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June 2017

Gordon & Rees Boston Team Wins Real Estate Broker Malpractice Case

Boston partner Jay Gregory, along with the assistance of associate Saraa Basaria, won a trial in a modest but interesting real estate broker malpractice case. The plaintiff, a urologist by day and real estate investor by night, sought to purchase a bank-owned condominium listed for sale by the firm's client.  When multiple buyers submitted offers for the condominium, the broker requested that buyers submit “best and final” offers. The plaintiff’s final offer ($125,000) was higher than all others but Gordon & Rees's client failed to submit it to the selling bank.  As a result, the bank sold the property to another buyer who had offered less than the plaintiff.  This buyer, as it turns out, was a customer of the broker.  When the plaintiff learned what had happened he sued the broker alleging fraud and other tort theories. The gist of the plaintiff’s claim was that the broker intentionally failed to submit the plaintiff’s higher bid so that the broker could pocket both sides of the commission. (The plaintiff also separately filed a License Complaint against the broker with the Massachusetts Division of Professional Licensure (DPL). That action resulted in the DPL temporarily suspending the broker’s license.)

Throughout the life of the case Gregory conceded that the broker made a mistake and should have submitted the plaintiff’s bid but countered that the plaintiff could not recover as he had neither: (1) suffered any out of pocket loss; nor (2) relied to his detriment on anything the broker, said, did, or failed to do.  Moreover, the plaintiff used the same source of funds that he was going to use to buy the subject condominium to buy another investment property.  At mediation before trial Jay’s client was willing to offer $25,000 but the plaintiff refused to settle.  The plaintiff demanded $100,000. 

At trial in February the plaintiff’s counsel introduced in evidence the fact that the DPL had suspended the broker’s license for his mishandling of the plaintiff’s offer. Gregory submitted post-trial pleadings and made a closing argument in March.  The Court issued a decision in June in favor of the broker – the plaintiff received nothing.  The Court’s decision bore a strong resemblance to Basaria's Request for Rulings of Law and Findings of Fact.

Jay S. Gregory