Summary

In Lazar v. Bishop, the California Court of Appeal resolved a pivotal question: whether a breach of fiduciary duty claim against a real estate broker could be assigned to another party. The court ruled that such claims are assignable when they pertain to property or pecuniary interests rather than highly personal or confidential relationships.

Laura Lazar, acting as the assignee of her late father Daniel Gottlieb’s rights, brought a lawsuit against real estate brokers Lynette Bishop, Shen Shulz, Sotheby’s International Realty, Inc., and Shen Realty, Inc., alleging breach of fiduciary duty during the sale of her father’s Malibu property. The court reversed a trial court’s grant of summary judgment, ruling that Lazar had standing to pursue the claim and remanding the case for further proceedings.

Background

In 2016, Daniel Gottlieb hired Lynette Bishop, a Sotheby’s International Realty agent, to sell his Malibu home, originally listed at $4.2 million. Over time, Bishop convinced Gottlieb to lower the price, eventually selling the home for $3.15 million to buyers represented by Shen Shulz, another Sotheby’s agent, creating an undisclosed dual agency situation. Gottlieb later assigned his claims to his daughter, Laura Lazar, before his death.

Lazar filed a lawsuit in 2019, alleging that Bishop breached fiduciary duties by:

• Failing to disclose the dual agency arrangement before the sale was finalized.
• Sharing Gottlieb’s willingness to accept lower offers with the buyers’ agent.
• Failing to market the property effectively, resulting in a sale price nearly $2 million below the home’s purported value.

Lazar sought over $2.2 million in damages, including lost sale proceeds, commissions paid to the brokers, and costs incurred preparing the property for sale.

Key Court Findings

The California Court of Appeal addressed whether a breach of fiduciary duty claim against a real estate broker could be assigned and ruled that such claims are assignable when they involve property or financial interests. The decision clarified the distinction between personal, non-assignable claims and those tied to transactional relationships.

Assignability of Claims

• The appellate court ruled that breach of fiduciary duty claims tied to property and pecuniary interests are assignable under California Civil Code §954.
• The court emphasized that the fiduciary relationship between a real estate broker and a client is transactional and distinct from the deeply personal and confidential attorney-client relationship.

Policy Concerns Dismissed

The trial court had denied Lazar standing, citing concerns about encouraging commercialized litigation and burdening the real estate profession. The appellate court rejected these concerns, noting that the case involved monetary losses tied to property, not personal injuries or emotional harm.

Constructive Fraud and Fiduciary Breach

The court determined that Bishop’s actions, including failing to disclose the dual agency and improperly influencing Gottlieb’s pricing decisions, constituted constructive fraud, a breach of her fiduciary duty requiring full transparency and loyalty.

Timeliness of Appeal

Despite technical delays in filing, Lazar’s notice of appeal was deemed timely due to prompt corrective actions by her counsel.

Key Takeaways

• Real Estate Fiduciary Claims Are Assignable: The ruling affirms that claims seeking monetary damages for breaches of fiduciary duty in real estate transactions can be assigned, as they are tied to property rights rather than personal relationships.
• Importance of Transparency: Real estate brokers must disclose dual agency arrangements and act solely in their client’s interest to avoid liability.
• Transactional Nature of Real Estate: The court’s decision underscores that real estate services are fundamentally tied to property and do not share the personal and confidential aspects of attorney-client relationships.

Citation

Lazar v. Bishop (2024) B321752, California Court of Appeal, Second Appellate District