Santorii v. MartinezRusso, LLC
381 P.3d 248, 746 Ariz. Adv. Rep. 22, 240 Ariz. 454 (2016)
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Rule of Law:
Arizona's real estate statutes and regulations, which require brokers to supervise salespersons over transactions, do not, as a matter of law, establish an employer-employee relationship for purposes of vicarious liability, nor do they create a non-delegable duty for a broker to supervise a salesperson's driving.
Facts:
- Sergio Horcos was a licensed real estate salesperson working with MartinezRusso, LLC dba RE/Max Professionals.
- Horcos's contract with MartinezRusso specified that he was an independent contractor paid solely by commission and required him to act exclusively for MartinezRusso.
- Horcos was not required to keep specific hours, attend sales meetings, or meet sales quotas; he chose his territory, created his advertisements, prospected for clients, drove his own car, and worked from a home office.
- MartinezRusso provided optional office space, administrative services, sales leads, and training, for which Horcos was charged a monthly fee.
- MartinezRusso required Horcos to purchase an auto insurance policy naming MartinezRusso and RE/Max as additional insureds.
- Horcos was returning from a real estate sales appointment when his car crossed the center line and collided with a tractor-trailer driven by Tammy Santorii's husband.
- Both Horcos and Santorii's husband died in the collision.
Procedural Posture:
- Tammy Santorii brought a wrongful death lawsuit against MartinezRusso, LLC dba RE/Max Professionals in Arizona superior court (trial court), alleging vicarious liability for Sergio Horcos’s negligence.
- Following the close of discovery, MartinezRusso filed a motion for summary judgment, arguing Horcos was an independent contractor and thus it could not be held liable.
- Santorii filed a cross-motion for partial summary judgment, seeking a declaration that MartinezRusso was vicariously liable as a matter of law.
- The superior court granted MartinezRusso’s motion for summary judgment and denied Santorii’s cross-motion.
- The superior court certified its ruling under Arizona Rule of Civil Procedure 54(b).
- Santorii timely appealed to the Arizona Court of Appeals.
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Issue:
Does Arizona law establish that a real estate salesperson is an employee of a broker, either as a matter of law under real estate statutes and regulations, through a non-delegable duty, or under a fact-specific analysis of control, thereby making the broker vicariously liable for the salesperson's alleged negligence?
Opinions:
Majority - Cattani, Judge
No, Arizona law does not establish that a real estate salesperson is an employee of a broker, either as a matter of law, through a non-delegable duty, or under a fact-specific analysis of control, making the broker vicariously liable for the salesperson's alleged negligence. The court determined that while Arizona's real estate statutes and regulations impose a broker's responsibility to supervise real estate transactions and their documentation, they do not establish the necessary control over other aspects of a salesperson's activities, such as driving, to dictate an employer-employee relationship as a matter of law. The purpose of these statutes is to protect the public regarding transactions, not to control all aspects of a salesperson's work. The court rejected the argument for a non-delegable duty because the statutes and regulations mandate supervision over the real estate transaction itself, not over a salesperson's driving. Applying the Restatement (Second) of Agency § 220 factors, the court concluded that Horcos was an independent contractor. Key factors included Horcos's discretion over his time, manner, and means of travel, his use of his own car, his commission-based pay, and his autonomy in client prospecting and scheduling. The control MartinezRusso exercised was limited to real estate transactions, not his driving. The requirement for auto insurance did not imply a right to control his driving.
Analysis:
This case clarifies the boundaries of vicarious liability for real estate brokers in Arizona, distinguishing between statutory supervision over real estate transactions and the common-law test for an employer-employee relationship. It underscores that statutory obligations intended to protect the public in transactional matters do not automatically translate into a broad right of control over all aspects of a salesperson's activities, especially those outside direct transactional oversight like driving. The decision emphasizes the importance of the 'right to control' as the fundamental criterion in determining employment status, providing guidance on how the Restatement factors should be applied to licensed professionals operating with significant autonomy.
