Title: Estate of Eller v. Bartron

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
ESTATE OF MARGARET ELLER ) 
AND LORETTA ELLER, as 
 
)  No. 643, 2010 
Administratrix of the Estate of    
) 
Margaret Eller, 
 
 
 
)  Court Below:  Superior Court of the 
 
 
 
 
 
 
)  State of Delaware in and for 
 
 
Plaintiffs Below,  
)  New Castle County 
 
 
Appellants,  
 
) 
 
 
 
 
 
 
)  C.A. No. 02C-03-221 
v. 
 
 
 
 
 
) 
 
 
 
 
 
 
) 
WAYNE BARTRON, 
 
 
) 
 
 
 
 
 
 
) 
 
 
Defendant Below,  
) 
 
 
Appellees.  
 
) 
 
 
 
 
 
 
) 
 
Submitted:  September 14, 2011 
Decided:  November 8, 2011 
 
Before STEELE, Chief Justice, BERGER and RIDGELY, Justices. 
 
 
Upon appeal from the Superior Court.  REVERSED and REMANDED. 
 
 
Bayard J. Snyder, Snyder & Associates, P.A., Wilmington, Delaware for 
appellant. 
 
 
Thomas C. Marconi, Losco & Marconi, P.A., Wilmington, Delaware for 
appellee. 
 
 
 
 
 
STEELE, Chief Justice: 
2 
 
 
 
A real estate agent served as the seller’s agent for two sales of the same 
house.  The initial purchaser submitted a bid for the house and, the same day, hired 
the initial seller’s agent to serve as seller’s agent for the second sale.  A few days 
later, the agent convinced the initial seller to accept the initial purchaser’s bid 
without disclosing his conflict of interest or the purchaser’s interest in flipping the 
house.  After one day of trial concerning the initial seller’s complaint against the 
agent alleging, inter alia, a breach of fiduciary duties, the trial judge granted the 
defendant’s motion for a directed verdict.  Because the plaintiff raised issues of 
material fact concerning whether the defendant breached his fiduciary duties to the 
seller, we remand the case for a new trial. 
FACTUAL AND PROCEDURAL BACKGROUND 
 
Loretta Eller decided to sell her mother’s house after her mother entered a 
nursing home.  Acting on her mother’s behalf, Eller entered into a listing 
agreement with Wayne Bartron, a real estate agent, on July 22, 1998.  The contract 
awarded Bartron the exclusive right to list the house for one year, specified a sale 
price of $152,000, and set the commission at seven percent.  The contract also 
included a waiver of Eller’s right to object to dual agency, meaning that Eller 
relinquished her common law right to object to Bartron representing both her and a 
3 
 
buyer in the sale of the house.  As a result, Barton could earn the full seven 
percent, rather than splitting it with a buyer’s agent, if he solely found a buyer.   
Several months passed uneventfully, then a flurry of activity occurred during 
January, 1999.  On January 20, 1999, Bartron showed the house to Brian Pierce, a 
person Bartron knew to be a real estate investor.  Pierce was part owner of 
Pierce/O’Neill Ltd., a firm that purchases real estate at distressed prices in the hope 
of quickly reselling it for a profit.  Two days later, Pierce/O’Neill made a $96,000 
offer, in writing.  Bartron read his notes from that day into evidence:  
O’Neill/Pierce made an offer with stipulation they can access prior to 
settlement for repairs and showings.  Loretta agreed with the 
condition that she/I be there for all entry. . . . O’Neill/Pierce signed 
contract with a promise to list with me for a reduced commission to 
solve problems with entry prior to. 
 
After a brief delay, Eller signed the contract on January 28.  She testified that she 
only decided to accept the offer after a conversation Bartron initiated, at her house, 
after work hours.       
As Bartron’s notes indicate, the same day Pierce/O’Neill made an offer to 
Eller, Pierce/O’Neill engaged Bartron to serve as Pierce/O’Neill’s agent for 
reselling the property.  Bartron arranged for Wayne Knierim, a potential buyer who 
knew Pierce socially, to tour the property.  Knierim entered into a contract on 
January 27 to purchase the house from Pierce/O’Neill, for $130,000.  Section 11 of 
that contract stated that Pierce/O’Neill sold the property “as is.”  But Knierim 
4 
 
testified that he entered into a handshake agreement with Pierce, obligating 
Pierce/O’Neill to both foot the bill for some repairs to the house and also provide 
raw materials for Knierim to use to accomplish other improvements.  Knierim 
testified that he would not have paid the $130,000 if Pierce/O’Neill had not agreed 
to this other help.   
On March 30, 1999, the settlements for both sales occurred in the same law 
firm.  The first sale consummated that day transferred the house from Eller’s 
mother to Pierce/O’Neill; the next sale transferred it from Pierce/O’Neill to Wayne 
Knierim. 
Months later, a realtor who happened to notice that Eller’s mother’s house 
was sold twice on the same day mentioned that oddity to Eller.  After learning of 
the second sale, Eller filed a suit against Bartron that alleged a number of claims, 
including a breach of fiduciary duty.       
At trial, Eller testified that Bartron never told her that he had agreed to sell 
the house on behalf of Pierce/O’Neill.  Nor, she testified, did Bartron inform her 
about the second sale.  Eller testified that she only learned the house was sold a 
second time on the same day because a realtor thought it was odd, and so 
mentioned the second sale to Eller when the two happened to speak some months 
later.     
5 
 
Other factual disputes arose at trial.  First, Eller contended that Bartron knew 
about the January 27 contract on January 28, when he convinced Eller to sign the 
offer.  Eller could offer no specific evidence supporting this contention, instead she 
relied on the nature of the relationship between Bartron and Pierce/O’Neill to 
support a finding that Bartron knew of the contract.  Despite the circumstances 
underlying the Bartron and Pierce/ONeill relationship, the trial judge found that 
Eller put forward no particular evidence sufficient to create a dispute about a 
genuine issue of material fact in the face of Bartron’s direct testimony that he did 
not know about the January 27 contract on January 28.   
Second, Eller contended that the two transactions cheated her out of the 
difference between the two sales prices.  Bartron introduced evidence suggesting, 
to the contrary, that the price difference reflected Pierce/O’Neill’s willingness to 
finance some renovations to the house.    
After a one day trial, the trial judge issued an oral order granting the 
defendant’s motion for a directed verdict.  Although Eller’s complaint asserted that 
Bartron breached his fiduciary duty, the trial judge’s oral order included no 
specific findings about that claim.  The trial judge concluded that the existence of 
Bartron’s notes “does necessarily indicate that he told her that he was working with 
[Pierce/O’Neill].”1   
                                                           
1 Tr. at 180. 
6 
 
STANDARD OF REVIEW 
 
We review a trial judge’s decision on a motion for a directed verdict to 
determine “whether the evidence and all reasonable inferences that can be drawn 
therefrom, taken in a light most favorable to the nonmoving party, raise an issue of 
material fact for consideration by the jury.”2   
DISCUSSION 
 
To establish liability for the breach of a fiduciary duty, a plaintiff must 
demonstrate that the defendant owed her a fiduciary duty and that the defendant 
breached it.3  Because Bartron acted as Eller’s agent, and therefore owed her 
traditional fiduciary duties, the trial judge should have permitted the jury to 
determine whether Bartron breached his fiduciary duties, and if so, what damages 
proximately resulted from the breach.     
A real estate agent is the agent of his clients.  As a general matter, “[a]gency 
is the fiduciary relationship that arises when a person (a ‘principal’) manifests 
assent to another person that the agent shall act on the principal’s behalf and 
subject to the principal’s control, and the agent manifests assent or otherwise 
                                                           
2 Burkett-Wood v. Haines, 906 A.2d 756, 762 (Del. 2006) (quoting Fritz v. Yeager, 790 A.2d 
469, 471 (Del. 2002)); see also Moody v. Nationwide Mut. Ins. Co., 549 A.2d 291, 293 (Del. 
1988).   
 
3 Heller v. Kiernan, 2002 WL 385545, at *3 (Del. Ch. Feb. 27, 2002) (citing York Linings v. 
Roach, 1999 WL 608850, at *5 (Del. Ch. Jul. 28, 1999)). 
 
7 
 
consents so to act.”4  Bartron and Eller manifested the necessary assent by signing 
the listing contract.  Delaware courts consider real estate agents to be agents as 
recognized at common law.5  A typical person depends on the experience and 
knowledge of a real estate agent to help arrange the best transaction possible 
concerning what may often be the most important asset a person owns.   
The existence of an agency relationship empowers an agent to act on behalf 
of his principal.  When accompanied by trust that the agent will use the principal’s 
confidential information to pursue the principal’s ends, that relationship also 
imposes fiduciary duties on the principal.    
Many forms of conduct permissible in a workaday world for those 
acting at arm’s length, are forbidden to those bound by fiduciary ties.  
A trustee is held to something stricter than the morals of the market 
place.  Not honesty alone, but the punctilio of an honor the most 
sensitive, is then the standard of behavior.6 
 
To protect the social gains resulting from fiduciary relationships, the courts, in 
appropriate circumstances, afford a remedy to those parties whose trust has been 
unlawfully abused, often referred to as the “exclusive benefit” rule, which unless 
                                                           
4 Restatement (Third) Agency, § 1.01 (2006). 
 
5 Johnson v. Chupp, 2003 WL 292168, at *2 (Del. Super. Feb. 11, 2003) (“It is true that where a 
real estate firm has agreed to act on behalf of a buyer in presenting a contract for purchase of real 
property, an agency relationship arises.”); Petenbrink v. Superior Home Builders, Inc., 1999 WL 
1223786, at *3 (Del. Super. Nov. 1, 1999) (“Real estate brokers and salesman are fiduciaries, 
who are charged with full disclosure of all material facts to those who repose confidence in 
them.”) (quoting Stella v. Del. Real Estate Comm’n, 1986 WL 3642, at *4 (Del. Super. Mar. 6, 
1986)). 
 
6 Meinhard v. Salmon, 249 N.Y. 458, 464 (N.Y. 1928).   
8 
 
modified by contract “flatly forbid[s]” fiduciaries from gaining personally from the 
agency relationship.7  
 
Agents owe their principals a duty to disclose certain information, and a duty 
to avoid gaining an interest adverse to their principal.   
It is true, of course, that under elemental principles of agency law, an 
agent owes his principal a duty of good faith, loyalty and fair dealing.  
Encompassed within such general duties of an agent is a duty to 
disclose information that is relevant to the affairs of the agency 
entrusted to him.  There is also a corollary duty of an agent not to put 
himself in a position antagonistic to his principal concerning the 
subject matter of his agency.8 
 
An agent who acquires a position adverse to the principal, but fails to disclose it, 
simultaneously breaches the duties of loyalty and care.9   
The evidence developed after one day at trial created genuine, disputed 
issues of material fact about whether Bartron breached his fiduciary duties.  First, 
the evidence at trial created an issue about whether Bartron informed Eller that 
Pierce/ONeill’s bid for her property was accompanied with a promise that 
Pierce/O’Neill would use Bartron as its listing agent to sell the property.  An agent 
cannot accept another agency that creates tension with an earlier agency unless he 
                                                           
7 Iman Anabtawi & Lynn Stout, Fiduciary Duties for Activist Shareholders, 60 Stan. L. Rev. 
1255, 1263 (2008). 
 
8 Sci. Accessories Corp. v. Summagraphics Corp., 425 A.2d 957, 962 (Del. 1980) (citations 
omitted). 
 
9 See Triton Const. Co., Inc. v. Eastern Shore Elec. Servs., Inc., 2009 WL 1387115 (Del. Ch. 
May 18, 2009). 
9 
 
first informs the principal and receives the principal’s consent.  If an agent “acts 
for more than one principal in a transaction,” he must “disclose to each principal . . 
. all other facts that the agent knows, has reason to know, or should know would 
reasonably affect the principal’s judgment unless the principal has manifested that 
such facts are already known by the principal or that the principal does not wish to 
know them.”10  This requirement ensures that the principal will have “a focused 
opportunity to assess risks” once the agent identifies potentially problematic 
circumstances.11   
Bartron’s failure to explain his dual agency role to Eller prevented her from 
having an opportunity to assess her risks.  Bartron’s agreement to act as the seller 
for Pierce/O’Neill’s second transaction affected the weight Eller should assign to 
his views, so Bartron had a duty to refuse to act for Pierce/O’Neill until he 
informed Eller of his opportunity to benefit and secured Eller’s consent.  When 
Eller consented to dual agency, she consented only to Bartron representing her and 
the buyer in a single transaction.  She would have reasonably expected Bartron to 
sell the house at a price approximating fair market value.  She reasonably could 
have objected to Bartron, as her agent, representing the buyer’s resale so quickly as 
                                                           
10 Restatement (Third) of Agency § 8.06(2)(b)(ii); Triton, 2009 WL 1387115, at *14 (“Agents 
owe a duty to disclose relevant information if they have notice of facts which they should know 
may affect the decisions of their principals as to their conduct.  The duty to disclose arises in 
situations where an agent has, or represents another who has, interests adverse to the principal 
concerning matters within the scope of the agency.”).   
 
11 Id. 
10 
 
detrimental to her receiving the highest available price in the initial sale.  The 
agent’s loyalty to both parties, coupled with the fact that the  second sale enhances 
the returns from the agent’s commissions, suggests that Eller would be worried 
about her price reflecting real market value.  But if the real estate agent agrees to 
sell that same property a second time on behalf of the prospective buyer, the agent 
faces a set of incentives that can destroy the agent’s incentives to get the best deal 
for the initial seller.  An agent who stands to earn a second commission on the 
same property, immediately, has reason to make sure that the prospective buyer 
secures the property.  The commission that he would stand to earn from a second 
sale could typically more than compensate him for a lower commission in the first 
transaction.  Eller should have had a focused opportunity to assess whether she 
would permit an agent with those arguably competing interests to act on her behalf.   
Eller’s contractual consent to Barton representing her and a buyer’s interest 
in a single sale does not remove Bartron’s duty to fully disclose his January 22 
agreement to serve as Pierce/O’Neill’s agent to resell the house.  A real estate 
agent who accepts a dual agency represents both the seller and the agent in a single 
transaction.  On January 28, when Bartron convinced Eller to accept 
Pierce/O’Neill’s offer even though it was significantly beneath the price she 
expected, Eller did not know she was dealing with a conflicted advisor.  Eller 
thought Bartron expected to receive a commission as the seller’s agent and one as 
11 
 
the buyer’s agent.  She did not know he also expected to receive another 
commission – as the seller’s agent for an immediate resale of the same property.  
Therefore, Eller did not consent to a situation where she might reasonably expect 
Bartron to recommend she sell the property for less than his estimate of its market 
value.     
Second, Bartron should have told Eller that Pierce/O’Neill planned to 
immediately resell the house.  The seller of a house, a person interested in 
receiving the best possible price for the property, would want to know if the 
purchaser planned to flip the house.  That information would at least suggest that 
the house could be sold for a higher price.  Eller testified that Bartron did not tell 
her that Pierce/O’Neill planned to attempt to resell Eller’s mother’s house before 
her sale to Pierce/O’Neill even closed.  Bartron’s notebook offers evidence that he 
told Eller about this plan.  But the conflict between Bartron’s notebook and Eller’s 
testimony creates a genuinely disputed issue about a material fact.  The jury should 
have resolved the issue of whether Bartron told Eller Pierce/O’Neill planned to flip 
the property.   
Factual arguments advanced by Bartron’s counsel misconceive the problem 
with Bartron’s behavior.  For instance, it does not matter that Eller put forward no 
particular facts suggesting that Bartron knew O’Neill/Pierce had signed a contract 
with Knierim when it happened.  Had facts suggested that Bartron knew of the 
12 
 
January 27 contract while he was persuading Eller to sign the offer on January 28, 
his violation of the duty of loyalty would have been patently obvious.  But even 
assuming that Bartron did not know of the contract between Knierim and 
Pierce/O’Neill, Bartron still should have told Eller of his conflict of interest and of 
Pierce/O’Neill’s intent to resell the house.      
Similarly, the argument that the higher price in the second sale was justified 
because a handshake deal between Pierce/O’Neill and Knierim explained the price 
increase misses the point.  Financial support given from Pierce/O’Neill to Knierim 
only demonstrates that Pierce/O’Neill’s profits from the two sales might be less 
than is suggested by the difference between the first and second sale prices.  That 
Pierce/O’Neill might have made a smaller profit than the facts at first suggest does 
not affect whether Bartron should have told Eller about those two points.  In any 
event, a jury need not credit Knierim’s testimony that a handshake deal existed.  
Since Pierce/O’Neill, an experienced real estate investment firm, bargained for the 
contractual right to receive payment without improving the property in any way, a 
reasonable jury could very well consider the contractual language to be a better 
guide to the content of the deal than the contradictory testimony.   
This opinion, premised on the common law of agency as it has evolved over 
the course of centuries, will soon provide little guidance to real estate agents.  The 
other branches of Delaware’s government have enacted a scheme of statutory 
13 
 
agency for real estate agents that takes effect in early 2012.12   The new act does 
not entirely foreclose the possibility that this opinion will be relevant again in the 
future, since, at least as a formal matter, the new act permits members of the public 
to hire a real estate agent as a common law agent.13  But most of the new act is 
devoted to a lengthy description of a new form of statutory agency that displaces 
the common law of agency.14  This opinion does not resolve whether the duties of a 
statutory agent, as discussed in the new law, would lead to the same outcome as the 
common law.           
CONCLUSION 
 
We reverse the judgment of the Superior Court and remand for a new trial. 
  
                                                           
12 78 Del. Laws ch. 166, § 2 (2011) (stating that the act goes into force six months after August 
3, 2011). 
 
13 See 78 Del. Laws ch. 166, § 1 (2011) (amending 24 Del. C. § 2932 to permit consumers to 
enter into a Common Law Agent relationship with a broker if both parties so agree; that 
relationship will be governed by the common law of agency “to the extent it is not inconsistent 
with applicable provisions of this chapter.”). 
 
14 See 78 Del. Laws ch. 166, §1 (2011) (amending 24 Del. C. § 2933 to replace the common law 
of agency with statutory agency and explaining that this subchapter completely displaces the 
common law for persons in a relationship governed by statutory agency).