On January 21, NY Supreme Court Justice Linda F. Jamieson granted a motion to certify the 2018 lawsuit, against Houlihan Lawrence, as a class action. The class created includes some 20,000 buyers and sellers involving an estimated 10,000 transactions.
The suit seeks punitive damages, attorneys’ fees and costs, and repayment of the sales commissions Houlihan Lawrence collected on home sales in which it acted as an undisclosed, non-consensual dual agent, “with interest from the time such commissions were paid.”
A motion to dismiss was filed in the matter (see motion to dismiss Memorandum(s) which was rejected by the Court saying that establishing informed consent to dual agency requires more than a signature on a disclosure form. Judge Jamieson pointed to state law, which says, “An agent acting as a dual agent must explain carefully to both the buyer and seller that the agent is acting for the other party as well. The agent should also explain the possible effects of dual representation, including that by consenting to the dual agency relationship the buyer and seller are giving up their right to undivided loyalty.” The Judge wrote “By these very words … it appears that the mere signing of the [statutory disclosure] form is insufficient, and the legislature required more”.
The lawsuit has also generated additional litigation, Great American Insurance Company, Houlihan Lawrence’s professional liability insurance provider filed suit against the real estate brokerage seeking a declaratory judgement that they (the insurance company) has no obligation to provide insurance coverage in regard to the dual agency lawsuit.
Depending upon the outcome of the lawsuit the action could have far ranging effects on the New York real estate industry.