## Facts

- Sellers retained a real estate salesperson affiliated with a brokerage to list a Malibu residence.
- Public records and MLS data available to the listing salesperson reflected substantially lower square footage than the brokerage’s marketing materials.
- The listing salesperson marketed the home as offering “approximately 15,000 square feet of living areas,” despite possessing conflicting figures from permits, assessor-related information, and MLS data, and having obtained an architect letter referencing a larger number under a local ordinance.
- A different salesperson affiliated with the same brokerage worked with the buyer; the brokerage was disclosed as a dual agent for both buyer and seller.
- The buyer received the marketing materials reflecting approximately 15,000 square feet and was not told of the known conflicting measurements or advised to obtain independent verification.
- After closing, the buyer learned the living area was substantially less than represented and sued the brokerage and the listing salesperson for, among other claims, breach of fiduciary duty.

## Issues

1. Whether, when a brokerage is a dual agent in a residential real estate transaction, the broker’s associate licensees (including the listing salesperson) owe fiduciary duties to both buyer and seller.
2. Whether the trial court erred by granting nonsuit on the buyer’s fiduciary-duty claim against the listing salesperson and by instructing the jury that the brokerage could not be liable for fiduciary breach based on that salesperson’s conduct.

## Decision

- The Court of Appeal held that when a broker is a dual agent, the broker’s salespersons acting under the broker owe the same fiduciary duties to both buyer and seller as the broker.
- The court concluded the listing salesperson owed a fiduciary duty to the buyer because the brokerage was the disclosed dual agent.
- The court ruled the nonsuit on breach of fiduciary duty and the related jury instruction eliminating the brokerage’s liability theory were erroneous and prejudicial.
- The judgment was reversed, and the matter was remanded for a new trial limited to the breach-of-fiduciary-duty claim.

## Legal Principles

- In a transaction where a broker acts as a dual agent, fiduciary duties extend to both principals and apply to the broker’s associate licensees acting under the broker in the transaction.
- A real estate fiduciary must learn and disclose material information that might reasonably affect the principal’s decisions.
- Known discrepancies in material property characteristics (including conflicting square-footage information in marketing materials versus publicly recorded or MLS-accessible data) can be material and require disclosure in a dual-agency context.
- Trial court error is prejudicial when it removes from the jury a properly supported fiduciary-duty theory that is not necessarily resolved by verdicts on separate tort claims requiring different elements.

## Conclusion

The court reversed and ordered a new trial on breach of fiduciary duty because a brokerage’s dual-agency status imposes fiduciary obligations on its salespersons to both buyer and seller, and the jury was improperly prevented from considering whether the listing salesperson and brokerage breached those duties by failing to disclose known square-footage discrepancies and related material information.


Horiike v. Coldwell Banker Residential Brokerage Co., 225 Cal. App. 4th 427 (Cal. Ct. App. 2014)