Listing Salesperson Held to Owe Duty to Buyer

Read the full decision: Horiike v. Coldwell Banker

In Horiike v. Coldwell Banker et. al., a California court of appeal held that where a listing salesperson and a buyer’s rep are both licensed with the same broker, they each owe the same fiduciary duties to both parties to the transaction.   

In 2006, the owners of a luxury residence in Malibu hired Chris Cortazzo (“Listing Rep”) to sell their home.  Listing Rep, who was licensed under Coldwell Banker Residential Brokerage Company (“Broker”), listed the property on an MLS.  The MLS provided Listing Rep with public record information on the home, including a statement that the size of the home’s living space was 9,434 square feet.  Nonetheless, apparently relying on a letter from the property’s architect, Listing Rep listed the property on the MLS as offering “approximately 15,000 square feet of living areas.”  Listing Rep also prepared a flier for the property, which also listed the living area as approximately 15,000 square feet.

A few months later, a couple made an offer on the property, and asked Listing Rep for verification of the square footage.  Listing Rep provided the letter from the architect stating that the living area was approximately 15,000 square feet.  The couple requested the certificate of occupancy, which was not available.  After sellers refused the couple’s request for an extension to inspect the property, the deal fell through.  Shortly thereafter, Listing Rep revised the MLS listing to state that the living area square footage was “0/O.T.” meaning zero square feet and other comments. 

Meanwhile, Hiroshi Horiike (“Purchaser”) engaged Chizuko Namba (“Buyer’s Rep”) who also held her license with Broker. Buyer’s Rep saw listing for the Property and arranged a showing, at which Listing Rep gave Buyer’s Rep a copy of the flier stating that the living space of the home was 15,000 square feet.   

Purchaser bought Property.  Some time later, in preparing to do work on the residence, Purchaser determined that the square footage of the home was significantly less than 15,000 square feet. He filed a complaint against Listing Rep and Broker, alleging intentional and negligent misrepresentation and breach of fiduciary duty, among other counts.  At trial, after the presentation of Purchaser’s case to the jury, Listing Rep moved for nonsuit on the count of breach of fiduciary duty.  The trial court granted the motion, holding that Listing Rep owed no fiduciary duty to Purchaser. 

The appellate court reversed, stating that “a broker’s fiduciary duty to his client requires the highest good faith and undivided service and loyalty.”  And where, as in this case, a dual agency relationship has been created by merit of two salespersons licensed under the same broker representing a buyer and a seller, each salesperson owes not only his or her own client those fiduciary duties, but also owes them to the other salesperson’s client. 

The record from trial showed that Listing Rep knew that the square footage of the property had been recorded differently in different documents.  Furthermore, stated the appellate court, Listing Rep’s act of changing the MLS listing from “approximately 15,000 square feet” to “0/O.T.” suggested that the square footage of the property required further explanation, and “a fiduciary must tell its principal all of the information it possesses that is material to the principal’s interests.”  Therefore, concluded the court, a trier of fact could determine that Listing Rep had breached his fiduciary duty to Purchaser “by failing to communicate all of the material information he knew about the square footage.”    

The case was remanded to trial, and proceedings are ongoing.  Purchaser was awarded his costs to appeal the trial court’s judgment.   

Horiike v. Coldwell Banker et. al. 225 Cal.App.4th 427 (April 9, 2014).