The defendants were retired real estate agents who, in 2006, contacted several realtors and expressed an interest in selling their own home. One of the realtors worked with the same agency the defendants used to be associated with. She suggested that the home should list at $1.25 to $1.3 million. The defendants told her she was “crazy” and that their home was worth far more money. The realtor refused to take the listing. The defendants later apologized and the realtor decided to take the listing at a price of $1.37 million. The listing agreement was signed by the parties and they agreed to a 6% commission for the real estate agency. The defendants made several written changes to the form document, including a provision that the real estate agency would not receive a commission for the sale of the home after the termination of the listing agreement (regardless of whether the realtor found the buyer during the term of the contract.) The listing term was Oct. 9, 2006 to Apr. 9, 2007. In mid-December 2006, the realtor showed the home to prospective buyers. The parties entered into negotiations, but the defendants ultimately rejected the offers. On Dec. 29, 2006, the defendants informed the realtor that they were not happy with the real estate agency’s listing and wished to terminate the listing agreement.
Apparently, the prospective buyer and the defendants had been communicating with each other unbeknownst to the realtor during this time. The defendants, through another realtor, presented a counter-offer to the prospective buyer on Jan. 2, 2007, and the parties agreed on the purchase price of $1.2 million. The real estate agency brought suit, claiming that the defendants fraudulently induced them into terminating the listing contract. At trial, the court found for the plaintiffs and determined that the defendants had acted fraudulently. They ordered the defendants to pay the real estate agency $43,920 in commission and damages.
The defendants appealed and asserted that the agency did not prove that they made any misrepresentation to the agency. Fraudulent misrepresentation in Iowa requires intent to deceive by the use of false representations that result in injury and damage. The Iowa Court of Appeals did not accept the defendants’ arguments. The court believed that the defendants clearly made statements that were so insincere that they were made with the intent to mislead and deceive. Thus, the agency’s action for fraud was upheld. There was such a “close sequence of events” surrounding the de-listing and subsequent sale that the defendants’ true intent was quite apparent. There was also substantial evidence that the defendants made statements to lead the agency to believe that they had terminated all communications and negotiations with the prospective buyers. Ruhl & Ruhl Real Estate v. Kent, No. 0-394/09-1452 (Iowa Ct. App. Oct. 6, 2010).