Haight Brown & Bonesteel has been dedicated to defending professionals throughout the State of California for over 40 years. As 2010 comes to a close, we are pleased to provide you with our latest issue of Professional Liability News, a regular publication of Haight Brown & Bonesteel.
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A CAREFUL ANALYSIS OF THE PLEADINGS CAN LEAD TO A FAVORABLE RULING FOR THE DEFENSE.
Plaintiff, Sherry Dang, filed an action alleging legal malpractice against her former attorneys, predicated on an allegation that they had failed to record a judgment lien against real property in which one of the judgment debtors owned an interest. Plaintiff alleged that, as a result of this failure, she lost her judgment lien interest when the judgment debtor died. The defendants filed a summary judgment motion presenting evidence through public records that a judgment lien was in fact filed, and therefore, argued that plaintiff could not prevail. Plaintiff opposed the motion with three new theories of liability against the attorneys and admitted that a judgment lien had been recorded by the defendants on her behalf. The trial court granted defendants’ motion and plaintiff appealed, arguing that the trial court erred by failing to grant her leave to amend.
The Court of Appeal rejected plaintiff’s position on the grounds that she had not sought leave to amend in the trial court. Plaintiff next argued that she should be permitted to pursue a claim of legal malpractice on the theory that the defendants had failed to “perfect” the lien and properly advise her of the risks of failing to do so. This argument was also rejected on the grounds that, not only was the theory not plead, but the plaintiff had failed to offer proof of the facts sufficient to establish such a new theory. The Court of Appeal also analyzed the new theory and concluded that, based upon the evidence presented, the theory was speculative.
The Court next examined plaintiff’s allegations that defendants incorrectly advised her that her former attorney’s value as a witness in the case outweighed any action against him and failed to properly analyze the underlying sales contract. The Court determined that these theories were distinct from those alleged in plaintiff’s Complaint and were not supported by the facts. The Court further found that a party cannot avoid summary judgment by asserting allegations outside the pleadings without making a motion to amend. Accordingly, the Court upheld the order granting summary judgment in favor of defendants. [Sherry Dang v. Alan Smith, et al., (2010) 190 Cal.App.4th 646.]
Real Estate Brokers/Salespersons
THE DUTY OF DISCLOSURE BY THE SELLER’S BROKER/SALESPERSON INCLUDES CONFIDENTIAL INFORMATION WHEN FACTS ARE KNOWN THAT MATERIALLY AFFECT THE VALUE OF PROPERTY.
The Court of Appeal has clarified the duty of a seller’s broker/salesperson to disclose to potential buyers certain confidential financial information if that information materially affects the value or desirability of residential property and is known and accessible only to him and not the buyer or potential buyer. In Holmes v. Summer, et al. (10/6/10) the plaintiffs offered to purchase residential real estate which had been listed by the defendant broker for $749,000 to $799,000, free and clear of all liens and encumbrances. During escrow it was learned that the property could not be transferred to them free and clear because debts on the property existed which totaled $1,141,000. The buyers sued the seller’s real estate broker and salesperson alleging causes of action for negligence, negligent misrepresentation and deceit. The trial court sustained defendants’ demurrer without leave to amend and the plaintiffs appealed. Starting with the general rule that the seller and seller’s broker are under a duty to disclose known facts materially affecting the value or desirability of the property which are known or accessible only to them, the Court determined that, because the seller and broker were aware of the magnitude of the debts and such information would not be readily available to the buyer, there was a duty owed by the broker and real estate agent to disclose the information. It was of particular concern to the Court that the failure of the seller’s agents to disclose this information amounted to a representation that there were no impediments to obtaining title to the property free and clear of monetary liens and encumbrances. Imposing the duty of disclosure in this instance would have the effect of protecting buyers from harm and providing them with sufficient information to enable them to choose wisely whether to enter into the transaction. It was also noted by the Court that the seller’s broker and agent could not hide behind certain confidentiality duties to their client, the seller. Any conflict in these duties could be resolved by obtaining the consent of the seller to disclose the information before the buyer entered into any contract to purchase the property. [Phil Holmes v. Sieglinde Summer, et al., (2010) 188 Cal.App.4th 1510.]
This document is intended to provide you with general information about recent professional liability related cases and issues. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this newsletter, please contact Jennifer Saunders at 213.542.8056 or firstname.lastname@example.org or your preferred Haight Brown & Bonesteel attorney. This communication may be considered advertising in some jurisdictions.