Oliveria-Brooks v. ReMax International

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State: Illinois

Court: 1st District Appellate

Docket No: 1-05-3967 Rel

Case Date: 03/21/2007

Preview:THIRD DIVISION March 21, 2007

No. 1-05-3967

CHRISTINE OLIVEIRA-BROOKS, Guardian of the Estate of Ana Marie de Oliveira Fernandes, a Disabled Person, Plaintiff-Appellant, v. RE/MAX INTERNATIONAL, INC., a Corporation, Defendant-Appellee (Roaring Fork Capital Partners, Inc., a Corporation, d/b/a Re/Max Northern Illinois, Antonio Nascimento, Mario J. Moretti, and T.S.W. #1, Inc., a Corporation, a/k/a Re/Max Midtown, Defendants.)

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Appeal from the Circuit Court of Cook County.

No. 01 L 15993

Honorable Diane J. Larsen, Judge Presiding.

PRESIDING JUSTICE THEIS delivered the opinion of the court: Plaintiff, Christine Oliveira-Brooks, as guardian of the estate of Ana Maria de Oliveira Fernandes, a disabled person, appeals from the order of the circuit court granting summary judgment in favor of defendant, Re/Max International, Inc. (Re/Max International). Plaintiff alleged that Re/Max International was vicariously liable for injuries Fernandes sustained in a accident while a passenger in a car driven by defendant Antonio Nascimento, a real estate sales associate affiliated with a Re/Max franchise. On appeal, plaintiff contends that summary

1-05-3967 judgment is not warranted because there is a genuine issue of material fact as to whether she established an actual or apparent agency relationship sufficient to hold Re/Max International vicariously liable for the alleged negligent conduct of Nascimento. For the following reasons, we affirm the judgment of the circuit court. BACKGROUND At the outset, we set forth and delineate the identity of the various defendants. It is undisputed that Re/Max International is the owner and licensor of the Re/Max trademarks and is engaged in the business of selling Re/Max franchises. Nevertheless, in 1977, it assigned its right to sell franchises in Illinois to the predecessor of Roaring Fork Capital Partners, Inc. doing business as Re/Max Northern Illinois, under a regional licensing agreement. By assigning its right to franchise, Re/Max International cannot sell franchises in Illinois, it has no ownership interest in Re/Max Northern Illinois or its franchisees, and has no contractual relationship with its franchisees or their sales associates. Re/Max Northern Illinois is the exclusive subfranchisor of local Re/Max franchises in the northern Illinois region.1 Re/Max Midtown is a real estate brokerage business that entered into a franchise agreement with Re/Max Northern Illinois to establish a local Re/Max franchise.2 Nascimento

Plaintiff's claim against Re/Max Northern Illinois settled prior to a ruling on its summary judgment motion. The trial court granted Re/Max Midtown's motion for summary judgment on its apparent agency claim, but denied its motion with respect to plaintiff's claim of actual agency. Thus, for purposes of this appeal, we assume that Nascimento was an agent of Re/Max Midtown. A separate appeal was taken with respect to Re/Max Midtown's claim of apparent agency, but that appeal has been stayed due to Midtown's bankruptcy filing. -22

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1-05-3967 was a licensed real estate sales associate affiliated with Re/Max Midtown through an independent contractor agreement. On September 24, 2001, while Nascimento was driving Fernandes and her son, Alex, to view some real estate property for sale, Nascimento's car collided with another vehicle and Fernandes was seriously injured. In her third amended complaint, plaintiff alleged that Nascimento was an actual or apparent agent of the entities Re/Max Midtown, Re/Max Northern Illinois, and Re/Max International and that Nascimento was acting in the course of his agency at the time of the collision. Plaintiff further alleged that Nascimento, individually and as an actual or apparent agent of these entities, was negligent in failing to keep a proper and sufficient lookout and in failing to follow various rules of the road under the Illinois Vehicle Code (625 ILCS 5/11-100 et seq. (West 2000)). During the pendency of the lawsuit, Re/Max International filed a motion for summary judgment against plaintiff, asserting that there was no actual or apparent agency relationship between Re/Max International and Nascimento. Therein, with respect to actual agency, it argued that the express provisions of the various agreements excluded an agency relationship, and it had no right to control or supervise the daily business activities of Re/Max Midtown or its sales associates. In support of its arguments, it attached the regional licensing agreement, the franchise agreement, the independent contractor agreement, and documents promulgated by Re/Max International, including trademark and graphic standards and its policy and procedure manual. Additionally, it attached deposition testimony from the following individuals: Re/Max International representatives, Re/Max Midtown's broker/owner, Nascimento, and Alex. Also

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1-05-3967 attached was Nascimento's business card indicating that each Re/Max office was independently owned and operated. With respect to the apparent agency claim, Re/Max International denied that plaintiff had come forward with any evidence that it held Nascimento out as its agent or that there was any evidence that Fernandes actually relied on any apparent agency relationship between Re/Max International and Nascimento. The various agreements attempt to set forth the relationship between and among the Re/Max entities and affiliated sales associates. Under the terms of the regional licensing agreement, Re/Max Northern Illinois was granted "complete control, authority, and the right to conduct the business as [it] deem[ed] appropriate." The franchise agreement between Re/Max Northern Illinois and Midtown provides that Re/Max International and Re/Max Northern Illinois do not "exercise control over or attempt to influence the day-to-day activities or business methods of [Re/Max Midtown] [or] assume responsibility for the actions of [Re/Max Midtown]." The franchise agreement further defines the relationship of Re/Max Midtown as an independent contractor. Under the terms of the franchise agreement, Midtown was obligated to identify its franchise as being an independently owned and operated real estate service office. Additionally, Nascimento had entered into a written agreement as part of his affiliation with Re/Max Midtown. That agreement provided in pertinent part: "[Nascimento] shall be deemed to be an independent contractor. [Nascimento] shall be free to devote to his real estate service business such portion of his entire time, energy, effort and skill as he sees fit and to establish his own endeavors. [Nascimento] shall

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1-05-3967 not be required to keep definite office hours, attend sales meetings or training sessions or adhere to sales quotas or participate in `floor time.' [Nascimento] shall not have mandatory duties except those imposed by law or regulation and those specifically set out in this Agreement. Nothing contained in this Agreement shall be regarded as creating any relationship (employer/employee, joint venture, partnership, shareholder) between the parties other than the independent contractor relationship as set forth in this Agreement." Additionally, the contract provided that Nascimento was required to adhere to office policies of Re/Max Midtown and the "System Standards" set forth by Re/Max Northern Illinois and Re/Max International. The contract further provided: "[S]uch Office Policies and System Standards have been established for the purpose of preserving the reputation, high standards and goodwill associated with the RE/MAX name and service marks, but they do not, and are not intended to, govern the specific means and manner by which [Nascimento] conducts his day-to-day real estate activities as an independent contractor on behalf of [Re/Max Midtown]." The contract also contained provisions indicating that Nascimento would be compensated solely by commissions, would not be treated as an employee for federal tax purposes, and would not be

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1-05-3967 covered by worker's compensation laws. Nascimento was also responsible under the agreement for his own automobile and the expenses related to it. He was required to obtain his own automobile insurance to protect himself against any liability which might arise in connection with the operation of his business as a real estate salesperson. He was also required to obtain a separate endorsement naming Re/Max Midtown, Re/Max Northern Illinois and Re/Max International as additional insureds on his policy. The agreement further provided that Re/Max International was not bound by or subject to the terms and conditions of the agreement between Nascimento and Re/Max Midtown. In her response to the motion for summary judgment, plaintiff argued that despite the express terms of the contracts purporting to exclude an agency relationship with Re/Max International, Nascimento and Re/Max Midtown were subject to extensive rules and regulations which were promulgated by Re/Max International. These rules included requirements regarding the promotion of the Re/Max name, and a written policy manual, which she argued demonstrated extensive control over Re/Max franchisees and the sales associates. In support, plaintiff relied on certain provisions in the policy manual and independent contractor agreement specifically relating to sales associates. These provisions included sales associates' duties of loyalty, cooperation, secrecy, use of forms prescribed by Re/Max Midtown, use and display of the trademarks in a manner prescribed by Re/Max International, membership in a realty association, and duties to attend any claims prevention seminars that may be approved by their broker. Plaintiff also pointed to the requirement that sales associates were to be full-time employees and were to name International as an additional insured on their automobile policies. Additionally,

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1-05-3967 plaintiff attached the deposition testimony of Elizabeth Posso, Re/Max Midtown's broker/owner, as evidence that Re/Max International controlled the day-to-day operations of her local franchise and its sales associates. The following relevant deposition testimony was presented to the circuit court. Posso testified that in about 1995, she decided to purchase a Re/Max franchise. As part of her ownership, she attended a mandatory training course at which time she was provided with instructions regarding the Re/Max system and was given specific policies and procedures for the operation of her franchise. She testified that she operated her franchise in accordance with the instructions provided during the training program and in accordance with the materials provided to her through Re/Max International. She did not disregard or develop her own policies and procedures and did not feel that she could run her Re/Max franchise in another way. She further testified that the independent contractor agreement entered into between Re/Max Midtown and Nascimento was developed by Re/Max International. She did not alter the contract in any way and did not believe she had the ability to change the terms set forth therein. Posso further testified that she did not interfere with Nascimento's day-to-day real estate business and did not tell him how to operate it. Re/Max International never inspected any records in her office and never came to her office to discuss her business. With respect to the sales associates, Posso testified that they could come and go as they pleased, they had a key to the office, they did not have to go to the office, did not have to make "cold calls," and did not have to attend meetings. When Nascimento got a listing, she had no control over that listing. Nascimento was not required to inform her about his daily appointments on any given day with

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1-05-3967 respect to his real estate business. Nascimento testified that his understanding was that he worked for Re/Max Midtown. He paid a monthly management fee, a fee for shared office expenses, an advertising fund fee, and annual membership dues for his affiliation with Re/Max International. He determined his own hours of work and determined what properties he would show. Nascimento was paid solely by commission. Nobody from Re/Max International ever called and told him how to do his job. He stated that he was not required to have an automobile to work at Re/Max, and none of the Re/Max entities contributed in any way to the payment of his vehicle or the upkeep of his vehicle. He was required to provide insurance for the vehicle, but his insurance had expired. He neglected to pay his premium and the coverage had lapsed. He was without insurance on the day of the collision. With respect to Nascimento's relationship with Fernandes, Nascimento testified that he had known her and her son Alex socially for several years prior to the accident. They knew each other from the Brazilian community. He had also worked with Alex previously on another property and Fernandes had co-signed the agreement to purchase that property. He recalls that he told Alex that he worked for Re/Max International, but did not remember telling Fernandes that information. He recalled the conversation with Alex because he would tell his clients about Re/Max International to show that it was a big company, that Re/Max would help them if they needed anything, and that Re/Max International was all over the world. Nascimento stated that the main reason why Alex and his mother selected him as their agent was because Alex knew that Nascimento had sold other properties for his uncle and other

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1-05-3967 friends and because he spoke English and Portugese. In Nascimento's mind, as far as Alex and Fernandes were concerned, it did not make a difference whether he worked for Century 21 or Re/Max He recalled giving Alex and his mother his business card. The card had his name, along with Re/Max Midtown on it, and stated that it was an independently owned and operated office. According to Nascimento, Fernandes had been to the office on two or three occasions. The sign on the front of the office was labeled Re/Max Midtown. When Fernandes called on the telephone, he would answer, "Re/Max Midtown, Tony Nascimento." On the day of the collision, he wore a pin that showed he was associated with Re/Max and had a balloon sticker on the left side window of his car which was a Re/Max logo. Alex testified that he chose to do business with Re/Max to buy his property because he saw the advertising and his uncle and a lot of friends had bought houses through Re/Max and they told him that he could trust that company. He found out that Nascimento worked for Re/Max, and he knew that he spoke Portuguese. When asked whether his mother was initially involved in the decision to use Re/Max to buy properties, Alex responded: "I decide- I was looking to buy a house before her. And the idea come up where [Nascimento] told me I didn't have credit enough to buy a building like that. And then I spoke with her, if she want to buy with me. And she said, I don't trust nobody, I said, no, it's a good company, and we can do that, which mean we can trust. Then she let me and this is it."

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1-05-3967 After a hearing, the circuit court granted Re/Max International's motion for summary judgment on both plaintiff's actual and apparent agency claims against it. Plaintiff filed this timely appeal. ANALYSIS A motion for summary judgment is properly granted when the pleadings, depositions, admissions, and affidavits on file, taken in the light most favorable to the nonmoving party, establish that no genuine issue of material fact exists and, therefore, the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2004). "Although a plaintiff is not required to prove his case at the summary judgment stage, in order to survive a motion for summary judgment, the nonmoving party must present a factual basis that would arguably entitle him to a judgment." Robidoux v. Oliphant, 201 Ill. 2d 324, 335, 775 N.E.2d 987, 994 (2002). The standard of review of an order granting summary judgment is de novo. Chatham Foot Specialists, P.C. v. Health Care Service Corp., 216 Ill. 2d 366, 376, 837 N.E.2d 48, 54-55 (2005). The doctrine of respondeat superior allows an injured party to hold a principal vicariously liable for the conduct of his or her agent. Moy v. County of Cook, 159 Ill. 2d 519, 523, 640 N.E.2d 926, 928 (1994). "The test of agency is whether the alleged principal has the right to control the manner and method in which work is carried out by the alleged agent and whether the alleged agent can affect the legal relationships of the principal." Anderson v. Boy Scouts of America, Inc., 226 Ill. App. 3d 440, 443-44, 589 N.E.2d 892, 894 (1992). While the existence of any agency relationship is usually a question of fact, it becomes a question of law when the facts regarding the relationship are undisputed or no liability exists as a matter of law.

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1-05-3967 Anderson, 226 Ill. App. 3d at 444, 589 N.E.2d at 894. "The burden of proving the existence of an agency relationship and the scope of authority is on the party seeking to charge the alleged principal." Anderson, 226 Ill. App. 3d at 444, 589 N.E.2d at 894. There is no dispute that Re/Max International and Re/Max Midtown had no contractual relationship, and that based upon the language of the various written agreements, the Re/Max entities clearly intended to exclude the possibility of any agency relationship. Nevertheless, the declaration of the parties is not controlling where the conduct of the parties demonstrates the existence of an agency relationship. Slates v. International House of Pancakes, Inc., 90 Ill. App. 3d 716, 726, 413 N.E.2d 457, 464-64 (1980). Thus, to overcome summary judgment, and impute Nascimento's liability for his alleged negligent driving to Re/Max International based upon an actual agency relationship, plaintiff must produce some factual indicia to show that the true relationship was one which vested the right of control in Re/Max International. After a review of the record and consideration of all of the evidence presented by plaintiff, we find no genuine issue of material fact with respect to an actual agency relationship between these defendants. Re/Max International and Re/Max Midtown did not have a franchisor/franchisee contractual relationship, and thus, Re/Max International had no contractual right to control Re/Max Midtown. Although there is evidence that Re/Max International promulgated policies and procedures intended for franchisees, there is no evidence that it retained the right to control the specific means and manner by which Re/Max Midtown sales associates conduct their day-to-day real estate activities so as to negate Re/Max International's intent.

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1-05-3967 The policy provisions plaintiff directs our attention to relate to general duties of a sales associate to abide by general system standards and a particular manner of advertising. Plaintiff points to the deposition testimony of Posso wherein she indicated, in general terms, that she was required to obtain franchisee training and to abide by the Re/Max system of operating her franchise. Nevertheless, inherent in any franchise is the need to protect the name, goodwill, reputation, and the trademarks and service marks it creates. 1 W. Michael Garner, Franchise and Distribution Law and Practice,

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