When is expert testimony required for real estate fiduciary duty claims? Posner v. Equity Title Ins. Agency Explained

In Posner v. Equity Title Insurance Agency, the Utah Court of Appeals addressed when expert testimony is necessary to prove breach of fiduciary duty claims against real estate professionals and reinforced fundamental agency law principles in escrow transactions.

Background and Facts

Posner, a Florida resident, hired Coldwell Banker to sell two Utah lots for $450,000 with $260,000 in seller financing. The purchase contract required the buyer to provide a surety bond to secure the financing. Posner hired Equity Title as his escrow agent and returned to Florida after signing closing documents. When the buyer later provided a “Financial Guarantee” instead of a traditional surety bond, Posner’s real estate agent Christoffersen approved the substitute instrument and instructed Equity to close. The buyer subsequently defaulted, and the Financial Guarantee proved worthless.

Key Legal Issues

The case presented two primary issues: (1) whether Equity breached its fiduciary duty by closing the transaction with an inadequate guarantee, and (2) whether expert testimony was required to prove Coldwell’s alleged breach of fiduciary duty in this complex transaction. A procedural issue also arose when the trial court excluded Posner’s expert witness for untimely disclosure under Rule 37(f).

Court’s Analysis and Holding

The Court of Appeals affirmed both summary judgments. Regarding Equity, the court applied agency law principles, finding that Christoffersen had both actual and apparent authority to act on Posner’s behalf. The court reasoned that following the principal’s authorized agent’s instructions cannot constitute a breach of fiduciary duty. For Coldwell’s claim, the court held that the transaction’s complexity—involving partial seller financing, surety bond requirements, out-of-state principals, and split closings—placed the professional standard of care beyond common knowledge of laypeople, making expert testimony mandatory.

Practice Implications

This decision establishes important precedent for professional liability claims in real estate. Practitioners should note that complex transactions involving unusual financing arrangements will likely require expert testimony to establish professional standards. The court’s strict application of discovery deadlines also demonstrates the importance of timely expert witness disclosure. Additionally, the decision reinforces that contractual attorney fee provisions can apply to tort claims arising from the same transaction, regardless of how the claim is characterized.