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Read the full decision: Weinberger v. Intero Real Estate Services CA3
California court reverses trial court and sends lawsuit against a listing broker back to the lower court for further proceedings in order to consider allegations that the sellers had not received the promised priority when reselling their timeshare interest.
A family trust (“Trust”) purchased a timeshare interest in a condominium located in a ski resort development. Shortly after the purchase, the Trust entered into a listing agreement with a real estate brokerage (“Brokerage”) to sell the timeshare interest. The listing agreement incorporated the terms from the resale agreement between the Trust and the property’s developer (“Developer”).
The resale agreement established rules for timeshare resales when multiple owners sought to sell their interest, including the priority of sales. The resale agreement stated that when an owner attempted to sell timeshare interests within five years of purchase, the owner must place their name on a resale list. Those owners on the resale list could only sell their interests when certain conditions were met, and priority was given to those who had closed the original escrow first.
The Trust claims that the Brokerage and the Developer breached the resale agreement because another owner who had closed escrow after the Trust was allowed to sell their property before the Trust, which interfered with the Trust’s ability to sell their timeshare interest due to the subsequent housing market collapse. The Trust filed a lawsuit against the Brokerage and the Developer, alleging breach of the listing agreement and the resale agreement. The Brokerage filed a motion to dismiss the lawsuit and the trial court granted the motion. The Trust appealed the trial court’s ruling.
The California Court of Appeal, Third District, partially reversed the trial court and sent the case back to the trial court for further proceedings. The trial court had ruled that the Brokerage was not a party to the resale agreement and so did not have a duty to monitor the priority of resales. However, the court found that the resale agreement had been incorporated into the listing agreement and thus there was a factual issue whether or not the Brokerage had breached its contractual duty when it was attempting to sell the Trust’s interest. Thus, the court reversed the dismissal of the breach of contract allegations and sent these allegations back to the trial court for additional proceedings.
Next, the court considered whether the Trust had sufficiently alleged a breach of fiduciary duty against the Brokerage. The Trust had alleged that the Brokerage had breached its fiduciary duty by failing to inform them that other owners were moving ahead of them on the resale list. The Trust introduced evidence showing that the resale list was maintained by the Brokerage and the Brokerage knew the Trust wanted to have priority on the resale list. The court found that the Trust had sufficiently alleged facts over whether the Brokerage had a duty to disclose material facts about the resale list and so sent these allegations back to the trial court.
Finally, the court also remanded the Trust’s allegations that the Brokerage had breached the implied covenant and fair dealing because the terms of the resale agreement had been incorporated into the listing agreement and so there was an issue of fact whether the terms of the resale agreement had been followed by the Brokerage. The court affirmed the dismissal of the remaining tort claims. Thus, the court partially reversed the trial court and returned the remaining allegations made by the Trust to the trial court for further proceedings.
Weinberger v. Intero Real Estate Servs., Inc., No. C080462, 2018 WL 476347 (Cal. Ct. App. Jan. 19, 2018). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information.]