Court Opinion

ID: 9618271
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:10:07.627989+00
Date Added: 2024-06-11T18:04:27.326784
License: Public Domain

METZGER, Judge,
dissenting.
I respectfully dissent as to Part III of the majority opinion, which holds that the trial court committed no error in refusing to allow the Covilles to amend their pleadings to add the defense of breach of fiduciary duty.
In February 1980, the Covilles granted Walpin and Company an exclusive right to sell listing for the property. That agreement authorized Walpin “to accept the assistance and cooperation of other brokers” and authorized it to collect seven percent of the selling price as a commission if it produced a ready, willing, and able purchaser. The contract between REDI and the Co-villes specifically provided that REB, whose principal stockholder was Arthur Seeley, REDI’s president, would receive a “2.8 percent co-op,” which meant that REB would receive 2.8 percent of the selling price.
Reading these agreements together, and noting the active participation of REB in obtaining REDI as a purchaser and in preparing the contract, I find the conclusion inescapable that Walpin was the agent of the Covilles and that REB was Walpin’s sub-agent; therefore, by definition, REB was an agent for the Covilles as well. See, e.g., Velten v. Robertson, 671 P.2d 1011 (Colo.App.1983).
Because REB was a real estate agent for the Covilles, it had a fiduciary duty to act with the utmost good faith and loyalty in their behalf. McKinney v. Christmas, 143 Colo. 361, 353 P.2d 373 (1960); Lestoque v. M.R. Mansfield Realty, Inc., 36 Colo.App. 32, 536 P.2d 1146 (1975). This fiduciary duty included a requirement that REB make a full and complete disclosure of material facts, including not only Seeley's opinion that the property, listed at $500,-000, could be re-sold immediately for a profit of between $100,000 and $125,000 but, more importantly, that Seeley had received an offer from a prospective purchaser for $591,000 before the closing date. See Hiller v. Real Estate Commission, 627 P.2d 769 (Colo.1981). See also Velten v. Robertson, supra.
As this court held in Collins v. McClurg, 1 Colo.App. 348, 29 P. 299 (1892):
“Where the confidential relation of principal and agent exists, the onus is upon the agent to show that the transaction was fair and equitable; that he gave all the advice within his knowledge pertaining to the subject of the sale and the value of the property; and that there was no suppression or concealment which might have influenced the conduct of the principal. It is the purpose of the courts to see that the agent, by reason of the confidence reposed in him by the principal, secures to himself no advantage from the contract, and when the transaction is seasonably challenged a presumption of its invalidity arises, and the agent then assumes the burden of making it affirmatively appear that he dealt fairly, and, in the richest of faith, imparted to his principal all the information concerning the property possessed by him.”
See also Sankey v. Cramer, 24 Colo.App. 16, 131 P. 288 (1913).
C.R.C.P. 15(b) provides in pertinent part that the trial court shall allow amendment of the pleadings freely when the presentation of the merits of the action will be subserved thereby. It is an abuse of dis*761cretion for the trial court not to do so. Francisco v. Cascade Investment Co., 29 Colo.App. 516, 486 P.2d 447 (1971). When the trial court admits evidence which could potentially change a party’s complaint or defense on any particular issue, amendment of the pleadings should be freely granted. Schwab v. Martin, 165 Colo. 547, 441 P.2d 17 (1968).
I would rule that here the trial court abused its discretion in refusing to allow the Covilles to amend their pleadings to add the breach of fiduciary duty defense. The record disclosed a prima facie case of a breach of fiduciary duty that would operate as a defense to REDI’s claim for specific performance. The evidence is undisputed that, although Seely freely accepted the Coville’s money, he did not fully disclose either all he knew about this property or his actions in connection therewith.
Accordingly, I would reverse the judgment of the trial court and remand this cause for a new trial with directions to allow the Covilles to amend their pleadings to add the defense of breach of fiduciary duty.