This case was last updated from Los Angeles County Superior Courts on 06/12/2019 at 14:46:34 (UTC).

JEE YONG SHIN ET AL VS HILTON & HYLAND REAL ESTATE ET AL

Case Summary

On 08/22/2017 JEE YONG SHIN filed an Other lawsuit against HILTON HYLAND REAL ESTATE. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is DANIEL S. MURPHY. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****3414

  • Filing Date:

    08/22/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Other

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

DANIEL S. MURPHY

 

Party Details

Plaintiffs and Petitioners

SHIN JEE YONG

SHIN PAUL

SHINN STEFAN J.

SHIN JEE YONG AKA PAUL SHIN

HANSEN CHRISTOPHER

HANSEN DEANNA

Defendants and Respondents

LASCANO ALPHONSO

DOES 1 TO 10

HILTON & HYLAND REAL ESTATE INC.

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

FULLER DANIEL H. ESQ.

FULLER H. DANIEL ESQ.

KIRKNER DONNA ELIZABETH

KIRKNER DONNA ELIZABETH ESQ.

Defendant Attorneys

COHEN LOREN NATHAN

TUCHMAN & ASSOCIATES

 

Court Documents

Minute Order

5/17/2018: Minute Order

NOTICE OF INTENT TO APPEAR BY TELEPHONE

6/22/2018: NOTICE OF INTENT TO APPEAR BY TELEPHONE

Unknown

9/25/2018: Unknown

Notice of Ruling

10/15/2018: Notice of Ruling

Case Management Statement

3/19/2019: Case Management Statement

Case Management Order

4/5/2019: Case Management Order

Notice

4/9/2019: Notice

Demurrer - with Motion to Strike

5/9/2019: Demurrer - with Motion to Strike

NOTICE OF CASE MANAGEMENT CONFERENCE

10/30/2017: NOTICE OF CASE MANAGEMENT CONFERENCE

NOTICE OF INTENT TO APPEAR BY TELEPHONE

11/13/2017: NOTICE OF INTENT TO APPEAR BY TELEPHONE

Unknown

11/13/2017: Unknown

SUMMONS ON FIRST AMENDED COMPLAINT

11/16/2017: SUMMONS ON FIRST AMENDED COMPLAINT

Unknown

11/17/2017: Unknown

Minute Order

11/29/2017: Minute Order

STIPULATION TO STAY ACTION PENDING COMPLETION OF ARBITRATION; ORDER THEREON

12/11/2017: STIPULATION TO STAY ACTION PENDING COMPLETION OF ARBITRATION; ORDER THEREON

NOTICE OF CASE MANAGEMENT CONFERENCE

10/13/2017: NOTICE OF CASE MANAGEMENT CONFERENCE

SUMMONS

8/22/2017: SUMMONS

COMPLAINT FOR: 1. PROFESSIONAL NEGLIGENCE; ETC

8/22/2017: COMPLAINT FOR: 1. PROFESSIONAL NEGLIGENCE; ETC

34 More Documents Available

 

Docket Entries

  • 05/28/2019
  • First Amended Complaint; Filed by Christopher Hansen (Plaintiff); Deanna Hansen (Plaintiff)

    Read MoreRead Less
  • 05/28/2019
  • Notice of Intent to Appear by Telephone; Filed by Jee Yong Shin (Plaintiff); Stefan J. Shinn (Plaintiff)

    Read MoreRead Less
  • 05/28/2019
  • Summons (on First Amended Complaint); Filed by Christopher Hansen (Plaintiff); Deanna Hansen (Plaintiff)

    Read MoreRead Less
  • 05/28/2019
  • Complaint (1st); Filed by Deanna Hansen (Plaintiff); Christopher Hansen (Plaintiff)

    Read MoreRead Less
  • 05/14/2019
  • Notice of Intent to Appear by Telephone; Filed by Jee Yong Shin (Plaintiff); Stefan J. Shinn (Plaintiff); Christopher Hansen (Plaintiff) et al.

    Read MoreRead Less
  • 05/09/2019
  • Request for Judicial Notice; Filed by Hilton & Hyland Real Estate, Inc. (Defendant); Alphonso Lascano (Defendant)

    Read MoreRead Less
  • 05/09/2019
  • Demurrer - with Motion to Strike (CCP 430.10); Filed by Hilton & Hyland Real Estate, Inc. (Defendant); Alphonso Lascano (Defendant)

    Read MoreRead Less
  • 05/09/2019
  • Declaration (Loren N. Cohen with Exhibits); Filed by Hilton & Hyland Real Estate, Inc. (Defendant); Alphonso Lascano (Defendant)

    Read MoreRead Less
  • 05/09/2019
  • Demurrer - with Motion to Strike (CCP 430.10); Filed by Hilton & Hyland Real Estate, Inc. (Defendant); Alphonso Lascano (Defendant)

    Read MoreRead Less
  • 05/09/2019
  • Demurrer - with Motion to Strike (CCP 430.10) (NOTICE OF MOTION and MOTION OF DEFENDANTS TO STRIKE PORTIONS OF THE SHIN/SHINN COMPLAINT;); Filed by Hilton & Hyland Real Estate, Inc. (Defendant); Alphonso Lascano (Defendant)

    Read MoreRead Less
54 More Docket Entries
  • 10/30/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

    Read MoreRead Less
  • 10/13/2017
  • Notice of Case Management Conference; Filed by Clerk

    Read MoreRead Less
  • 10/13/2017
  • Proof of Service (not Summons and Complaint); Filed by Jee Yong Shin (Plaintiff)

    Read MoreRead Less
  • 10/13/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

    Read MoreRead Less
  • 10/13/2017
  • PROOF OF SERVICE OF SUMMONS AND COMPLAINT ON HILTON & HYLAND REAL ESTATE, INC., DECLARATION OF REASONABLE DILIGENCE, AND PROOF OF SERVICE BY MAIL

    Read MoreRead Less
  • 10/13/2017
  • PROOF OF SERVICE OF SUMMONS AND COMPLAINT ON ALPHONSO LASCANO, DECLARATION OF REASONABLE DILIGENCE, AND PROOF OF SERVICE BY MAIL

    Read MoreRead Less
  • 10/13/2017
  • Proof of Service (not Summons and Complaint); Filed by Jee Yong Shin (Plaintiff)

    Read MoreRead Less
  • 08/22/2017
  • Complaint; Filed by Jee Yong Shin (Plaintiff); Stefan J. Shinn (Plaintiff)

    Read MoreRead Less
  • 08/22/2017
  • SUMMONS

    Read MoreRead Less
  • 08/22/2017
  • COMPLAINT FOR: 1. PROFESSIONAL NEGLIGENCE; ETC

    Read MoreRead Less

Tentative Rulings

Case Number: BC673414    Hearing Date: February 14, 2020    Dept: 32

Jee yong shin & STEFAN J. SHINN

Plaintiffs,

v.

HILTON & HYLAND REAL ESTATE, INC., et. al.

Defendants.

Case No.: BC673414

Hearing Date: February 14, 2020

[TENTATIVE] order RE:

motions for summary judgment or, in the alternative, summary adjudication

BACKGROUND

A. Shinn Action

Plaintiffs Jee Yong Shin and Stefan J. Shinn (“Shin/Shinn”) commenced this action against Defendants Hilton & Hyland Real Estate, Inc. (“H&H”) and Alphonso Lascano (“Lascano”) (collectively, “Defendants”) on August 22, 2017. Their operative pleading is the First Amended Complaint (“Shin/Shinn FAC”) filed on November 13, 2017. The Shin/Shinn FAC asserts causes of action for (1) professional negligence, (2) breach of fiduciary duty, and (3) unauthorized practice of law. The Shin/Shinn FAC alleges in pertinent part as follows.

H&H is a licensed real estate broker, and Lascano is a licensed real estate agent employed by H&H. On May 26, 2016, Defendants entered into a joint representation agreement with (1) Christopher Hansen and Deanna Hansen (“Hansens”) as sellers and (2) Shin/Shinn as buyers for residential real property located at 1935 Curson Place, Los Angeles, CA 90046 (“Property”). Escrow regarding the sale of the Property was originally scheduled to close on July 26, 2016. Prior to the closing, a water sprinkler in the ceiling of the Property’s master bedroom broke resulting in significant damage to the Property’s top floor and to the floors below as the water migrated downward.

In light of the water damage, Shin/Shinn and Hansens discussed what to do about the pending sale of the Property. Defendants advised them that the sale of the Property could still go forward prior to completion of the repairs and that the purchase and sale documents could be amended to reflect the changes in the transaction occasioned by the water damage. To that end, Defendants prepared, and Shin/Shinn and Hansens signed, a two-page document entitled Addendum #1 (“Addendum”). Defendants drafted the Addendum without the assistance of an attorney. The Addendum provided, among other things, that repairs would be performed by Shin/Shinn’s chosen contractors and paid for by State Farm under the Hansens’ insurance policy.

Escrow closed on July 29, 2016 and Shin/Shinn became the owners of the Property. Shin/Shinn and the Hansens are presently engaged in an arbitration dispute regarding the scope and cost of repairs to be made to the Property because State Farm never agreed to pay the repair costs directly to Shin/Shinn’s contractors. Instead, State Farm made payments to the Hansens, and the Hansens have attempted to dictate what requested repairs are reasonable and the reasonable amount owed for those repairs. As a result, the Property remains uninhabitable and the excessive delay has resulted in significant consequential damages to Shin/Shinn.

B. Hansen Action

Plaintiffs Christopher Hansen and Deanna Hansen (“Hansens”) filed a complaint against Defendants on July 25, 2018. Their operative pleading is the First Amended Complaint (“Hansen FAC”) on May 28, 2019. The Hansen FAC asserts causes of action for (1) professional negligence, (2) breach of fiduciary duty, and (3) violations of the Unfair Competition Law (“UCL”). The Hansen FAC repeats many of the same allegations set forth in the Shin/Shinn FAC.

According to the Hansen FAC, Defendants entered into a joint representation agreement with (1) the Hansens as sellers and (2) the Shin/Shinn as buyers for the Property. Prior to the closing of escrow, a water sprinkler on a fourth-floor ceiling malfunctioned causing water to flow down the walls and into the ground-level garage.

Defendants advised the Hansens and Shin/Shinn that the sale of the Property could still go forward prior to completion of the repairs. Defendants prepared, and the Hansens signed, the Addendum to amend the purchase and sale agreement. Defendants drafted the Addendum without the assistance of an attorney. The Addendum provided, among other things, that repairs would be performed by Shin/Shinn’s chosen contractors and paid for by State Farm under the Hansens’ insurance policy. Defendants did not obtain State Farm’s approval.

Disputes concerning the rights and obligations of the parties occurred almost immediately after the Addendum’s signing. The parties were unable to agree on the cost of repair and their rights and obligations under the Addendum. Shin/Shinn instituted arbitration proceedings against the Hansens to resolve the dispute. In the arbitration, Shin/Shinn was awarded damages totaling $582,853.75 as well as costs and attorney fees.

C. Course of Proceedings

On April 5, 2019, the Court consolidated the Shinn/Shinn Action (BC673414) with the Hansen Action (BC714602) and designated the Shin/Shinn Action as the lead case.

On July 8, 2019, the Court sustained Defendants’ demurrer to Shin/Shinn’s third cause of action without leave to amend.

LEGAL STANDARD

CCP section 437c(c) states: “The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” A material fact is one that “must relate to some claim or defense in issue under the pleadings, and it must also be essential to the judgment in some way.” (Riverside County Community Facilities District v. Bainbridge 17 (1999) 77 Cal.App.4th 644, 653.) The court may not weigh the evidence. (Mann v. Cracchiolo (1985) 38 Cal.3d 18, 39.) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. (CCP § 437c(f)(2).) The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-51.)

REQUESTS FOR JUDICIAL NOTICE

Defendants’ requests for judicial notice in its moving papers and in reply are granted.

The Hansens’ requests for judicial notice are granted as to Nos. 2 and 3 and denied as to No. 1.

EVIDENTIARY OBJECTIONS

Shin/Shinn’s objections to the Wallace Declaration are overruled.

Defendants’ objections to the Hansen, Jacobson, Ryan, and Shin Declarations are overruled.

DISCUSSION

Defendants move for summary judgment on the Shin/Shinn and Hansen FACs or, in the alternative, summary adjudication of each cause of action in those pleadings.

A. Negligence

1. Existence and Scope of Duty

The Shin/Shinn FAC and Hansen FAC each assert a cause of action for professional negligence. The Shin/Shinn FAC enumerates five breaches of Defendants’ duty of care, whereas the Hansen FAC enumerates four breaches. (Shin/Shinn FAC ¶ 17; Hansen FAC ¶ 41.) Both FACs allege that Defendants committed professional negligence by (1) not recommending and/or not insisting that the Hansens and Shin/Shinn (collectively, “Plaintiffs”) obtain legal counsel to assist them once the water damage occurred to the Property; (2) continuing to jointly represent the Plaintiffs after the water damage occurred when it was clear that Defendants had a new and significant conflict of interest in doing so; (3) negotiating and drafting the Addendum without the assistance of legal counsel; and (4) negligently preparing the Addendum. (Shin/Shinn FAC ¶ 17; Hansen FAC ¶ 41.) The Shin/Shinn FAC additionally alleges that Defendants committed professional negligence by advising Shin/Shinn to proceed with the immediate sale of the Property even though the Property was badly damaged, in need of major repairs, and uninhabitable. (Shin/Shinn FAC ¶ 17.)

“Duty is a question of whether the defendant is under any obligation for the benefit of the particular plaintiff.” (Staats v. Vintner’s Golf Club, LLC (2018) 25 Cal.App.5th 826, 832.) “The existence and scope of a duty are questions of law.” (Ibid.) Being a question of law, duty “is particularly amenable to resolution by summary judgment.” (Parsons v. Crown Disposal Co. (1997) 15 Cal.4th 456, 465.)

Defendants acknowledge that they served as the parties’ real estate broker in the transaction involving the Property and that, as the parties’ broker, they owed the parties some duties. Defendants dispute, however, that the scope of those duties extends to the specific actions identified by the parties.

“To assess the scope of a duty, a court must ‘identify the specific action or actions the plaintiff claims the defendant had a duty to undertake. “Only after the scope of the duty under consideration is defined may a court meaningfully undertake the balancing analysis of the risk and burdens present in a given case to determine whether the specific obligations should or should not be imposed.” ’ ” (Staats, supra, 25 Cal.App.5th at 833-34.)

a. Recommendation to Obtain Legal Counsel

The Shin/Shinn and Hansen FACs allege that Defendants’ broker duties included recommending and insisting that Plaintiffs “obtain legal counsel to assist them once the water damage occurred to the Property.” (Shin/Shinn FAC ¶ 17; Hansen FAC ¶ 41.)

Defendants argue that the parties’ agreement, as memorialized in various paperwork, compel a different conclusion. Section 18 of the Purchase Agreement is entitled “Brokers.” Subsection B of this section is entitled “Scope of Duty.” Subsection B states: “Buyer and Seller acknowledge and agree that Broker: … (x) Shall not be responsible for providing legal or tax advice regarding any aspect of a transaction entered into by Buyer or Seller; and (xi) Shall not be responsible for providing other advice or information that exceeds the knowledge, education and experience required to perform real estate licensed activity. Buyer and Seller agree to seek legal, tax, insurance, title and other desired assistance from appropriate professionals.” (Lascano Decl. Ex. 1; DUMF 8.) A Buyer Material Issues form signed by Shin/Shinn and a Statewide Buyer and Seller Advisory signed by the Plaintiffs repeat the same advisements. (DUMF 10-11.) Similarly, the Disclosures Regarding Real Estate Agency Relationship signed by Plaintiffs state: “A real estate agent is a person qualified to advise about real estate, if legal or tax advice is desired consult a competent professional.” (DUMF 9.)

Defendants also rely on Carleton v. Tortosa (1993) 14 Cal.App.4th 745. There, the plaintiff sued his real estate broker for professional negligence, claiming that the broker should have warned him of adverse tax consequences on certain real estate transactions. The trial court granted the real estate broker’s motion for summary judgment, concluding that the real estate broker owed no such duty. On appeal, the appellate court noted that real estate brokers owe two sets of duties: those imposed by regulatory statutes and those arising from the general law of agency. The appellate court explained that the plaintiff needed to show a duty derived from the general law of agency because the plaintiff had not contended that the broker failed to fulfill a statutory duty. The appellate court noted that the existence and extent of those agency duties are determined by the terms of the agreement between the parties.

“Plaintiff's agreement with defendant is contained in the listing agreements, disclosure statements and purchase contracts described above…. The listing agreements for sales of the properties … told plaintiff that defendant, a real estate broker, was ‘qualified to advise on real estate,’ but informed plaintiff he should ‘consult an appropriate professional’ if he desired legal or tax advice. The real estate agency disclosure forms advised plaintiff to ‘carefully read all agreements to assure that they adequately express your understanding of the transaction,’ and reiterated that ‘[a] real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.’ The real estate purchase contracts informed plaintiff that ‘[a] real estate broker or agent is qualified to advise on real estate. If you require legal or tax advice, consult your attorney or accountant.’ Moreover, the contracts specifically advised plaintiff that ‘[n]o representation or recommendations are made by the broker, agents, or employees as to the legal sufficiency, effect, or tax consequences of this document or the transaction relating thereto. These questions are for your attorney and or your accountant.’ ” (Carleton, supra, 14 Cal.App.4th at 755-56.)

The appellate court concluded that “[t]hese documents negate plaintiff’s claim of duty.” “Plaintiff’s claim that defendant had a duty to inform him of her lack of expertise with section 1031 exchanges and to advise him to seek other professional help in that regard is negated by the documents’ provisions stating a broker is qualified to advise on real estate but legal or tax advice should be obtained from a ‘competent professional,’ an ‘attorney and or ... accountant.’ These documents also provide the very advisement which plaintiff claims defendant should have given: that plaintiff should ‘seek other professional assistance’ regarding tax consequences of the transactions here at issue. (Carleton, supra, 14 Cal.App.4th at 756.)

Defendants’ argument is well-taken. Plaintiffs have not identified a statutory duty which Defendants failed to fulfill, so Plaintiffs must predicate their negligence claims on a duty derived from agency law and, in turn, the parties’ agreement. Similar to Carleton, the parties’ agreement contains repeated advisements warning Plaintiffs that Defendants are “not … responsible for providing legal or tax advice regarding any aspect of a transaction entered into by Buyer or Seller” or “for providing other advice or information that exceeds the knowledge, education and experience required to perform real estate licensed activity.” Like Carleton, the parties’ agreement provide the very advisement which Plaintiffs claim should have been given: that the Plaintiffs should “seek legal, tax, insurance, title and other desired assistance from appropriate professionals.” These advisements negate Plaintiffs’ claim of duty.

Shin/Shinn responds that Carleton is distinguishable because that opinion confines an agent’s duties to those arising out of the contract unless the agent has engaged in “some conduct … consistent with assuming broader duties.” As the Hansens point out, Carleton involved a broker’s failure to structure a transaction to minimize her client’s tax liability, not a performance of duties claimed to be outside the scope of services. Plaintiffs claim that Lascano assumed broader duties by offering legal advice and preparing the Addendum which had legal ramifications for the Plaintiffs.

Shin/Shinn present expert testimony from Michael K. Ryan (“Ryan”), a licensed California broker and general contractor. (Ryan Decl. ¶ 3.) Ryan opines that industry practice is that “once a list of ‘deal terms’ is tentatively agreed to that the Realtor would then direct each of his clients to have their respective attorneys[] transcribe this list into a formal legal agreement for their review and execution.” (Ryan Decl. ¶ 13.) Ryan opines that Defendants practiced law when they drafted the Addendum and acted negligently by doing so without a license. (See Ryan Decl. ¶ 14; see also Estate of Condon (1998) 65 Cal.App.4th 1138, 1142 (“The practice of the law … includes legal advice and counsel and the preparation of legal instruments and contracts by which legal rights are secured although such matter may or may not be [ ] pending in a court.”) .)

Similarly, the Hansens rely on the expert testimony of Lawrence H. Jacobson (“Jacobson”), a licensed California attorney that has written articles on real estate brokers and lectured on the topic of real estate. (Jacobson Decl. Ex. A.) Jacobson opines that Lascano should not have prepared the Addendum. (Jacobson Decl. ¶ 6c.) According to Jacobson, “[w]hile it is certain that it is the custom and practice of real estate agents to fill in the blanks in C.A.R. forms, or simple addenda, custom and practice does not extend to drafting complex documents with significant legal issues and consequences.” (Ibid.)

However, Ryan’s and Jacob’s testimony is predicated on the assumption that Defendants drafted the Addendum, as opposed to simply put it together. An agent is not “guilty of practicing law without a license” if the agent has “only undertaken to perform the clerical service of filling in the blanks on a particular form in accordance with information furnished him by the parties, or had merely acted as a scrivener to record the stated agreement of the parties to the transaction.” (People v. Sipper (1943) 61 Cal.App.2d Supp. 844, 846-47 disapproved of on other grounds by Murgia v. Municipal Court (1975) 15 Cal.3d 286.) Defendants correctly point out that the Addendum consisted of five basic deal terms which originated from the parties’ own email correspondence. (Lascano Decl. ¶¶ 15-16, 20-21, Exs. 2, 13-14.) As Ryan and Jacobson both concede that brokers prepare addenda to purchase agreements and such addenda logically entail some degree of writing-in (see Reply RJN Exs. 2-3), there is no well-reasoned basis to conclude that the Addendum was actually an assumption of broader duties.

Shin/Shinn dispute Defendants’ role as a scrivener. Shin declares that Lascano conceived of the idea of the Addendum and drafted the initial version himself. (Shin Decl. ¶ 8.) Christopher Hansen testified at deposition that he would provide input to Lascano and Lascano “would craft Addendum 1 to his liking.” (Hansen Depo. p. 94.) However, this testimony is not probative because a broker can “fill[] in in the blanks on a particular in accordance with information furnished him by the parties.” Lascano did essentially this with the information supplied by Shin/Shinn and the Hansens. Ryan and Jacobson have not furnished a reasonable basis to conclude that a CAR addendum form is the only means by which a broker can properly prepare an addendum.

Furthermore, the Rutter Guide on Real Property Transactions provides sage instruction: “As a practical matter, under the foregoing standards [which define the “practice of law”], almost every broker probably engages in the ‘unauthorized practice of law’ to a certain extent. This is because brokers routinely assist their clients in everything from choosing the form of the purchase and sale agreement to selecting which provisions to leave in and which ones to delete or modify; typically, they also offer suggestions on the pros and cons of particular provisions (e.g., a liquidated damages clause). Nonetheless, no known reported authority has held these traditional broker functions ‘off limits’ (but see People v. Sipper, supra, re broker advice concerning loan documents).” (Greenwald & Bank, Cal. Practice Guide: Real Property Transactions (The Rutter Group 2019) ¶ 2:8.) Construing the preparation of an Addendum under these circumstances as the “practice of law” would have the effect of rendering “traditional broker functions ‘off limits.’ ”

Defendants did not owe Plaintiffs this duty.

b. Joint Representation

The Shin/Shinn and Hansen FACs allege that Defendants’ broker duties included discontinuing the joint representation of Plaintiffs after the water damage occurred because it was clear that Defendants had a new and significant conflict of interest in doing so. (Shin/Shinn FAC ¶ 17; Hansen FAC ¶ 41.)

Defendants argue that no such duty is owed because California law permits a broker to represent both a buyer and seller in a transaction, even when that representation creates conflicts of interest existing at the time of the Addendum’s execution. The Court agrees.

The Civil Code permits a broker to act as a “dual agent,” that is, an agent “for both the seller and the buyer in a real property transaction.” (Civ. Code § 2079.13(d); see DUMF 7.) A dual agent must obtain a signed disclosure form from both the buyer and seller. (Civ. Code § 2079.14.) Civil Code section 2079.16 sets forth the text of this disclosure:

“A real estate agent, either acting directly or through one or more salespersons and broker associates, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer. [¶] In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer: (a) A fiduciary duty of utmost care, integrity, honesty, and loyalty in the dealings with either the Seller or the Buyer. (b) Other duties to the Seller and the Buyer as stated above in their respective sections. [¶] In representing both Seller and Buyer, a dual agent may not, without the express permission of the respective party, disclose to the other party confidential information, including, but not limited to, facts relating to either the Buyer’s or Seller’s financial position, motivations, bargaining position, or other personal information that may impact price, including the Seller's willingness to accept a price less than the listing price or the Buyer’s willingness to pay a price greater than the price offered.”

In this case, Lascano obtained Plaintiffs’ signatures on the Purchase Agreement and the required statutory disclosures. (Lascano Decl. ¶ 7, Exs. 1, 3-4.) In the Purchase Agreement, Plaintiffs acknowledged that H&H is an agent of both the buyer and seller in the transaction. (Lascano Decl. Ex. 1.) As such, Defendants properly became dual agents in this transaction.

Shin/Shinn appear to concede this conclusion as they no longer claim this to be a breach of duty. (See Shin Opp. at 5-6.) The Hansens argue that Defendants had an inherent conflict of interest as Shin/Shinn sought to receive a larger sum of money to perform repairs and the Hansens sought to pay out a minimal sum of money. (Hansen Opp. at 11.) The Hansens contend that Defendants’ failure to recognize and address this conflict is a breach of duty. However, the Hansens present no evidence that the Defendants failed to recognize this conflict and cite no legal authority precluding a dual agency under such circumstances. As the Civil Code sets forth no exemptions as to when a brokers may act as a dual agent, the Court will not read them into the statutes.

Defendants did not owe Plaintiffs this duty.

c. Advice to Proceed with Sale

The Shin/Shinn FAC alleges that Defendants’ broker duties included advising Shin/Shinn not to proceed with the immediate sale of the Property as the Property was badly damaged, in need of repairs, and uninhabitable. (Shin/Shinn FAC ¶ 17.)

As noted ante, a broker owes statutory duties. “[A] broker’s fiduciary duty to his client requires the highest good faith and undivided service and loyalty. [Citations.] ‘The broker as a fiduciary has a duty to learn the material facts that may affect the principal’s decision. He is hired for his professional knowledge and skill; he is expected to perform the necessary research and investigation in order to know those important matters that will affect the principal’s decision, and he has a duty to counsel and advise the principal regarding the propriety and ramifications of the decision.” (Assilzadeh v. California Federal Bank (2000) 82 Cal.App.4th 399, 414-15 (emphasis added).) A duty to counsel and advise the principal Shin/Shinn regarding the Property would logically entail advising Shin/Shinn not to proceed with the sale if the Property is viewed as irredeemable.

Defendants present expert testimony on this issue to show the absence of a breach. Alan D. Wallace (“Wallace”) is an attorney licensed to practice in California and a licensed California real estate broker. (Wallace Decl. ¶ 4.) Wallace has been involved as a real estate broker in thousands of real estate transactions. (Ibid.) Wallace opines that it is “within the custom and practice of real estate brokers to have situations where a home encountered damage during the escrow or where buyers demand extensive repairs which may or may not have been completed at the time of closing. In these situations, the parties customarily enter into addendums and agreements for continuing work to be completed after the close of escrow with negotiated escrow holdbacks and agreements for completion of the work.” (Wallace Decl. ¶ 15.)

This expert testimony constitutes a prima face showing that Defendants did not breach this duty because this testimony shows that water damage is customarily addressed through addenda and agreements for repairs. This is how Defendants proceeded in this transaction.

Shin/Shinn have not provided expert testimony rebutting this testimony.

Defendants did not owe Shin/Shinn this duty.

d. Negotiation and Drafting of Addendum without Legal Counsel

The Shin/Shinn and Hansen FACs allege that Defendants broker’s duties included the negotiation and drafting of the Addendum with the assistance of legal counsel. (Shin/Shinn FAC ¶ 17; Hansen FAC ¶ 41.)

As explained ante, the Court has concluded that Defendants acted as a scrivener in preparing the Addendum and that their actions did not constitute the practice of law. The question posed here is slightly different. As brokers acting in their capacity as brokers, did the Defendants’ duty of care include preparation of the Addendum with the assistance of legal counsel?

Defendants argue that a broker’s duty does not encompass this specific duty. Wallace opines that “[i]t is within the custom and practice of real estate brokers to assist their clients in preparing purchase agreements, counter offers and addendums that include deal terms material to the transacting parties. Even filling out the [CAR] forms concern material deal points of the transacting parties. Within those forms there are often deal terms and separate addenda that are prepared by the brokers which reflect the material deal terms of their clients. As such, it is customary in the industry for Brokers to assist their clients in putting their clients material deal terms in the contracting documents.” (Wallace Decl. ¶ 14.) Wallace opines that Defendants’ act of putting the Plaintiffs’ deal terms together in the Addendum was within the custom and practice of a California real estate broker. (Ibid.)

Plaintiffs respond with expert testimony of their own. Shin/Shinn cites to the Ryan Declaration. Ryan disagrees with Wallace’s opinion that Defendants’ preparation of the Addendum was within the custom and practice of a California real estate broker. (Ryan Decl. ¶ 12.) To reiterate, Ryan opines that industry practice is that “once a list of ‘deal terms’ is tentatively agreed to that the Realtor would then direct each of his clients to have their respective attorneys[] transcribe this list into a formal legal agreement for their review and execution.” (Ryan Decl. ¶ 13.)

For their part, the Hansens rely on the testimony of Jacobson. Jacobson opines that Lascano should not have prepared the Addendum. (Jacobson Decl. ¶ 6c.) According to Jacobson, “[w]hile it is certain that it is the custom and practice of real estate agents to fill in the blanks in C.A.R. forms, or simple addenda, custom and practice does not extend to drafting complex documents with significant legal issues and consequences.” (Ibid.)

Plaintiffs’ expert testimony about industry practice establishes a triable issue of material fact as to whether Defendants’ broker duties included the negotiation and drafting of the Addendum with the assistance of legal counsel.

Given the presence of triable issues, the Court cannot conclude that Defendants did not owe Plaintiffs this duty.

e. Negligent Preparation of the Addendum

The Shin/Shinn and Hansen FACs allege that Defendants’ broker duties included not negligently preparing the Addendum. (Shin/Shinn FAC ¶ 17; Hansen FAC ¶ 41.) The Shin/Shinn FAC notes, for example, that the Addendum failed to bind State Farm to pay the costs of repair to Shin/Shinn’s contractor. (Shin/Shinn FAC ¶ 17.)

Defendants argue that their broker duties with respect to the Addendum did not go beyond putting the parties’ deal terms together. The Court agrees. Defendants acted as scriveners in the transaction, memorializing the parties’ deal terms and transmitting the instrument for signatures. Paragraph 2, the section of the Addendum addressing the parties’ repair payment obligations, was taken verbatim from Chris Hansen’s email. (Lascano Decl. Exs. 2, 13.) Shin/Shinn and the Hansens then voluntarily signed the Addendum containing these terms. Defendants owed no duty to ensure that the terms, inter alia, bound State Farm apart from, perhaps, a duty to retain counsel to ensure the Addendum’s sufficiency.

Defendants did not owe Plaintiffs this duty.

2. Causation

Defendants argue that Plaintiffs cannot establish actual or proximate causation.

a. Actual Causation

In professional negligence claims, the “but for” test determines whether actual causation is present. (CACI 601.) The plaintiff must prove that but for the professional’s negligent acts, it is more likely than not that the plaintiff would have obtained a better result. (See Viner v. Sweet (2003) 30 Cal.4th 1232, 1241.) Causation is ordinarily a question of fact unless the facts are such that the only reasonable conclusion is an absence of causation. (Novak v. Continental Tire North America (2018) 22 Cal.App.5th 189, 197.)

Defendants claim that Plaintiffs cannot prevail on the “but for” test. According to Defendants, “Plaintiffs must show that, if they had hired an attorney, the attorney would have done something different, or that if Broker had tried to secure State Farm’s agreement to pay [Shin/Shinn’s] contractor ‘directly,’ both Hansen and State Farm would have agreed to such terms, and that either alternative options would have stopped Hansen from reneging and interfering with the funds.” Defendants claim that such a showing inherently involves undue speculation.

With respect to Shin/Shinn, the Court disagrees. There is a triable issue of fact as to the likelihood of whether Shin/Shinn would have obtained a better result if Defendants included more specific terms in the Addendum to ensure State Farm’s payments went directly to Shin/Shinn’s contractors. This is so because the Hansens would have had fewer plausible grounds to breach the Addendum, and stricter contractual controls could have, at minimum, reduced the time needed to arbitrate or litigate the dispute.

With respect to the Hansens, the Court agrees. The critical distinction is that the Hansens’ own misconduct caused the damages that the Hansens now seek. (Viner v. Sweet (2003) 30 Cal.4th 1232, 1241 (“It is far too easy to make the legal advisor a scapegoat for a variety of business misjudgments unless the courts pay close attention to the cause in fact element, and deny recovery where the unfavorable outcome was likely to occur anyway, the client already knew the problems with the deal, or where the client’s own misconduct or misjudgment caused the problems.”) (Emphasis added).) According to the arbitration award, Hansens breached the Addendum’s implied covenant of good faith and fair dealing in refusing to pay Shin/Shinn’s contractors. (Lascano Decl. Ex. 35.) These findings are binding. (CCP § 1287.6 (“An award that has not been confirmed or vacated has the same force and effect as a contract in writing between the parties to the arbitration.”); Evid. Code § 622 (“The facts recited in a written instrument are conclusively presumed to be true as between the parties thereto, or their successors in interest; but this rule does not apply to the recital of a consideration.”).) And these findings are conclusive in precluding the Hansens from recovering for their own wrongdoing. (See also Civ. Code § 3517 (“No one can take advantage of his own wrong.”).)

Shin/Shinn can establish actual causation; the Hansens cannot.

b. Proximate Causation

The question of proximate causation is “whether there is a sufficient connection between the risks created by defendants’ conduct and the injury [plaintiff] suffered to hold defendants responsible.” (Novak, supra, 22 Cal.App.5th at 196.) Proximate causation is focused on public policy considerations. (Ibid.)

One policy consideration is the extent to which a defendant should be held liable for unforeseeable consequences. (Novak, supra, 22 Cal.App.5th at 196.) Whereas duty is concerned with “clear, categorical, bright-line rules of law applicable to a general class of cases,” proximate cause rules apply in individual cases and “take into account the particular context in which any act or injury occurred.” This foreseeability is “a question of fact for the finder of fact, but it may be decided as a question of law if under the undisputed facts there is no room for a reasonable difference of opinion.” (Kumaraperu v. Feldsted (2015) 237 Cal.App.4th 60, 69.)

Defendants argue that, as a matter of public policy, they should not be held responsible for Hansens’ contractual breach as the Addendum stated that the State Farm funds would be paid to Shin/Shinn’s contractor. Defendants claim that it is not foreseeable that the Hansens would convert these funds and seek to reimburse Shin/Shinn only a fraction of the estimated damages.

Defendants’ argument is unpersuasive. Defendants’ purported negligence and Shin/Shinn’s alleged damages are both grounded in the preparation and construction of the Addendum. Without Defendants’ purported negligence, Shin/Shinn might not have suffered any damages. This close connection creates a triable issue of fact here. As to foreseeability specifically, the Court agrees with Shin/Shinn that anticipating breaches is not patently unreasonable: “Defendants would be hard pressed to find any lawyer who, during the drafting process, does not attempt to foresee and address likely (and even ‘possible’) future events pertaining to performance of the contract.” (Opp. at 8.)

Shin/Shinn can establish proximate causation

B. Breach of Fiduciary Duty

Plaintiffs allege that Defendants, as Plaintiffs’ brokers, “were required to advise Plaintiffs that they should obtain legal counsel to deal with the pending sale of the Property once the water damage occurred.” (Shin/Shinn FAC ¶ 23; Hansen FAC ¶ 50.)

The Court has already addressed and rejected this asserted duty.

Defendants’ motion for summary adjudication of Plaintiffs’ second cause of action for breach of fiduciary duty is granted.

C. UCL

The Hansens allege that Defendants violated the UCL by committing an unlawful act. (Hansen FAC ¶ 61.) According to the Hansens, this unlawful act was the practice of law without a license in violation of Business and Professions Code section 6125 as preparation of the Addendum required the services of an attorney. (Hansen Decl. ¶¶ 59-60.)

The Court has already addressed and rejected this asserted duty.

Defendants’ motion for summary adjudication of the Hansens’ third cause of action for violation of the UCL is granted.

CONCLUSION

Defendants’ motion for summary judgment on the Hansens’ FAC is GRANTED.

Defendants’ motion for summary judgment on Shin/Shinn’s FAC is DENIED.

Defendants’ motion for summary adjudication of Shin/Shinn’s FAC is GRANTED as to Shin/Shinn’s second cause of action for breach of fiduciary duty and the following issues of duty — (1) a duty to recommend and insist that Shin/Shinn obtain legal counsel to assist them once the water damage occurred to the Property, (2) a duty to discontinue joint representation of Shin/Shinn after the water damage occurred, (3) a duty to advise Shin/Shinn not to proceed with the immediate sale of the Property because of the water damage, and (4) a duty to non-negligently prepare the Addendum.