Real Estate Attorneys Can Bring Third-Party Claims Against Real Estate Agents

| Jul 4, 2013 | Firm News

The Rhode Island Supreme Court has held that real estate attorneys sued in negligence by their clients with respect to a real estate transaction can bring third-party claims for contribution and indemnity against real estate agents involved in the transaction.

The clients alleged that they retained the attorneys, in part, to review leases respecting the subject property to determine if they were “triple net leases.”  The clients claimed they relied on the attorney’s incorrect advice that the leases were triple net leases and, as a result, overpaid $1.7 million for the property.  The attorneys moved to file a third-party complaint against the real estate agents alleging that the agents had reviewed the leases, that the agents had prepared financial information and projections knowing the clients would rely on them, that the agents had represented the leases were triple net leases and that the buyers had relied on the agents’ representations.  The third-party complaint alleged the agents were liable to the attorneys for contribution and indemnity.

The motion justice denied the motion to amend.  He held that under Rule 14, a third-party defendant could only assert a third-party claim against someone who owed a duty to the third-party defendant.  Since the third-party complaint only alleged a duty to the clients, the attorneys had no third-party claim against the agents.

The Supreme Court said a third-party claim can be based on contribution.  There is a right of contribution between joint tortfeasors if they are both liable in tort to the original plaintiff and their respective conduct caused the same injury to the original plaintiff.  The Court said that when the original complaint and the proposed third-party complaint are viewed together they collectively allege that the attorneys and the agents are potentially joint tortfeasors with respect to the clients because they caused the same injury.  There is no requirement for contribution that the third-party defendant owe a duty to the third-party plaintiff.

A party can bring a claim for indemnity if the claimant/proposed indemnitee is liable to another party, the proposed indemnitor is also liable to the other party and as between the prospective indemnitee and the indemnitor, the obligation ought to be discharged by the indemnitor.  The Court said that if the attorneys are able to introduce evidence which proves the agents’ acts were the active and primary cause of the clients’ injury, then the attorneys are entitled to indemnity.  The Court vacated the Superior Court’s denial of the motion for leave to assert the third-party complaint.

The Wampanoag Group, LLC v. Iacoi, 2013 WL 3064182 (R.I. June 19, 2013).



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