Court Finds No Duty to Disclose Competing Offer
Read the full decision: Woodson v. DLI Properties, LLC, et. al.
In Woodson v. DLI Properties, LLC, the Supreme Court of South Carolina affirmed summary judgment in favor of a listing broker (“Broker”) who had been sued by Larius and Maurissa Woodson (“Offerors”) for failing to reveal to them that there was a competing bid on the property.
In early 2006, DLI Properties, LLC (“Sellers”) hired Broker, Allen Tate, in connection with the sale of a parcel of property. On Tuesday, August 1, 2006, Offerors requested that Broker send a draft form “Agreement to Buy and Sell Real Estate” (“Offer”). Upon its receipt, Offerors made multiple changes to the Offer, signed it, and sent it back to Broker to relay to Sellers. Over the course of the following days, Sellers and Offerors made and initialed numerous changes to the Offer and exchanged multiple counteroffers. Both parties sent and received these communications through Broker.
Late in the day on Friday, August 4, Offerors called Broker to let her know that they had forgotten to include a contingency term in their latest counteroffer. Broker discussed the additional term with Sellers, and then left a voice mail for Offerors stating that Sellers accepted the additional term, and instructing Offerors to notate the change in their counteroffer and leave it, along with a check for $1,000 earnest money, at Broker’s office. Offerors did so on the next day, and Broker immediately called Sellers to arrange finalization of the deal. However, because some of Seller’s partners were out of town, they planned to wrap up the deal early in the upcoming week.
On Sunday, August 6, a new prospective purchaser (“Purchaser”) called Broker and stated that he wanted to buy the property. After Broker informed Purchaser that there was an existing offer on the property, Purchaser made a cash offer with no contingent terms and an earlier closing date. After hanging up with Purchaser, Broker called Sellers to inform them of Purchaser’s offer, and to ask Sellers whether she should inform Offerors of the new bid. Broker also told Sellers that she was afraid that if she did tell Offerors of Purchaser’s bid, Sellers could lose both offers. Sellers instructed Broker not to say anything to Offerors about the new offer.
Sellers subsequently accepted Purchaser’s offer and Sellers and Purchaser executed the final agreement on Wednesday, August 9. That afternoon, Broker called Offerors to inform them that Sellers had accepted another offer. Offerors proceeded to file a lis pendens lien on the property in the amount of $3,000, and sued Sellers and Broker on numerous counts, including fraud and violations of the South Carolina Unfair Trade Practices Act. Offerors stated in their suit that Broker had misrepresented the viability of their Offer, had owed Offerors a duty of care to communicate truthful information to Offerors, and had breached that duty by failing to disclose the competing offer to them. They also contended that Broker had a duty to inform them earlier that Sellers had not signed their final offer. Offerors sought to close on the property and recoup the $3,000 they claimed represented the time and effort they had expended between the time Offerors sent their final counteroffer and the time Sellers rejected their counteroffer and closed the deal with Purchaser.
At trial, the court granted summary judgment in favor of Broker and Sellers. Offerors appealed, and the appellate court affirmed. On final appeal to the Supreme Court of South Carolina, the court again affirmed the judgment in favor of Broker and Sellers. In respect to Offerors’ contention that Broker owed them a duty of care, the court stated that Offerors were not clients of Broker, and the circumstances of the negotiation between the parties “did not imply a ‘trust and confidence’ between the parties” that would give rise to a duty to disclose another offer. The court went on to affirm dismissal of Offerors’ unfair or deceptive act claim on the basis that such a claim could only survive under the state’s law when the act in question affected the public interest. Here, stated the court, the act affected only the parties to the transaction.
Woodson v. DLI Properties, LLC, et. al. 406 S.C. 517, 753 S.E.2d 428 (2014).
Additional Information: The Code of Ethics and Standards of Practice of the National Association of REALTORS®, Standard of Practice 1-15, states that “REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker.” (Adopted 1/03, Amended 1/09).