Business Associations, Pages 20–30

Green v. H & R Block, Inc.

Court of Appeals of Maryland, 1999


Plaintiffs are a class of people who used defendant's "Rapid Refund" program to obtain a "Rapid Anticipation Loan." This meant that defendant would obtain a bank loan from a third party for the amount of the refund and pay it within a few days. Defendant profited from this in three ways:

  1. Defendant received a license fee from the lending bank.
  2. Defendant purchased about half of the loans from the banks.
  3. Defendant received 15% of the check-cashing fee from Sears if the checks were cashed there as encouraged.

Plaintiffs sued for not disclosing these "kickbacks" in violation of its fiduciary obligations it owes to his customers because of its agency relationship.

Procedural History:

Trial court granted defendant's motion to dismiss, finding that it had no duty to disclose the benefits because no fiduciary obligation existed between it and its customers.


Was defendant an agent for its customers in the RAL program?


  • LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 22–23

    The creation of an agency relationship ultimately turns on the parties' intentions as manifested by their agreements or actions.

  • LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 23

    [C]ourts . . . have considered three characteristics as having particular relevance to the determination of the existence of a principal-agent relationship:

    1. the agent's power to alter the legal relations of the principal;
    2. the agent's duty to act primarily for the benefit of the principal; and
    3. the principal's right to control the agent


    The three factors used in determining whether an agency exists are valid, but they are not determinative and must be viewed within the context of the entire circumstances.


  • A principal does not have to exercise physical control over its agent's actions for an agency relationship to exist. The agent must merely be subject to the principal's control over the relationship's result. A principal does not need to exert constant control, nor control the details. It is reasonable to infer that the customers had ultimate control over filing their taxes and applying for the RAL. Thus, they had enough control to find that defendant was an agent.

  • Defendants also had the power to alter the plaintiffs' legal relations, despite requiring them to sign their loan applications themselves. Agents often require their principals to sign things. Defendant still prepared plaintiffs' applications, implicitly endorsed the applications, shared their tax returns, and handled the loan payments. It is reasonable to infer that defendant played an integral part in the customer's receipt of the loan, which has legal ramifications for its clients. Discovery may also disclose other means by which defendants affected its customers' legal relations.

  • Furthermore, defendant advertised that it could be trusted to obtain the highest and fastest refunds, largely because of it's "Rapid Refund" program. It is reasonable to expect that defendant is acting on customers side to get these highest and fastest refunds. Employees also encouraged customers to apply for RALs. It is reasonable to see how one could believe that defendant operated as the broker for the loans.

    Defendant also claims that it became the agent of the principal instead when the loan was approved, but even if so, defendant was serving two principals without disclosing it. Defendant also cannot file customers' tax returns until the RAL is approved or denied, so it would still be an agent for both sides at the same time until that is filed.


Yes, defendant was an agent for its customers in the RAL program. Reversed and remanded.