{"id":202,"date":"2010-02-12T11:23:23","date_gmt":"2010-02-12T18:23:23","guid":{"rendered":"http:\/\/fiduciarydutiesblog.com\/?p=202"},"modified":"2010-02-12T11:23:23","modified_gmt":"2010-02-12T18:23:23","slug":"real-estate-agent-not-liable-for-breach-of-fidicuary-duty-without-proof-of-damages","status":"publish","type":"post","link":"https:\/\/fresnolawyerblog.com\/?p=202","title":{"rendered":"Agent Not Liable for Breach of Fidicuary Duty Without Proof of Damages"},"content":{"rendered":"

In the recent case of Sharabianlou v. Karp<\/em>, 2010 DJDAR 2039 (Feb. 8, 2010), the court considered the following facts.<\/p>\n

\"\"<\/a>\u201cSharabianlou [the buyer] offered to purchase a commercial building owned by Berenstein Associates.\u00a0\u00a0 The [buyer] engaged real estate agent Ronald Karp to represent them in the transaction.\u00a0 Soon after the offer was made, however, the parties learned of environmental contamination on the property.\u201d<\/p>\n

\u201cFaced with uncertainty about the scope of the contamination and the cost of its cleanup, and unable to agree on who should pay for the remediation, the parties failed to close escrow.\u00a0 After further efforts to resuscitate the transaction were unsuccessful, the [buyer] sued the [seller] and the [real estate agent].\u201d<\/p>\n

\u201cThe second amended complaint also included claims against the [real estate agent] for breach of fiduciary duty . . . The [buyer] contends that [the real estate agent] breached his fiduciary duty by failing to disclose to their lender’s appraiser that environmental contamination had been discovered on the property.\u201d<\/p>\n

So far, that\u2019s a traditional basis for a breach of fiduciary claim.\u00a0 The agent is required to disclose all material facts concerning the subject of the agency.<\/p>\n

Thus, the buyer \u201casserts that [the real estate eagent] knew he was relying on the appraisal to determine whether to exercise a contractual right to walk away from the contract.\u00a0 [The buyer] claims that had the contamination been disclosed to the appraiser, the property could have appraised for less than $1.7 million, and he would have exercised his right under Addendum 4 to cancel the Agreement.\u201d<\/p>\n

That\u2019s the background for the court\u2019s review \u2013 did the real estate agent \u201cfail to disclose the existence of the Piers environmental reports to US Bank’s appraiser?\u201d\u00a0 In its analysis, the court held that,<\/p>\n

\u201cA claim for breach of fiduciary duty by a real estate agent has three elements; a plaintiff must demonstrate the existence of a fiduciary relationship, its breach, and damages proximately caused by that breach.\u00a0 The trial court found no breach of fiduciary duty because the evidence showed the [buyer] and US Bank already knew that the toxic hazard and potential remediation cost was undefined and unknown.”<\/p>\n

This finding that will not be disturbed on appeal unless it is unsupported by evidence, and would undermine any claim for relief.<\/p>\n

The buyer made a peculiar concession to the appellate court.\u00a0 \u201cOn appeal, the [buyer] does not contest any of these findings.\u00a0 Instead, [the buyer] claims that as a matter of law, \u2018[the real estate agent] owed a duty to disclose the existence of environmental contamination on the property when he must have known that his failure to do so would affect his principals’ substantive rights.\u2019\u201d<\/p>\n

The appellate review could have ended at this point, because there was no finding of a failure to disclose.\u00a0 Instead, the court held held \u201cappellants cannot show any prejudicial error because they failed to present evidence of damages proximately caused by [the real estate agent\u2019s failure to disclose.\u201d<\/p>\n

The court explained that \u201cthere simply is no evidence that the property would have appraised for less than $1.7 million, and thus any claim that the [buyer] would have been entitled to cancel the Agreement on that basis is entirely speculative.\u00a0 Without such evidence, the [buyer] cannot show that [he was] damaged by the alleged breach of fiduciary duty.\u201d<\/p>\n

That\u2019s a bit of a strange turn.\u00a0 The concession that there was no failure to disclose should have ended the inquiry.<\/p>\n

Sharabianlou v. Karp<\/em>, 2010 DJDAR 2039 (Feb. 8, 2010)<\/p>\n","protected":false},"excerpt":{"rendered":"

In the recent case of Sharabianlou v. Karp, 2010 DJDAR 2039 (Feb. 8, 2010), the court considered the following facts. \u201cSharabianlou [the buyer] offered to purchase a commercial building owned by Berenstein Associates.\u00a0\u00a0 The [buyer] engaged real estate agent Ronald Karp to represent them in the transaction.\u00a0 Soon after the offer was made, however, the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-202","post","type-post","status-publish","format-standard","hentry","category-case-law"],"_links":{"self":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/202"}],"collection":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=202"}],"version-history":[{"count":0,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/202\/revisions"}],"wp:attachment":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}