Court Opinion

ID: 9732090
Source: CourtListenerOpinion
Date Created: 2023-08-26 16:07:21.774703+00
Date Added: 2024-06-11T18:26:23.127534
License: Public Domain

NIGRO, Justice,
dissenting.
I respectfully dissent, as I believe that an agency relationship existed between H & R Block and Appellees.
“This Court has defined agency as ‘the relationship which results from (1) the manifestation of consent of one person to another that (2) the other shall act on his behalf and subject to his control, and (3) consent by the other so to act.’ ” Reid v. Ruffin, 503 Pa. 458, 462-63, 469 A.2d 1030, 1033 (1983), citing Smalich v. Westfall, 440 Pa. 409, 413-14, 269 A.2d 476, 480 (1970) and Restatement (Second) of Agency § 1(1) (1958). “Those rendering service but retaining control over the manner of doing it ... may be agents, agreeing only to use care and skill to accomplish a result and subject to the fiduciary duties of loyalty and obedience to the wishes of the principal.” Smalich, 440 Pa. at 414, 269 A.2d at 481. Furthermore, Comment b of the Restatement (Second) of Agency § 1 provides in relevant part:
To constitute the relation, there must be an agreement, but not necessarily a contract, between the parties; if the agreement results in the factual relation between them to which are attached the legal consequences of agency, an agency exists although the parties did not call it agency and did not intend the legal consequences of the relation to follow.
Restatement (Second) of Agency § 1, cmt. b. Therefore, direct evidence of specific authority is unnecessary. Rather, the relationship can be inferred from the circumstances of the case by looking at factors such as the relation of the parties *374and their conduct. See Scott v. Purcell, 490 Pa. 109, 117 n. 8, 415 A.2d 56, 60 n. 8 (1980) (internal citations omitted).
I believe that Appellees met their burden of establishing that an agency relationship existed. Here, the Superior Court found that Appellees “established that they visited the [¶] & R] Block offices in response to media promotions of the Rapid Refund Program to engage [¶] & R] Block to achieve two results: 1) to complete and file their tax returns, and 2) to obtain a refund of any overpayment of taxes they had made to the Internal Revenue Service [“IRS”].” Basile v. H & R Block, Inc., 729 A.2d 574, 581 (Pa.Super.1999) (citing Deposition of Laura Calvin, 11/18/93, at 103-04; Deposition of Sandra Basile, 11/17/93, at 33-35). Appellees remained at the office while H & R Block employees completed the tax forms. After completion, the H & R Block employees requested that Appellees sign the tax returns before H & R Block sent the returns to the IRS and the state Department of Revenue. Calvin Deposition, supra, at 104-05; Basile Deposition, supra, at 39-40. These facts indicate that: (1) Appellees manifested that H & R Block, through its employees, compute their taxes and complete and send their tax forms, thereby “rendering service but retaining control of the manner of doing it;” (2) H & R Block, through its employees, accepted the undertaking of completing and sending Appellees’ tax forms; and (3) Appellees remained in control, that is, they had to sign their own forms and the H & R Block employees completed the forms pursuant to information given to them by Appellees. See Reid, 503 Pa. at 462-63, 469 A.2d at 1033. For these reasons, I believe that an agency relationship existed between Appellees and H & R Block with respect to the computation of their taxes and the completion and submission of their tax returns to the taxing authority. What remains is to determine whether agency extended to the Rapid Refund portion of the transaction. I believe it does.
Evidence in this case establishes that when the H & R Block tax preparer determined that a particular taxpayer was eligible for a refund, the preparer offered the taxpayer one of three options. The taxpayer could choose between (1) an electronic filing of the tax return for a fee; (2) an electronic *375filing of the tax return for a fee with an electronic direct deposit by the IRS of the tax return to the taxpayer’s bank account; or 3) an electronic tax return filing for a fee with a refund anticipation loan arranged by H & R Block with a lending institution such as Mellon Bank, called a “Rapid Refund.” The Rapid Refund enabled the taxpayer to receive her “refund” within a few days, instead of the typical four-to six weeks it would take for the taxing authority’s refund check to arrive. Customers who chose the H & R Block Rapid Refund option were given an application which they completed and submitted to Mellon Bank. Once the bank approved the application, it issued a check to the taxpayer in an amount equal to the taxpayer’s anticipated refund less transaction fees. The taxpayer would then sign over the entire amount of the check from the taxing authority which would arrive a few weeks later.
H & R Block essentially contends that its relationship with the taxpayer is concluded once the tax return is filed, and that once the tax preparer offers her the application for the Rapid Refund, the taxpayer’s relationship is a creditor/debtor one with Mellon Bank. I disagree as I believe that H & R Block’s role in facilitating the Rapid Refund for the taxpayer is as the taxpayer’s agent as all three elements of agency exist. Here, (1) the taxpayer manifested her consent to the tax preparer that she wished to participate or take advantage of H & R Block’s Rapid Refund program when it was offered; (2) the preparer facilitated the process of obtaining a Rapid Refund by offering an application; and (3) the preparer consented to act on the taxpayer’s need by matching the taxpayer to a source for the early refund, here, Mellon Bank. See Reid, 503 Pa. at 462-63, 469 A.2d at 1033. Accordingly, I also believe an agency relationship existed between Appellees and H & R Block for purposes of the Rapid Refund Program.
“An agency relationship is a fiduciary one, and the agent is subject to a duty of loyalty to act only for the principal’s benefit.” Sutliff v. Sutliff, 515 Pa. 393, 404, 528 A.2d 1318, 1323 (1987) (citing Restatement (Second) of Agency § 387 (1958) (“[A]n agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected *376with his agency.”)). Furthermore, the Restatement (Second) of Agency § 389 states that: “Unless otherwise agreed, an agent is subject to a duty not to deal with his principal as an adverse party in a transaction connected with his agency without the principal’s knowledge.” Restatement (Second) of Agency .§ 389 (1958). Finally, the fiduciary duty an agent owes his principal also includes a duty of disclosure, that is, the agent must disclose all relevant information pertaining to the parties’ performances within the scope of the agency relationship. Matter of Estate of Evasew, 526 Pa. 98, 104-05, 584 A.2d 910, 912-13 (1990). In Evasew, we stated:
[A] fiduciary seeking to profit by a transaction with the one who confided in him has the burden of showing that he communicated to the other, not only the fact of his interest in the transaction, but all information he had which it was important for the other to know in order to enable him to judge the value of his property.
Evasew, 526 Pa. at 104, 584 A.2d at 912.
As H & R Block was the agent through which the Rapid Refund was facilitated, it had a duty to disclose the nature of its relationship with Mellon Bank in respect to the Rapid Refund Program. As the majority noted, “Block did not disclose to its [refund application loan] customers that it received a payment from Mellon Bank for each loan, shared in the profits of the [refund application loans] in other ways, or that the taxpayer’s endorsement on the back of the loan proceeds check constituted a signature on a loan agreement printed on the reverse of the check.” Maj. Op. 563 Pa. at 366, 761 A.2d at 1119. I believe that this is a gross violation of H & R Block’s fiduciary duty to Appellees. Since I believe that the evidence creates the inference that an agency relationship existed between H & R Block and Appellees for the entire tax return “package” offered and further, that H & R Block violated the fiduciary duty it owed to Appellees, I respectfully dissent.