disclosure regarding the house’s condition. After moving in, Carter discovered the real condition of the house. Consequently, Plaintiff Carter sued defendants, sellers, salesperson, and the Synergy Group for fraud, negligent misrepresentation, breach of contract, and violation of the Consumer Fraud Act. The trial court found the defendants liable, which the Synergy Group appealed.
Could the real estate brokerage be held liable for the acts and misrepresentations of its broker?
The court found that the real estate brokerage was a seller involved in commerce under the Consumer Fraud Act. The court also found that a broker had supervised and consulted with the listing agent, inspected the property, and conveyed certain information concerning the house to the buyer. Thus, the court ruled that the broker operated as an agent of the brokerage and that the broker's knowledge of high winds on the property were properly imputed to the brokerage.
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