1. Whether a real estate brokerage firm, once oral negotiations have begun between a seller and a potential purchaser, owes to a seller a duty to refrain from showing additional properties to potential purchasers.

2. Whether Defendant had a broker/principal relationship with Plaintiffs giving rise to an obligation to act as their fiduciary.

1. No. Unless a broker and principal specifically agree otherwise, a broker cannot be expected to decline a prospective purchaser's request to see another property listed for sale with that broker.

2. No. Defendant did not agree to become Plaintiffs' broker or act as Plaintiffs' fiduciary; nor could a clear intent to create a fiduciary relationship be discerned from the language of the commission agreement.

Plaintiffs purchased a condominium apartment in Manhattan, which they immediately listed for resale on an exclusive basis with Phyllis Koch Real Estate. Plaintiffs gave permission to Koch to contact other brokerage firms seeking potential buyers to offer to sell the property under a co-brokerage arrangement. Under New York City real estate practice at that time, a co-broker who facilitated a transaction would be entitled to half of the commission along with the listing broker. Defendant's salesperson, Susan Turkewitz, contacted a Koch salesperson and indicated that she had interested purchasers, Steve and Jenny Tam (the "Tams"). To commence the sale, Defendant requested a greater percentage of the purchase price from Plaintiffs than was the practice. Facilitating this request, Plaintiffs drafted an agreement between them and Defendant for the greater commission, should the sale be completed. Defendant signed the agreement; however, the Tams never signed a contract or forwarded a down payment with respect to Plaintiffs' condominium. Another of Defendant's salespersons, co-defendant Patricia Cliff, showed the Tams a different apartment in Plaintiffs' building, which the Tams subsequently decided to purchase.

Plaintiffs commenced a breach of fiduciary duty action against Defendant, asserting that Defendant had assumed the role of Plaintiffs' broker and that Defendant, through Cliff's actions, had breached its fiduciary duty by inducing the Tams to purchase the Roderick apartment instead. Defendant moved for summary judgment on the ground that it owed no fiduciary duty to Plaintiffs because Defendant represented the Tams in the proposed transaction and Defendant did not engage in improper conduct. The Supreme Court held that Defendant became Plaintiffs' broker when Defendant's vice-president executed the commission agreement and that an issue of fact existed as to whether Defendant breached its fiduciary duty when the proposed transaction between Plaintiffs and the Tams failed. A jury found in favor of Plaintiffs, and stipulated damages of $52,000 were awarded. Plaintiffs were granted pre-verdict interest, which was vacated on Defendant's motion.

The parties cross-appealed. Plaintiff contested the denial of pre-verdict interest, and Defendant challenged the determination of liability. The Appellate Division held that the nature of the relationship between Plaintiffs and Defendant was a question of fact which should have been submitted for jury determination. Accordingly, the Appellate Division reversed in favor of Defendant, concluding that the Supreme Court erred as a matter of law when it determined that Defendant assumed the role of Plaintiff's broker and that Defendant owed a fiduciary duty to Plaintiffs. Moreover, the Appellate Division held that, assuming Defendant owed Plaintiffs a fiduciary duty, Defendants did not breach that duty since there was no binding contract between Plaintiffs and the Tams. The Appellate Division granted Plaintiffs leave to appeal to the Court of Appeals, which ruled that Defendants were entitled to summary judgment dismissing Plaintiffs' complaint.

In determining whether a broker/principal relationship exists, the "courts must review the particular communications and agreements between the parties under the circumstances presented." (Dubbs v. Stribling & Assocs., 2001 N.Y. Int. 0072 (June 12, 2001); see generally, Northeast Gen. Corp. v. Wellington Adv., 82 N.Y. 2d 158, 162 (1993)). Here, Defendant did not agree to become Plaintiffs' broker or act as Plaintiffs' fiduciaries. The Court could not discern from the language of the commission agreement a clear intent to create a fiduciary relationship. No statement was made by Defendant in the commission agreement which indicated that Defendant was expected to perform any services for Plaintiffs. Rather, Defendant contacted Plaintiffs' listing broker, Koch, to advise them of potential purchasers. Even assuming that a broker/principal relationship existed, the Court held that Plaintiffs failed to demonstrate that Defendant engaged in conduct in breach of its fiduciary duty. Defendant did not have an obligation either to refuse the Tams' request to view other properties or to decline to assist them in making an offer for the Roderick apartment. "Unless a broker and principal specifically agree otherwise, a broker cannot be expected to decline a prospective purchaser's request to see another property listed for sale with that broker." Such a rule would "unreasonably restrain a broker from simultaneously representing two or more principals with similar properties for fear of violating a fiduciary duty in the event a purchaser chooses the property of one principal over another." Moreover, such a limitation would "frustrate the interests of sellers who benefit from the opportunity to market their properties to as many potential purchasers as possible, as well as the interests of potential buyers who often request exposure to a number of properties in order to select the one most suitable to their needs and budget."