Appeals Court rules on claims brought by agent against brokerage (OR: Dec. 2011)

By Michael J. Sikora III
Sikora Law LLC

The Court of Appeals in Franklin County recently issued a decision dealing with certain aspects of claims brought by a real estate agent against a commercial real estate brokerage. See White v. Equity, Inc., 191 Ohio App.3d 141, 2010-Ohio-4743.

In that case Tammy White brought claims against Equity, Inc. for various commissions that she claimed were due and owing. Ms. White brought spoliation of evidence claims as well, asserting that her Independent Contract Agreement was altered and that the original of that document was destroyed. The brokerage claimed that Ms. White’s claims were subject to a binding arbitration provision that was part of the Independent Contractor Agreement that she signed. The trial court agreed with the brokerage and found that Ms. White’s claim should be stayed pending the outcome of the arbitration, and the trial court dismissed Ms. White’s spoliation of evidence claims.

Ms. White appealed, and the Court of Appeals reversed the decision of the trial court. The Court of Appeals acknowledged the strong presumption in favor of enforcement of an arbitration clause. Nevertheless, the Court found that Ms. White brought claims that were not addressed in the Independent Contractor Agreement. Moreover, Ms. White brought claims against individuals and entities that were not parties to the Independent Contractor Agreement and therefore were not bound by it.  As a result, the Court of Appeals found that Ms. White’s claim should not be stayed pending the outcome of arbitration.

Additionally, the Court of Appeals found that Ms. White satisfied the relatively low standard necessary to beat a Motion to Dismiss because she “clearly set forth a claim for spoliation of evidence.” The Court of Appeals noted that counsel for the brokerage conceded that point at oral argument. As a result, the Court of Appeals also found that Ms. White was permitted to pursue her spoliation of evidence claims against the Defendants. The Court of Appeals ultimately concluded that Ms. White could pursue all of her claims in the Franklin County Court of Common Pleas.

Disputes between agents and their brokerages are relatively rare, especially those that make their way to Courts of Appeals. Although the White case does not directly address the merits of the case, it does provide some perspective and guidance for parties that find themselves in similar situations.

Sikora Law LLC represents real estate companies, including commercial real estate brokerages in disputes throughout Ohio and Michigan. Mike Sikora can be reached at (440) 266-7777 or MSikora@SikoraLaw.com.