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Court Awards Broker Attorney’s Fees Pursuant to the Listing Agreement

In Bardack v. Tomjanovich, a California appellate court recently upheld an award of attorney’s fees to Coldwell Banker pursuant to the express indemnity provision in the listing agreement. In Bardack, plaintiff purchased a home in Pacific Palisades for $6.5 million. The sellers purchased the property several years earlier for $4.25 million. At the time that the sellers purchased the property, they received reports and disclosures indicating that the home had active water leaks. The sellers experienced a water leak in the foyer. Two years later, they experienced another leak in the foyer’s skylight. A year later, they listed their home for sale with Coldwell Banker. The California Association of Realtors’ (“CAR”) listing agreement contained the following provision:

Seller further agrees to indemnify, defend and hold Broker harmless from all claims, disputes, litigation, judgments and attorney’s fees arising from any incorrect information supplied by Seller, or from any material facts that Seller knows but fails to disclose.

Subsequently, plaintiff made an offer to purchase the home for $6.5 million pursuant to a CAR Residential Purchase Agreement (“Agreement”). In the Agreement, the sellers were required to “disclose known material facts and defects affecting the property” to the plaintiff. Unfortunately, the sellers did not disclose to the buyer or Coldwell Banker the reports that they had received at the time they purchased the home, or that the home had active water leaks.

Subsequently, the plaintiff experienced several leaks and sued the sellers for breach of contract, negligence per se, intentional misrepresentation, negligent misrepresentation, concealment, rescission, and negligence for their failure to disclose the water leaks. Plaintiff also sued various inspectors, construction and design professionals. The sellers denied any wrongdoing and filed a cross-complaint against Coldwell Banker for equitable and implied contractual indemnity, alleging that Coldwell Banker was negligent and breached its fiduciary duty to the sellers in connection with their sale.

The matter proceeded to trial. The trials were bifurcated, limiting the first phase of the trial to plaintiff’s claims against the sellers and the sellers’ cross-complaint against Coldwell Banker. The jury found the sellers liable to the plaintiff for intentional misrepresentation, concealment and breach of contract. The jury awarded plaintiff damages of over $2.8 million and punitive damages of $250,000. The jury found Coldwell Banker and the agents were not negligent, nor did they breach any fiduciary duty to the plaintiff.

Coldwell Banker filed a motion for attorney’s fees and costs in the amount of $367,790 pursuant to the indemnity provision in the listing agreement. The trial court awarded Coldwell Banker $348,372. Plaintiff appealed. The appellate court upheld the award finding in an unpublished decision that Coldwell Banker was entitled to their attorney’s fees under the express indemnity provision of the listing agreement.

Please note that this case was not published by the California appellate court. Therefore, it may not be relied upon by the courts. However, it is a good indication as to how the court would interpret CAR’s Listing Agreement.

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