Financial Adviser Who Was Also Realtor Breached Duty to Elderly Client

The Haisches built a substantial estate, including a ranch, and their wills from the 1990s reflected a desire to leave a substantial charitable legacy. Joe Duling became the Haisches’ financial adviser.  He was also a realtor and broker. When Haisch was 90 years old, the ranch was put up for sale. Despite several purchase offers, Duling got the Haisches to execute a Charitable Remainder Trust into which the ranch was gifted, even though the trust had numerous drafting problems. The trustee signed a listing agreement with Duling, making Duling the listing agent for the Trust. The trustee later signed a contract for sale and an option agreement, selling the ranch to Duling and his wife. There was a conflict of interest waiver and statement that the sales price was the best available. The trustee eventually sued Duling alleging Duling unduly influenced the Haisches to get the ranch, breached fiduciary duties as a financial adviser and real estate agent, and damaged the trust due to failure to pay fair market value for the ranch.

The jury ultimately found that Duling did not act in the best interests of the Haisches in his capacity as the financial adviser or as their realtor and returned a verdict of $1 million plus punitive damages of approximately $568,000. The decision was recently upheld by the Supreme Court of South Dakota on February 6, 2013.

Moral:  The duty of fidelity can never be ignored.  Even though a conflicts waiver was executed by the parties, the Jury still found the agent breached his duties to the client.

Lee A. Drizin, Esq,

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