Mary Ellen and David Holley ("Buyers"), a mixed race couple, were looking to purchase property in Twenty-Nine Palms, California.  The Buyers visited Triad, Inc... D/b/a/ Triad REALTOR® ("Brokerage") to help them with their search and spoke with Grove Crank, a Triad representative.  The Brokerage was a corporation whose sole shareholder was David Meyer ("Broker"), the president of Triad and also the designated officer/broker for the Brokerage.  David Meyer had turned the day-to-day operation of the Brokerage over to Crank.  During the Buyers' home search, Crank allegedly prevented the Buyers from purchasing a home for racially discriminatory reasons.  The Buyers eventually built their own house in the town.  The home the Buyers intended to bid on sold for less than the Buyers' proposed offering price.

The Buyers filed a lawsuit against both the Brokerage and the Broker personally, alleging violations of the Act, because Crank's license was held by the Brokerage, rather than the Broker. 

Under the general principles of corporate law, a corporation is liable for the actions of its employees.  The court also considered whether the Broker was individually liable for the actions of Crank because the parties were in an agency relationship.  Since the broker had delegated the operation of the Brokerage to Crank, an agency relationship existed between the two and Crank had a responsibility to assure that the Brokerage was in compliance with the Act as well as state housing laws.  Due to the agency relationship between the parties, the Broker could be individually liable for the actions of Crank.

The court also considered whether the Buyers had sufficient facts to pierce the corporate veil.  In this case the Broker was the sole owner of the Brokerage, paid the taxes using his personal social security number, and there was a failure to follow corporate formalities (such as shifting control of the Brokerage to Crank). The court found that fairness and equity allowed the disregarding of the corporate shield.

Source:  NAR