Discuss fully whether Sam had fiduciary duties to Mike and, if so, which fiducia

Business Law

1.  Robert is licensed real estate broker who maintains an office and employs several real estate salespersons.  John is also a licensed real estate broker, but is not employed by Robert.  John has an arrangement where he rents a desk in Robert’s office.  Whenever John needed forms to use in his business, he used forms provided by Robert.  These forms had Robert’s business name at the top.

Robert placed an advertisement in a local newspaper for property that his brokerage had listed for a property owner.  Martha, who was looking for a property to purchase, read the advertisement and called Robert to arrange a showing of the property.  Robert told Martha that he was very busy with other matters at the moment and would be unable to show her any property, but that he would send out “one of his men.”

The same afternoon John appeared at Martha’s home.  John showed the property to Martha, and Martha had John write an offer to purchase the property.  John used a purchase offer form that had the name of Robert’s firm on the top to prepare the offer.  Martha signed the offer, and John gave Martha a copy.   John told Martha to make out a check in the amount of $45,000 payable to him as an earnest money deposit on the purchase offer and told Martha that he would hold the check in the real estate office until the seller’s accepted Martha’s offer.

The next day, John cashed the check and both John and the cash disappeared.  When Martha called Robert to ask whether her offer had been accepted by the seller’s, Robert told Martha that he did not know that she had made an offer and had not seen John since he sent him to meet with Martha.

What is Martha’s best argument that John is an agent of Robert, and what elements must she prove to establish this type of agency?

2.  Sam and Gil teamed together to purchase a large tract of land, but were not successful in completing the purchase.  Mike purchased the tract.  Sam approached Mike to ask if Mike needed assistance to develop the tract.  Mike hired Sam and Sam worked as Mike’s employee to do financial analyses and steer properties through the approval process necessary to convert the raw land into parcels that could be sold to residential subdivision developers.  Sam was paid $20,000 per month for his work, and was entitled to 5% of any potential profits gained through the sale of any of the parcels.

When the development approvals were obtained, Sam helped Mike negotiate the sale of the property to SG Corporation, a corporation owned jointly by Sam and Gil, for $20 million.  Mike dealt with Gil on the sale of the property and was not told that Sam was a shareholder in the corporation.  After the sale, Mike and Sam agreed that Sam’s employment would terminate, and Sam told Mike that he was going to work for SG Corporation on the further land development.  Five months later, SG Corporation sold the same property to a residential subdivision developer for $110 million.  When Mike heard these details, he was not amused.  He filed a lawsuit against Sam for breach of fiduciary duties.

Discuss fully whether Sam had fiduciary duties to Mike and, if so, which fiducia

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