The facts
Mr. Mason, an owner of a commercial property, contacted Ms. Jackson to find a tenant for lease. Ms. Jackson was very familiar with residential lease transactions, but had no experience with commercial lease transactions. Thinking that there were little differences in the transactions, Ms. Jackson agreed to serve as the leasing agent for Mr. Mason’s property. Ms. Jackson was soon contacted by Mr. Cook about leasing the property. Ms. Jackson provided Mr. Cook with a standard residential leasing application and agreement. Understanding the differences in residential and commercial leasing arrangements, Mr. Cook provided Ms. Jackson with a sample commercial leasing agreement and application with addendums written in by him personally as well as $5,000 to secure his right to lease the property.
Upon receipt of the documents and money, Ms. Jackson presented the offer to Mr. Mason. At the same time, Ms. Lyons toured the property and submitted an offer as well. After reviewing each offer, Mr. Mason decided to accept Ms. Lyons’ offer. He outlined the reasons for his decision to Ms. Jackson. However, Ms. Jackson did not document the conversation or Mr. Mason’s reasons for choosing Ms. Lyons’ offer over Mr. Cook’s.
The result
Mr. Cook filed suit for discrimination against Ms. Jackson and Mr. Mason alleging that each unfairly discriminated against him based on his race and that they fraudulently accepted and withheld his money to lease the property.
Eventually the property was leased to Mr. Cook as the offer from Ms. Lyons fell through. Despite being granted use of the property, Mr. Cook continued with his discrimination suit. The suit settled for $20,000 in damages, despite defenses’ assertion that the reasons for rejection of Mr. Cook’s offer being completely unrelated to race. Defense costs were $80,000 making the total cost of the suit $100,000.
Risk factors
Risk factor #1
Knowing that she had no experience in commercial leases, Ms. Jackson shouldn’t have agreed to be Mr. Mason’s agent.
Risk factor #2
It was Ms. Jackson’s responsibility to document her conversation with Mr. Mason.
*The claim scenario is strictly documented for illustrative purposes only and provides an example of what a policy could cover. It is intended to provide a general overview of the program described. Please remember only the insurance policy can give actual terms, coverage, amounts, conditions and exclusions. Program availability and coverage are subject to individual underwriting criteria.
