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Jury sides with Coldwell Banker in dual agency case

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On April 5, 2018, the jury in a second trial ruled in favor of the listing salesperson and Coldwell Banker on all claims in a square footage case. This is the second jury to exonerate the listing salesperson and broker in the same matter.

Billionaire Hiroshi Horiike bought a large Malibu house for $12.25 million in 2007. Although he admitted not reading any of the documents containing varying square footage such as permits, disclosures, public records, architectural drawings, he claimed the “approximate square footage” of 15,000 square feet on a flyer was a misrepresentation and a breach of the listing salesperson’s fiduciary duty.

The first jury held in favor of the broker and the listing salesperson on intentional and negligent misrepresentation claims. The judge had dismissed the breach of fiduciary duty claim against the broker that was based solely on the listing salesperson’s actions as the buyer’s salesperson, also licensed with Coldwell Banker, was not named.

In 2016, the California Supreme Court ruled that there was an agency relationship between the buyer and the broker and listing salesperson. The trial court retried all counts from the first trial plus the breach of fiduciary duty claim. Again, the jury found, after only a day of deliberation, that the broker and listing agent were not in breach even given the dual agency structure. The defense team was headed by Neil Gunny with Robert Shulkin assisting in a compelling defense of the broker and salesperson.

Take away: Square footage continues to be an issue of disclosures. Real estate professionals should make sure that when square footage information is provided, it is clear, as is stated in the Statewide Buyer and Seller Advisory (C.A.R. Form SBSA), that the broker has not verified the square footage regardless of the source. This case involved experts with different opinions about what “living area” square footage included. It is best practice that when licensees give clients available square footage information, they should attribute the source and indicate that the licensee has not verified the information and, as stated in the SBSA, that only an appraiser can reliably confirm square footage.

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