LOS ANGELES – The Supreme Court of California has ruled in favor of a home buyer in a real estate case against a brokerage firm.

Hiroshi Horiike filed suit against Coldwell Banker Residential Brokerage Co. after he learned the home he purchased through an agent with the brokerage allegedly did not meet the square footage advertised by the real estate company’s agent Chris Cortazzo.

Cortazzo was the listing agent for the luxury Malibu residence that Horiike worked with agent Chizuko Namba to secure. Prior to Horiike’s interest, Cortazzo had worked with another set of clients that were interested in the property but backed out of the transaction after learning the property that was marketed as have 15,000 square feet was listed in public records as having 9,224 square feet of living space along with a 746-square-foot guest house, a 1,080-square-foot garage and an unspecified basement area.

Cortazzo allegedly told the initial couple repeatedly that Coldwell Banker did not guarantee square footage of a home and that they should have a qualified appraiser verify the property. The couple canceled their home offer in March 2015 after being denied an extension of time to inspect the property.

When Horiike expressed interest in the home, Cortazzo showed the property to him as arranged by Namba. Horiike received sales literature purportedly stating the property had approximately 15,000 square feet of living space. This was also stated on the MLS listing printout but supposedly contained a disclaimer that the “broker/agent does not guarantee the accuracy of square footage.” Despite the claims, Horiike purchased the property through Namba who negotiated with Cortazzo on the property sale price.

When Horiike went to have work done on the home, he saw on the building permit that the square footage contradicted what was advertised by the agent and broker. He filed suit, claiming that Cortazzo and Coldwell Banker allegedly breached their fiduciary duties toward him by “deliberately misrepresenting the square footage of the living area of the [residence] and failing to act with the utmost care, integrity and honesty” with him.

The case went to a jury but was moved to a nonsuit by the court following the close of the case. The court in this instance ruled that Cortazzo “exclusively represented the selling of the transaction and therefore did not owe a fiduciary duty to Horiike.” The jury returned a verdict in favor of Coldwell Banker.

The Court of Appeal reversed the judgment against Coldwell Banker, maintaining that the agent “owed a duty to Horiike 'equivalent' to the duty owed to him by Coldwell Banker.” Because both Namba and Cortazzo were agents of the brokerage in the case, it was categorized that Coldwell Banker was indeed a “dual agent” to the buyer and seller of the property and therefore owned Horiike a fiduciary duty.

The case was remanded for a new trial on Horiike’s claims of fiduciary responsibility. An amicus brief was filed on behalf of Coldwell Banker urging the court to overturn the appeals court decision but the decision was upheld, viewing Coldwell Banker as a dual agent that had responsibility in the best interests of the buyer and seller in the case.

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Organizations in this Story

California Supreme Court
350 McAllister Street
San Francisco, CA 94102

Coldwell Banker Residential Brokerage California Real Estate
32675 Temecula Pkwy
Temecula, CA 92592

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