$348,372 Is Broker Fee Recovery; However, CAR Clause May Need To Be Amended To Allow Routine Costs Recovery.
Brokerage company successfully defended against a cross-complaint brought by sellers, sellers who were also successfully sued by buyers of an expensive Pacific Palisades residence in the same case. Broker defended against the cross-complaint by arguing that sellers provided it with inaccurate information or failed to disclose material information to broker. The broker and seller had a CAR form listing agreement with a broad indemnification clause covering inaccurate/undisclosed information and indemnifying against such items as judgments, fines, claims and attorney’s fees (however, “costs” were not included within the ambit of the provision).
Broker was awarded $348,372 in attorney’s fees under the indemnification clause, but the lower court denied $19,500 in requested costs because the clause was ambiguous on whether they were covered.
Sellers did not get any additional relief on appeal in Bardack v. Tomjanovich, Case No. B247887 (2d Dist., Div. 8 Aug. 29, 2014) (unpublished).
The indemnification provision at issue was broad and did cover direct suits between broker and sellers, not just narrower indemnification against third parties. (See Zalkind v. Ceradyne, Inc., 194 Cal.App.4th 1010 (2011); Wilshire-Doheny Associates, Ltd. v. Shapiro, 83 Cal.App.4th 1380 (2000); Dream Theater, Inc. v. Dream Theater, 124 Cal.App.4th 547 (2004).)
Broker fees spent on an amicus curiae brief before the California Supreme Court were found to be related enough to the defense of the cross-complaint so as to be worthy of compensation.
BLOG UNDERVIEW—Although unpublished, this case may suggest that the CAR form listing agreement needs to be revised to include “costs” and “expenses” if brokers want to potentially recover routine costs in a dispute, although it would also likely work both ways under Civil Code section 1717 reciprocity principles depending on the circumstances.