Real Estate Agent Suing Attorney For Malpractice Is Not Bound By Arbitration Provision In A Retainer Agreement Signed By The Agent’s Brokerage Company

Lidia Dinkova of Daily Business Review has authored this interesting article discussing a Florida appellate decision in Jacocks v. Capital Commercial Real Estate Group, Inc. As described, Mr. Jacocks, a real estate agent, was victimized twice in pursuit of his share of a real estate commission to which he claimed entitlement from the sale of an apartment complex. First, he asserts that the buyer and seller secretly executed the transaction so as to avoid payment of a commission. Second, after the brokerage company, with the assistance of counsel, pursued legal action to recover the commission, a settlement was implemented through which the brokerage company refused to share the commission with him.

Mr. Jacocks thereafter sued the law firm claiming malpractice, alleging that it improperly chose sides, pursuing the interests of the brokerage firm while ignoring him. He claims he initially was viewed as a client by the firm even though the did not sign the retainer agreement, having paid part of the firm’s retainer and working closely with the attorneys. However, after separating from the brokerage firm during the pendency of the legal fight, the law firm thereafter ignored him and his interests without addressing the attendant conflicts of interest.

The law firm sought to arbitrate Mr. Jacocks’ malpractice claims, pointing to language in the retainer agreement and arguing that, as a claimed third party beneficiary of the agreement, Jacocks was bound by the arbitration provision. This argument prevailed with the lower court, but was reversed on appeal. According to the appellate court, “Jacocks is suing the defendants for negligence, not to enforce the retainer agreement. The fact that Jacocks relies on his status as an intended third-party beneficiary of the retainer agreement to establish that the defendants owed him a duty of care does not transform the basic nature of his claim from negligence to breach of contract.”

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