As will be discussed briefly below, the California statutory and regulatory scheme
imposes fiduciary and fiduciary-like duties on real estate licensees. However, it does not
restrict or limit the broader fiduciary duties owed by licensees existing under the common
law. See, for example, the Legislature’s statement of its intention in adopting the
legislation which became section 2079 of the California Civil Code, which section is
titled “Real estate brokers and salespersons; inspections and disclosures; standards of
professional conduct”.
Breaches of Fiduciary Duties and Remedies
The following discussion is not intended to be an exhaustive discussion of all the
remedies available for the breach(es) of fiduciary duties, or an analysis of the distinctions
and boundaries between the common law and statutory and regulatory law, legal and
equitable remedies and/or contract and tort law. Rather, the purpose of the discussion is
to familiarize real estate licensees with the general range and variety of remedies
available.
When a client feels wronged by his or her real estate brokerage and agent, the
client oft-times files a lawsuit seeking damages and other remedies on theories ranging
from breach of contract, intentional misrepresentation, negligent misrepresentation, and
various others. It is the nature of the breach, the wrong and the loss (or the harm
suffered) that will determine the scope and the applicability of remedies. In an action for
an alleged breach of fiduciary duty(ies), a presumption of unfairness and undue influence
arises when a fiduciary self-deals or gains an advantage in a transaction.
Depending on the facts of a particular case, a client suing for breach(es) of
fiduciary duties can recover a full range of damages, including actual as well as punitive
and exemplary damages. Moreover, when a client is defrauded by a fiduciary, the client
is entitled to the benefit of his or her bargain and is awarded compensation for all of the
detriment proximately caused by the breach, whether it could be anticipated or not. See
sections 1709, 3333 and 3343 of the California Civil Code. Also, a real estate agent who
breaches his or her fiduciary obligations may forfeit and be deprived of his or her
commission. Sierra Pacific Industries v. Carter, 104 Cal.App.3d 579 (1980), at page
583.
In appropriate cases, such as where there is no adequate legal remedy capable of
providing a client with a complete measure of justice, or where necessary to prevent
irreparable injury, the client may obtain equitable relief, including an account of profits,
the disgorgement of “secret” profits, the imposition of a constructive trust, the grant of an
equitable lien, the setting aside, rescission or voiding of unconscionable transactions, and
the delivery and/or cancellation of documents. When applying equitable remedies, the
Courts endeavor to shape and design a judgment to provide substantial justice to the
client who has been wronged and has suffered harm by the breach(es).
Administrative Discipline Because of Breach(es) of Codified Fiduciary and Fiduciary-
Like Duties