In a recent wrongful death case arising from an automobile accident, the Arizona Court of Appeals held that, while Arizona statutes and regulations mandate real estate brokers closely supervise their agents in a real estate transaction, they do not establish the broker’s requisite control over the other aspects of the agent’s activities to make the broker liable for the agent’s negligence arising out of an automobile accident.
In Santorii v. MartinezRusso, LLC dba RE/Max Professionals, No. 1 CA-CV 15-0211, filed 8-23-2016, a real estate agent, returning from a sales appointment, was involved in a car collision in which both drivers died. The widow of the other driver sued the real estate broker for vicarious liability for the agent’s negligence. The broker defended that the agent was not an employee, but rather an independent contractor, so the broker should not be liable for the agent’s driving. The agent furnished his own car, car insurance, was paid by commission only and made his own appointments.
The Court found that, although Arizona law imposes upon brokers the duty to supervise their agents, that duty regulates only the real estate transaction itself and does not extend to the agent’s driving. Thus, if the agent truly is an independent contractor and not an employee, then the broker would not be liable for vehicular accidents even if related to real estate transactions. However, if the agent was an employee, then the broker would, in fact, be liable for the agent’s negligent driving in the course of employment.
Therefore, for brokers to protect themselves from vicarious liability for acts of their agents, refer to our Spring Newsletter (link) for an analysis of the law on independent contractors versus employees and to our Summer Newsletter (link) for specific provisions that should be in an independent contractor agreement under Arizona’s new law. You also can contact us for a legal review and update of your independent contractor agreements.