This was not an idle year for court battles involving real estate entities.
Whether the case involved the two biggest listing portals in the country discussing trade secrets, franchisors allegedly in violation of the Real Estate Settlement Procedures Act (RESPA) or a buyer upset about a square footage disclosure on a home, there were numerous opportunities for the state of the industry to change based on a judge’s order in 2016.
Here were the seven most noteworthy court cases that Inman covered this year.Independent contractors, dissected
The unique legal status that real estate agents occupy straddles the line separating employees from independent contractors. The room that the special designation leaves for ambiguity spurred litigation this year.
In January, Coldwell Banker settled a lawsuit brought by an agent alleging that the agent was treated as an independent contractor when he should rightfully have been considered an employee.
And in August, an Arizona ruled that a real estate agent involved in a fatal car accident was an independent contractor, and the agent’s brokerage was not liable for the wrongful death of of one of the car accident victims.
CoreLogic won a two-year-old lawsuit brought by real estate photographers, who alleged that the company stripped identifying information from photographs when they were entered into the MLS. The identifying information would make it easier for those photographers to protect their copyright, they said.
Another case still making its way through courts involves real estate photography company VHT and real estate portal Zillow; VHT is alleging that Zillow has illegally used its photographs.
California Association of Realtors (CAR) filed a $136 million lawsuit against a tech firm, PDFfiller. The lawsuit alleges that the firm has copied, published and sold copyrighted CAR forms.
A case unfolding in Malibu, California, involved two agents employed by the same brokerage and a buyer who claimed breach of fiduciary duty — by the listing agent.
The state supreme court ruled late this year that the listing agent owed fiduciary duties to the buyer because both buyer and seller were represented by the same brokerage. However, the court did not rule on whether or not the listing agent violated his fiduciary duty.
Nonbank lender Quicken Loans and real estate franchisor Re/Max filed dueling lawsuits in separate states, each alleging breach-of-contract in a marketing services arrangement (MSA) that the companies entered into during the summer of 2015.
Quicken claims that Re/Max misled it about the value of the arrangement. Re/Max claims that Quicken failed to honor the agreement.
This would probably be the court battle of the year (if Zillow and News Corp. hadn’t jumped into the fray together) — PHH and Realogy entered into a joint venture, PHH Home Loans, in January 2005.
Consumer plaintiffs who say they weren’t aware of the nature of the joint venture and filed a lawsuit. The statute of limitations and definition of a “thing of value” are two issues being discussed in the case, which Realogy and PHH have moved to dismiss.
PHH has also been involved in a separate RESPA-related case over its captive reinsurance practices. A ruling in that case earlier this year stated that the single-director structure of the Consumer Financial Protection Bureau (CFPB) is unconstitutional. (The CFPB is responsible for enforcing RESPA.) The CFPB is seeking another hearing in that ruling.
When two executives left Move — which operates the real estate portal realtor.com and is owned by the deep-pocketed News Corp. — for Zillow, it sparked litigation that stretched over months and involved a legal hearing earlier this year to determine whether those executives intentionally destroyed evidence in the case.
The two companies settled out-of-court for $130 million right before the trial was scheduled to start in June of this year.
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