Anchorage Attorney Robert Wagstaff may make a cottage industry out of suing dual agency brokers and agents, if they keep giving him the chance.

His success representing Joe Columbus, Jr. and his agent Robert Holbrook and McAlpine Investments, Inc. in a lawsuit against dual agents Bonnie Mehner and her broker Prudential Jack White has rocked Alaska. The defendants were ruled against, and settled out of court to pay over $200,000 before punitive damages could be awarded to the plaintiffs by the court.

Not only did the case and award put a cold chill through Alaska real estate, but the defendants provided Wagstaff with evidence that could be used in additional lawsuits, he says.

Just recently, he has filed a new lawsuit on behalf of Eldon and Elizabeth Tanner, who claim that it was not disclosed to them until well into their purchase of a $46,900 Mat-Su property that the same brokerage firm, Prudential Vista, (another Jack White brokerage) was acting as dual agent to both sides of the transaction. Wagstaff asked the court for class action status, which should be ruled upon in the next six months. Meanwhile, he is already collecting additional plaintiffs.

”What spawned the class action,” explains Wagstaff, “was Jack White's and Bonnie Mehner's defense that 'yes, we violated the statute - everybody does it. It's too difficult. We shouldn't be liable for punitive damages.' The judge wasn't impressed, and they set themselves up for class action. They do a high-volume residential business. For Alaska, they are the biggest player up there, and now they are on record saying 'this is how we do business.'”

One of the muddy areas of dual agency that Wagstaff would like to see cleared up is that the buyer fully understands who represents his or her interests. This is true whether the buyer is hiring an agent or a broker.

”They have no clue about who the agent is working for,” says Wagstaff, “who is representing the buyer. Alaska has a disclosure statute that requires from the agent from the getgo to tell the buyer that the agent is representing the seller and it also requires the agent to tell the buyer what the buyer's alternatives are - they can get their own agent, or allow the agent to represent the buyer as a dual agent. Dual agency at best is a difficult thing to do, but it is allowed by statute. The agent must comply with the statute.”

Real estate agents have worked as sellers agents for decades. The Alaska disclosure statute first appeared in 1991, and many agents still grapple with its interpretation to the point that state regulators have required that all agents renewing their licenses through 2002 take a continuing education course on agency disclosure.

Explains former Alaska real estate commissioner Audrey Foldoe, “We have all been through this in 2002. If you do it right everyone is protected.”

Yet, Foldoe admits that although she practices dual agency she prefers working one side of the transaction at a time.

“They want to know your allegiance,” she says. “For myself, I love working one side of the sale, it is so much more fun to represent one side.”

The real estate industry used to represent the seller only. Buyers were customers, and not offered fiduciary protections. Yet during the mid-1980s, the industry underwent an upheaval.

”It was nationwide,” says Foldoe. “The state passed a law saying you have to disclose on first contact.”

But first contact can be problematic. “If someone calls on the phone and asks about a house,” says Foldoe, “it doesn't seem appropriate to talk about representation, but if you are showing a house, you should disclose before you show the house. People call, and they don't have an agent, and they want to see the house right away. Then the agent shows the house. What I find is that the public is more informed, and even if the agent doesn't bring it up, the buyer knows and says, 'I understand that you are representing the seller.'”

Wagstaff takes an unsympathetic view.

”No, the whole purpose is not to help the consumers,” he says, “it is to get both sides of the commission. If they are a seller's agent, they run the risk of not getting half of the commission. That is the dynamics of it. Dual agency is founded upon greed and I think arguments can be made for dual agency like a lawyer representing both sides, but you can't do it, it is same with real estate. Both the buyer and seller have different interests, you can't discharge duties to either, you represent yourself. We didn't argue that in the Mehner case, because there wasn't compliance with the statute.”

Is there any difference between dual agency by an agent and dual agency by the brokerage?

”There are different levels,” he answers. “I think it is worse when it is same person, in legal obligations, it is the same. It is just another technique to keep the entire commission in-house.”

Non-compliance can also take the place of omitting information pertinent to the buyer's decision. “It is very clear that the statute apples directly to both parties (buyers and sellers) to be informed who is representing whom what that means. You should also be told what your options are – that you can get your own agent. The other option is dual agency, which has to be explained carefully, what the alternatives are, and who this person is in the transaction, you have to consent to dual agency.

Wagstaff, who is asking for disgorgement of commissions and punitive damages, says all he wants is compliance.

”Just comply with the statute,” he says.

Published: October 7, 2002

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