Gwendolyn N. Darby v. The Furman Company, Inc.

Breach of Fiduciary Duty - Real Estate Broker - Petitioner Gwendolyn N. Darby ("Darby") owned a large tract of
land in Greenville County. In 1987, Darby contacted respondent
Furman Company, Inc. ("Furman") and spoke with its agent, Bill
Fogleman ("Fogleman"). Darby expressed interest in selling 53
acres of her Greenville County property and signed an "Exclusive
Right to Sell" contract on May 5, 1987. In that contract, Darby
agreed to pay a $500 per acre real estate commission.

Fogleman produced Yarborough Real Estate Development Company
("Yarborough") as a potential purchaser. Yarborough planned to
develop the property into a new housing subdivision. Darby signed
a Contract of Purchase and Sale with Yarborough on May 15, 1987.
Under the terms of that contract, a purchase money note and
mortgage provided most of the purchase price. The contract
required Darby to subordinate her security interest to the
buyer's anticipated development financing. Their agreement placed
no cap on the amount to which Darby's interest could be
subordinated.

After Darby signed the purchase contract in May, agent Fogleman
and his wife joined purchaser Yarborough and another real estate
developer in forming Squires Creek Partnership ("Squires Creek").
Yarborough then transferred its interest in the real estate sales
contract to Squires Creek. Squires Creek closed the sale of the
property with Darby in December of that year. The trial produced
conflicting testimony as to the extent Fogleman revealed to Darby
his partnership interest with Squires Creek. Fogleman claims that
he fully disclosed his interests to Darby. Darby maintains that
she was unaware of the nature and extent of Fogleman's
involvement with the purchaser. Fogleman did testify that he
never put into writing any disclosure to Darby.

Squires Creek obtained more than $1.2 million in development
financing for the project. The development project failed and the
construction lender foreclosed on the property. Not only did
Darby lose her land, but the foreclosure action eliminated her
purchase money note and mortgage. Darby obtained a judgment
against Squires Creek for the value then owing on its promissory
note plus interest ($315,056.45). The Foglemans, who paid
$30,000, are the only ones to have made a payment on this award.
Darby has also sued and reached a confidential settlement with
the attorney who advised her on the contract.

In the present case, Darby sued Furman on a theory of vicarious
liability for Fogleman's breach of fiduciary duty and fraud. She
sought the total amount to satisfy her earlier judgment along
with the return of $26,500 in commission fees she paid to Furman.
The trial court judge heard the case without a jury and found
that Darby's breach of fiduciary duty claim was the equivalent of
a claim for constructive fraud.

Defendant's verdict.

Unknown

Unknown

Reversed by the Supreme Court of South Carolina. See: 513 S.E.2d 848 (S.C. 1999). Teh above date reflects the appellate court decision date, not the original trial date. Reported by kkm.