In just under ten years, we have been hired over 30 times as an auction expert witness. Nearly all these cases have had claims in excess of $1 Million with the highest claim in excess of $75 Million.
We’ve learned a lot since that first case in New Orleans, Louisiana. Most notably, if you are an auctioneer there is absolutely no question that it’s best to stay out of court versus winning or losing in court.
We wrote about that in some detail here: https://mikebrandlyauctioneer.wordpress.com/2018/07/26/auctioneers-you-want-win-in-court-or-stay-out-of-court/ well understanding auctioneer’s can’t always avoid being a party in litigation.
Of the many things we’ve been exposed to, it seems to us obvious to always get everything in writing with sellers as well as disclose all known material (latent) defects in regard any property being sold. But that’s just the start …
Here’s a few other issues auctioneers should keep in mind which are actionable, with damages we’ve seen awarded:
- Running the bid / taking fictitious bids ($17 Million)
- Not following client’s legal directions ($11 Million)
- Mixing absolute and with reserve status on the same lot ($32 Million)
- Misusing “as-is” and misrepresenting property ($6 Million)
- Treating bidders with discretion other than bid price ($2.5 Million)
- Reopening the bid after, “Sold!” ($13 Million)
We have a site devoted to our services here: https://auctionlegalconsulting.com/. We’ve traveled to over 32 states to help attorneys navigate a wide variety of auction-related cases — from a county court house in a one-stop-light town in west Texas to the 29th floor of 7 Times Square overlooking New York City.
In speaking to an attorney the other day — as we sometimes speak to 2-3 a week — he told me his story and I told him I was disappointed any auctioneer would act in this fashion; I suggested if only he had acted “reasonably” in this case, there would have been no case.
The attorney quipped, that of course, “I was right,” but if everyone acted reasonably he would have to find other work. I suppose if we all ate better and exercised more we’d need fewer doctors too.
Certainly the risks increase with the value of the subject property. There are few lawsuits over any auction transaction under $5,000 — largely because the cost to litigate will likely exceed the claim. It seems once property crosses $100,000 (and certainly when over $1 Million) new attention is given to auctioneers / sellers / bidders / buyers behaving badly.
Lastly, it seems obvious to us that every auctioneer should work with an attorney, accountant and insurance professional prior to any legal action to help ensure proper business structure and adequate insurance coverage commensurate with the magnitude of any property being sold.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.