Is a seller’s assignment of their claim against a broker for breach of fiduciary duty enforceable by the assignee when the broker fails to disclose the dual agency of their agents?

Facts: A seller of property enters into a seller representation agreement with a broker to market their real estate available for sale. An agent employed by the broker assists the seller as the seller’s representative. A buyer represented by a separate agent employed by the same broker makes an offer to purchase the property at an amount below the property’s fair market value (FMV) and the price sought in the seller representation agreement. The seller broker and agent do not disclose the conflict of interest arising from the dual agency to the seller. The seller agent advises the seller to accept the lower price offered by the buyer. The seller accepts the buyer’s offer and closes escrow on the sale. The seller discovers the broker’s dual agency status and assigns their cause of action against the broker for breach of fiduciary duties to an assignee who pursues the claim for money losses for the difference between the fair market value and the sales price of the property.

Claim: The broker claims a breach of fiduciary duty is not assignable since it is a highly personal cause of action and the employment of a real estate broker by a client under a representation agreement is comparable to an attorney-client relationship which is not transferable.

Counterclaim: The assignee of the seller’s cause of action claims a broker’s breach of fiduciary duty is a transferable right to recover losses since the money losses sought are grounded in the compromised sale price and not from a personal wrong inflicted on the seller.

Holding: A California appeals court holds a cause of action against a broker for breach of fiduciary duty is transferable and not analogous to an attorney-client relationship since the money loss results from a sale of property at a price which was compromised, not from a personal wrong inflicted on the seller. [Lazar v. Bishop (2024) 107 CA5th 668]

Lazar v. Bishop