Urban Sunrise v. Vogt

Opinion

Filed 9/4/26 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT

(El Dorado)

URBAN SUNRISE LLC et al., C103199 Plaintiffs, Cross-defendants and Appellants, (Super. Ct. No. 22CV0024)

v.

DAVID VOGT et al., Defendants, Cross-complainants and Appellants.

APPEAL from a judgment of the Superior Court of El Dorado County, Leanne Mayberry, Judge. Affirmed.

Buchalter and John D. Fairbrook for Plaintiffs, Cross-defendants and Appellants. Samuels Law, Debra L. Samuels; Rollston, Henderson & Johnson; Michael K.

Johnson and Robert M. Henderson for Defendants, Cross-complainants and Appellants.

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David Vogt, a real estate broker doing business as Tahoe Investment Properties, and Ryan Smith, a real estate agent, were dual agents for the buyer and sellers in unsuccessful commercial real estate transactions involving five properties. The transactions were unsuccessful because the buyer, Urban Sunrise, LLC (Urban Sunrise or buyer), did not secure loans for the properties due to the cost of fire insurance. As a result of canceling the transactions, Urban Sunrise forfeited over $1.1 million to the sellers and lost the benefit of a tax-deferred exchange under Internal Revenue Code section 1031 (1031 exchange) (26 U.S.C. § 1031).

Urban Sunrise and its managing member, Susan Kerr (collectively, plaintiffs), sued Vogt and Smith (collectively, defendants) 1 for breach of fiduciary duty, professional negligence, constructive fraud, and rescission. The causes of action were grounded in allegations that defendants had breached their fiduciary duties to plaintiffs in six ways. Defendants successfully moved for summary judgment on plaintiffs’ complaint and Vogt thereafter also successfully moved for summary judgment on his cross-complaint against plaintiffs for payment of the commission owed to him. Plaintiffs appeal.

Plaintiffs challenge both summary judgment rulings on the grounds that there are triable issues of fact pertaining to four of the six alleged breaches of fiduciary duties against defendants. 2 Those alleged breaches of fiduciary duties are: (1) defendants failed to disclose Vogt’s “extensive prior relationship” with the managing member of the sellers prior to plaintiffs giving consent to the dual agency relationship; (2) defendants recommended and encouraged plaintiffs to enter into addenda to the purchase agreements that contained unfavorable terms; (3) Vogt acted as an attorney in the preparation of the unfavorable addenda, which gave rise to an unwaivable conflict of interest; and

1 Plaintiffs sued the sellers as well, but they are not parties to this appeal.

2 As explained post, plaintiffs also raise a myriad of other claims unrelated to the allegations in the operative complaint, which we do not address.

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(4) defendants failed to investigate material facts concerning the availability and cost of fire insurance for the properties. Finding no merit in plaintiffs’ contentions, we affirm.

BACKGROUND

We set forth the general background facts here and include more specific facts, as necessary, in the pertinent sections of the Discussion.

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Undisputed Material Facts 3 In December 2020, Kerr met with Smith to discuss business opportunities, including Urban Sunrise’s interest in buying property in South Lake Tahoe. Kerr had previously invested in commercial properties and told Smith that she had a “team” assisting her in real estate transactions, including a mortgage broker, insurance broker, accountant, and an attorney. Smith told Kerr that Vogt had a client who might be willing to sell property in South Lake Tahoe that was not publicly listed for sale.

A. The Exclusive Buyer Representation Agreements In January 2021, Urban Sunrise signed two exclusive buyer representation agreements (representation agreements) with Tahoe Investment Properties, as broker. Urban Sunrise signed the first representation agreement on January 2, 2021, and the second representation agreement on January 10, 2021. In both representation agreements, Urban Sunrise granted Tahoe Investment Properties the exclusive and irrevocable right to represent Urban Sunrise in acquiring real property within a 50-mile radius of South Lake Tahoe for six months. Smith signed the representation agreements as an agent on behalf of Tahoe Investment Properties.

3 We note plaintiffs submitted a statement of additional material facts and supporting evidence in opposition to defendants’ motion for summary judgment. The record does not contain any response to plaintiffs’ statement of additional material facts.

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Each of the representation agreements provided, in part: “Depending on the circumstances, it may be necessary or appropriate for Broker to act as an agent for both Buyer and a seller, exchange party, or one or more additional parties (‘Seller’). Broker shall, as soon as practicable, disclose to Buyer any election to act as a dual agent representing both Buyer and Seller. If Buyer is shown property listed with Broker, Buyer consents to Broker becoming a dual agent representing both Buyer and Seller with respect to those properties.” The representation agreements further described the broker’s duties and stated that such duties were limited by the terms of the agreement. In that regard, paragraph 6.B. of each agreement provided: “Buyer agrees to seek legal, tax, insurance, title or other desired assistance from appropriate professionals.”

In the representation agreement signed by plaintiffs on January 2, 2021, the parties agreed that Urban Sunrise would compensate Tahoe Investment Properties three percent of the acquisition price or six percent “for non-MLS properties” 4 if Urban Sunrise entered into an agreement to acquire property on terms acceptable to it, “provided Seller completes the transaction or is prevented from doing so by Buyer.” In the representation agreement signed by plaintiffs on January 10, 2021, the parties modified the compensation to six percent of the acquisition price.

B. The Purchase Agreements and Related Documents In April 2021, Kerr signed five purchase agreements and other documents on behalf of Urban Sunrise to buy commercial properties in South Lake Tahoe. Charles G.

4 “A multiple listing service (MLS) is a facility of cooperation of agents and appraisers, operating through an intermediary that does not itself act as an agent or appraiser, through which agents establish express or implied contracts for compensation between agents that are MLS participants in accordance with its MLS rules with respect to listed properties in a listing agreement, or that may be used by agents and appraisers, pursuant to the rules of the service, to prepare market evaluations and appraisals of real property.” (Civ. Code, § 1087.) “A listing may not be placed in a multiple listing service unless authorized or directed by the seller in the listing.” (Civ. Code, § 1088, subd. (a).)

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(Charles) signed the purchase agreements on behalf of each seller as its managing member. Urban Sunrise entered into the purchase agreements with the intent to purchase the properties as part of a 1031 exchange. At the time of entering into the purchase agreements, Kerr was aware that all the properties, except one, were not listed for sale with any real estate company.

Purchase agreements: Each of the purchase agreements identified Tahoe Investment Properties as both the seller’s and buyer’s brokerage firm and as a dual agent, and Vogt and Smith as dual agents. 5 The close of escrow date for the purchases was 60 days after the seller’s acceptance of the purchase offer. In describing the scope of the broker’s duties, the purchase agreements stated, among other things: “Buyer and Seller agree to seek legal, tax, insurance, title and other desired assistance from appropriate professionals.” The purchase agreements also contained a liquidated damages provision stating: (1) in the event of buyer’s default, seller would retain the deposit paid as liquidated damages; and (2) if the deposit was increased at a later date, buyer and seller would sign a separate liquidated damages provision, referred to as “C.A.R.FORM RID,” incorporating the increased deposit as liquidated damages.

Agency disclosures: Kerr signed five real estate agency relationship disclosure forms (agency disclosures) on behalf of Urban Sunrise. The disclosures explained that a real estate agent can legally be the agent of both the seller and buyer in a transaction if the seller and buyer have knowledge of and consent to such dual representation; however, any such agency would be identified in the purchase agreement or another document. The forms cautioned that the duties of a dual agent “do not relieve a Seller or Buyer from

5 Plaintiffs assert the purchase agreements identified Smith as the buyer’s agent and Vogt as the seller’s agent. Plaintiffs disregard the checked boxes underneath their names designating Vogt and Smith as “both the Buyer’s and Seller’s Agent. (dual agent).” There is no ambiguity that defendants were designated as dual agents.

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the responsibility to protect his or her own interests” and recommended to “carefully read all agreements to assure that they adequately express your understanding of the transaction.”

Representation disclosures: Plaintiffs signed disclosure and consent forms pertaining to possible dual representation (representation disclosures) for each property, which identified Tahoe Investment Properties as both the buyer’s and seller’s brokerage firm. The representation disclosures stated, in pertinent part, that buyer acknowledged the broker may represent the sellers of property that buyer might be interested in acquiring and consented to the broker acting as a dual agent for both buyer and seller with regard to that property.

C. The Escrow Period and Third Addenda to the Purchase Agreements When it entered into the purchase agreements, Urban Sunrise knew that it had to obtain fire insurance to finance the properties. Urban Sunrise consulted with an insurance broker in Arizona to investigate the availability and cost of insurance.

On April 26, 2021, Charles disclosed to plaintiffs that “[f]ire insurance rates are variable from year to year on new policies” and, although he had experienced that “fire insurance slowly increases every year for existing policies,” “for new policies it has depended on [the] previous fire season(s).” Charles wrote that the cost of fire insurance was much higher than the prior year due to the most recent fire season.6 Plaintiffs also received: (1) a document containing the name and contact information for Charles’s insurance agent pertaining to the properties; (2) a natural hazards disclosure statement disclosing each property was in a very high fire hazard severity zone; (3) a wildfire disaster advisory for each property (pertaining to properties in or around areas affected by

6 Plaintiffs’ statement that the disclosure informed Kerr that “the insurance rates were rising ‘slowly’ and would be higher,” does not comport with the information provided by Charles.

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a wildfire) stating wildfire disaster concerns and impacts include the cost and availability of insurance, which are concerns that real estate agents and brokers do not have the “authority or expertise” to provide guidance upon, and advising buyers to determine the availability of insurance early in the transaction; and (4) a buyer’s inspection advisory for each property stating “[t]he availability and cost of necessary or desired insurance may vary” and advising that property located in a fire hazard zone “may affect the availability and need for certain types of insurance.”

On May 5, 2021, Urban Sunrise removed all contingencies, except the loan and appraisal contingencies. Approximately a week later, Smith sent an e-mail to Kerr, her assistant, and plaintiffs’ mortgage broker stating that an extension of the close of escrow date was inevitable because Smith still had not received any lender commitment letters. Urban Sunrise agreed because its lender needed additional time to process the acquisition financing and requested an extension of the close of escrow date.

At 12:35 p.m. on May 14, 2021, Vogt provided Smith with general terms that the sellers, through Charles, were demanding in exchange for granting an extension of the close of escrow date to June 30, 2021. Those terms pertained to the removal of the remaining contingencies, a nonrefundable release of the earnest money on deposit ($184,000), and the deposit and release of an additional nonrefundable $200,000 per property to each seller (i.e., a total of $1 million). Smith provided the general terms to Kerr. 7 Vogt also provided Smith with a letter to Kerr, which Smith sent to Kerr at 1:31 p.m. the same day.

In the letter, Vogt wrote: “Given what’s happening with our escrows, I thought I would put a few things in writing with the hope it might help you understand what my

7 Plaintiffs acknowledge that Smith forwarded to Kerr correspondence from Vogt stating that Charles was “demanding” those terms in exchange for extending the close of escrow date.

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experience is with Charles, the seller, and why he has been so persistent with timelines.” Vogt explained that he had represented Charles “in perhaps 12 deals over the past 3-4 years,” ranging in value from $500,000 to $2 million. In terms of his experience with Charles, Vogt wrote: “Every transaction I have had with Charles has been easy. He does what he says he will do, has never asked for anything odd or out of the ordinary, has always closed on time. Never petty, or overbearing. In short, he does things right, and he’s the type of client I LOVE.”

Vogt next explained that, prior to Urban Sunrise’s letter of intent to acquire the properties, Charles had entered into a transaction that required him to either sell or refinance assets. Charles’s transaction had a “firm close date” and “he was very clear from the start of [the] escrows that he ha[d] a firm deadline to make, and that these escrows had to close, or be clearly capable of closing prior to his drop-dead date on the other acquisition.” Thus, if Urban Sunrise was unable to meet the deadline, sellers would need to cancel the escrows and begin refinancing. Addressing the terms for the extension of the close of escrow date, Vogt said that Charles felt the terms were “what it would take for him to feel comfortable that your escrows would close in sufficient time for him to fund his other deal.” Vogt explained, “[i]t is simply a number which he feels will ensure our deals will close.”

In closing, Vogt stated: “I hope this helps you understand better what is happening outside your escrows, and what is driving his need for clarity, and timeliness. Other than successfully closing these 5 transactions, there is no end-game. No-one is trying to play you, or obtain something they have not already agreed to. We all want to see you happy with these wonderful properties. And as he has more multifamily properties coming up soon, who knows what the future possibilities are. [¶] Please, if you have any questions, or concerns, do not hesitate to discuss with Ryan. I’ve made the opportunity available for all of us to get on a call together so that you can ask any question you wish to, so there can be no misunderstandings.”

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At 2:37 p.m. on May 14, 2021, Vogt provided Smith with language for the addenda to the purchase agreements to extend the close of escrow date. 8 Smith copied and pasted the terms into five separate addenda to the purchase agreements (collectively, third addenda) and sent them to Kerr for signature. Kerr signed the third addenda for Urban Sunrise, and Smith sent the signed addenda to Vogt at 2:52 p.m. the same day.

The third addenda addressed two separate extensions of the close of escrow date.

In the first provision, the parties agreed to extend the close of escrow to June 30, 2021, if Urban Sunrise agreed to remove all contingencies, released the existing earnest money deposits to each seller as nonrefundable, and deposited an additional $200,000 in escrow for each property by May 27, 2021, to be released to each seller the same day. The third addenda further provided that each seller agreed to extend the close of escrow date for each property from June 30, 2021 to July 14, 2021 if, by June 30, 2021, Urban Sunrise deposited an additional $200,000 into escrow for each property and agreed to release the additional deposit to each seller the same day as nonrefundable.

A week after executing the third addenda, Urban Sunrise signed the title company’s supplemental escrow instructions to release funds prior to the close of escrow. On May 21, 2021, Urban Sunrise authorized the release of $1 million from the escrow account to the sellers. Plaintiffs were unable to close on the properties due to difficulties in obtaining fire insurance.

8 Further details regarding the drafting of the third addenda are set forth in the Discussion post.

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II

The Operative Complaint and Cross-complaint 9 All of plaintiffs’ causes of action against defendants are based on the allegations that defendants breached their fiduciary duties to plaintiffs by: (1) failing to disclose Vogt’s relationship with Charles prior to confirming the dual agency relationship for the purchase of the properties; (2) recommending and encouraging plaintiffs to enter into the third addenda; (3) Vogt acting as an attorney in the preparation of the third addenda, which constituted an unwaivable conflict of interest because he did so “on behalf of both sides to the transactions”; (4) Smith engaging in the unauthorized practice of law in drafting the third addenda; (5) failing to investigate material facts concerning the availability and cost of fire insurance for the properties; and (6) providing plaintiffs with historical financial information for the properties without advising that certain information contained therein would likely change and should not be used to estimate costs and expenses for the properties in the future.

Plaintiffs alleged that they were damaged in the amount of $1,184,000, which were the amounts deposited and released to sellers, and because the 1031 exchange failed. They further sought incidental and consequential damages, and rescission of the operative representation agreement.

Vogt filed a cross-complaint against Urban Sunrise for breach of contract, breach of the covenant of good faith and fair dealing, and the common count of quantum meruit for services rendered pursuant to contract. Vogt sought, among other things, payment of the commission set forth in the operative representation agreement.

9 We do not discuss any allegations against or pleadings filed by the sellers of the properties because they are not parties to this appeal.

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III

The Motions for Summary Judgment Defendants moved for summary judgment as to plaintiffs’ complaint on the grounds that there was no triable issue of fact that they had properly performed their duties to plaintiffs. Plaintiffs opposed the motion and, in support of their statement of additional material facts, submitted, among other things, declarations by Kerr and two consultants. The trial court granted the motion for summary judgment, finding there was no triable issues of material fact that defendants did not breach their fiduciary duties.

Following that ruling, Vogt moved for summary judgment as to his cross-

complaint against plaintiffs. The trial court granted and denied the motion in part, ordering Urban Sunrise to pay Vogt $492,800 in commission plus interest, attorney fees, and costs.

Plaintiffs filed a timely notice of appeal challenging the trial court’s judgment.

DISCUSSION

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Standard of Review

“Summary judgment is appropriate when all the papers submitted show there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law.” (Maksimow v. City of South Lake Tahoe (2024) 106 Cal.App.5th 514, 520.) “A defendant moving for summary judgment has the initial burden of presenting evidence that a cause of action lacks merit because the plaintiff cannot establish an element of the cause of action or there is a complete defense.” (Id. at p. 521.) “Once the moving defendant has met its initial burden, the burden shifts to the nonmoving plaintiff to show that a triable issue of material fact exists.” (Ibid.) A triable issue of material fact exists if the evidence reasonably permits the trier of fact to find the contested fact in favor of the plaintiff in accordance with the applicable standard of proof. (Ibid.)

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We review an order granting summary judgment de novo; the trial court’s rationale for granting summary judgment is thus not binding on us. (Maksimow v. City of South Lake Tahoe, supra, 106 Cal.App.5th at pp. 521-522; see Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037 [our de novo review considers “ ‘ “all the evidence set forth in the moving and opposing papers except that to which objections were made and sustained” ’ ”].) Nonetheless, because we presume the trial court’s judgment is correct, plaintiffs have the burden to demonstrate reversible error. (Meridian Financial Services, Inc. v. Phan (2021) 67 Cal.App.5th 657, 708.)

In performing our independent review of the evidence, we view the evidence in the light most favorable to the nonmoving party. (Lackner v. North (2006) 135 Cal.App.4th 1188, 1196.) We also “ ‘apply the same three-step analysis as the trial court. First, we identify the issues framed by the pleadings. Next, we determine whether the moving party has established facts justifying judgment in its favor. Finally, if the moving party has carried its initial burden, we decide whether the opposing party has demonstrated the existence of a triable, material fact issue.’ ” (Ibid.)

II

Preliminary Matters

A. Unchallenged Trial Court Findings Plaintiffs alleged that defendants breached their fiduciary duties to plaintiffs in six ways. The trial court found in favor of defendants as to each alleged breach of fiduciary duty. On appeal, plaintiffs do not challenge the trial court’s ruling that Smith did not engage in the unauthorized practice of law pertaining to the third addenda and that defendants did not breach their fiduciary duties in providing plaintiffs with the historical financial information for the properties. We accordingly do not address those findings. (Meridian Financial Services, Inc. v. Phan, supra, 67 Cal.App.5th at p. 708 [appellant must demonstrate reversible error].)

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B. Extraneous and Forfeited Contentions Because a motion for summary judgment tests the sufficiency of the allegations in the operative pleading, “[a] plaintiff opposing summary judgment may not raise facts or legal theories not encompassed by his complaint to defeat a summary judgment motion.” (Berlanga v. University of San Francisco (2024) 100 Cal.App.5th 75, 87; Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258 & fn. 7 [the complaint limits the issues to be addressed in a motion for summary judgment because “[i]t is the allegations in the complaint to which the summary judgment motion must respond”].) We accordingly disregard all arguments that do not pertain to the four breaches of fiduciary duties alleged in the complaint and challenged on appeal. Those arguments include but are not limited to: Vogt’s purported conflict of interest arising from his commission agreements with each of the sellers; Vogt’s purported failure to negotiate more favorable terms in the third addenda for plaintiffs; Vogt’s purported request that Urban Sunrise sign the supplemental escrow instructions dated May 21, 2021; defendants’ purported failure to properly advise plaintiffs regarding the unreasonableness of sellers’ demands in the third addenda; Vogt’s purported failure to obtain a conflict waiver from buyer and sellers even if his actions regarding the third addenda did not constitute the practice of law; that there was no agreement to dual agency because the representation agreement merely disclosed the “ ‘possible’ representation as a dual agent” and there was no evidence “that the modification from exclusive representation to a dual agency was discussed or explained to Plaintiffs”; and defendants’ purported failure to explain “in so many words” that defendants were acting as dual agents for buyer and sellers.

Further, to demonstrate error on appeal, an appellant must present meaningful legal analysis supported by citations to authority that support the claim of error. (In re S.C. (2006) 138 Cal.App.4th 396, 408.) As explained post, we deem forfeited various statements presented by plaintiffs that fail to comply with this fundamental rule of appellate procedure. We also do not address any arguments pertaining to errors in the

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trial court’s reasoning or the argument that the judgment should be reversed because the trial court erred in disregarding plaintiffs’ consultants’ declarations because our standard of review is de novo.

Finally, we decline to address plaintiffs’ argument that the trial court abused its discretion by overruling plaintiffs’ objection to a fact asserted in support of Vogt’s motion for summary judgment on his cross-complaint. Plaintiffs raise this argument for the first time in their reply brief. (American Indian Model Schools v. Oakland Unified School Dist. (2014) 227 Cal.App.4th 258, 275-276 [appellate courts do not generally consider issues raised for the first time in a reply brief because it raises fairness concerns].)

III

There is No Triable Issue of Fact That Defendants Did Not Breach Their Fiduciary Duties 10 A. Legal Background “The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Knox v. Dean (2012) 205 Cal.App.4th 417, 432.) Real estate brokers and agents are subject to two sets of duties: “those imposed by regulatory statutes, and those arising

10 We reject any purported argument premised on Kerr failing to read and understand the documents that she signed on Urban Sunrise’s behalf. In resolving disputes between parties, we presume “everyone who signs a contract has read it thoroughly, whether or not that is true” (Roldan v. Callahan & Blaine (2013) 219 Cal.App.4th 87, 93) and generally abide by the principle that, “ ‘in the absence of fraud, overreaching or excusable neglect, … one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.’ ” (Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1588.) We also presume the parties understood the agreements they signed, and that the parties intended whatever the agreement objectively provides, whether they subjectively did or not. (In re Tobacco Cases I (2010) 186 Cal.App.4th 42, 47.)

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from the general law of agency.” (Carleton v. Tortosa (1993) 14 Cal.App.4th 745, 755 (Carleton).) Thus, if a duty is not imposed by statute or implementing regulation, the plaintiff must derive the defendant’s duty from agency case law and the agreement between the principal and agent.

At common law, generally, a broker “ ‘has a duty to learn the material facts that may affect the principal’s decision. He is hired for his professional knowledge and skill; he is expected to perform the necessary research and investigation in order to know those important matters that will affect the principal’s decision, and he has a duty to counsel and advise the principal regarding the propriety and ramifications of the decision. The agent’s duty to disclose material information to the principal includes the duty to disclose reasonably obtainable material information. [¶] … [¶] The facts that a broker must learn, and the advice and counsel required of the broker, depend on the facts of each transaction, the knowledge and the experience of the principal, the questions asked by the principal, and the nature of the property and the terms of sale. The broker must place himself in the position of the principal and ask himself the type of information required for the principal to make a well-informed decision. This obligation requires investigation of facts not known to the agent and disclosure of all material facts that might reasonably be discovered.’ ” (Field v. Century 21 Klowden-Forness Realty (1998) 63 Cal.App.4th 18, 25-26.)

A broker’s duties may, however, be limited by contract. (Carleton, supra, 14 Cal.App.4th at pp. 750-751 [parties contractually agreed defendant had no duty to recognize and advise plaintiff regarding the potential tax consequences of his transactions].) “ ‘The existence and extent of the duties of the agent to the principal are determined by the terms of the agreement between the parties, interpreted in light of the circumstances under which it is made, except to the extent that fraud, duress, illegality, or the incapacity of one or both of the parties to the agreement modifies it or deprives it of legal effect.’ ” (Id. at p. 755; Ahern v. Dillenback (1991) 1 Cal.App.4th 36, 42 [absent

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some conduct on the part of the agent consistent with assuming broader duties, the agent’s duties are limited to those arising out of the contract].)

“Where a duty is found to exist, a real estate agent must fulfill it by exhibiting the degree of care and skill ordinarily exhibited by professionals in the industry.” (Carleton, supra, 14 Cal.App.4th at p. 754.) The degree of care and skill required to fulfill a professional duty ordinarily is a question of fact and may require testimony by professionals in the field if the matter is within the knowledge of experts only. (Id. at pp. 754-755.) However, expert testimony is incompetent on the predicate question whether the duty exists and the scope of that duty because it is a question of law for the court alone. (Id. at p. 755.)

B. Defendants Adequately Disclosed Vogt’s Business Relationship with Charles

Plaintiffs alleged that defendants breached their fiduciary duties by failing to disclose Vogt’s “extensive prior relationship” with Charles because Vogt represented Charles “in as many as 12-15 previous real estate transactions.” 11 We find no triable issue of fact that defendants adequately disclosed the relationship between Vogt and Charles to plaintiffs prior to plaintiffs agreeing to dual agency.

A real estate broker and agent have, among other duties, the duty to refrain from dual representation in a sale transaction without full disclosure to both principals (i.e., buyer and seller) and their knowledge and consent. (Loughlin v. Idora Realty Co. (1968) 259 Cal.App.2d 619, 629.) The dual representation disclosure requirements arise from statute and common law.

Statutorily, a dual agent must provide the buyer and seller with the disclosure form set forth in Civil Code section 2079.16 at the times specified in Civil Code section

11 It is unclear where plaintiffs found the “12-15” number. In his letter, Vogt wrote that he represented Charles “in perhaps 12 deals over the past 3-4 years.”

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2079.14. The disclosure form details a dual agent’s fiduciary duties to the buyer and the seller but cautions that the duties of a dual agent do not relieve the buyer or the seller from “the responsibility to protect their own interests.” (Civ. Code, § 2079.16.) It is undisputed that defendants provided and plaintiffs signed the dual agency disclosure form in section 2079.16 of the Civil Code.

In addition to the statutory disclosure requirements, common law provides that a dual agent is “bound to disclose to each [principal] all facts which he knows or should know would reasonably affect the judgment of each in permitting such dual agency.” (Anderson v. Thacher (1946) 76 Cal.App.2d 50, 68; accord, Huijers v. DeMarrais (1992) 11 Cal.App.4th 676, 685-686 (Huijers).) The foregoing quoted language originates from section 392 in the Restatement Second of Agency. (Anderson, at p. 68; Rest.2d Agency, § 392 [“An agent who, to the knowledge of two principals, acts for both of them in a transaction between them, has a duty to act with fairness to each and to disclose to each all facts which he knows or should know would reasonably affect the judgment of each in permitting such dual agency, except as to a principal who has manifested that he knows such facts or does not care to know them.”].)

Comment b to section 392 of the Restatement Second of Agency states, in pertinent part: “The agent’s disclosure must include not only the fact that he is acting on behalf of the other party, but also all facts which are relevant in enabling the principal to make an intelligent determination, such as the prior relations between the agent and the other party, and the knowledge or lack of knowledge by the other party that the agent is acting for the principal. The agent, however, is under no duty to disclose, and has a duty not to disclose to one principal, confidential information given to him by the other, such as the price he is willing to pay.” (Rest.2d Agency, § 392, com. b.) A fact is relevant (i.e., material) if it is one that the agent should realize would likely affect the judgment of the principal in giving their consent in a particular transaction. (Rattray v. Scudder (1946) 28 Cal.2d 214, 224.)

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Plaintiffs assert that defendants breached their common law duty by failing to disclose the material fact of Vogt’s prior business transactions with Charles because such information would affect a reasonably prudent buyer’s willingness to agree to a dual agency with Vogt. (Citing Huijers, supra, 11 Cal.App.4th at pp. 685-686.) Defendants disagree, arguing Kerr knew, prior to signing the purchase agreements on Urban Sunrise’s behalf, that Charles was Vogt’s client and the properties that Urban Sunrise was purchasing from sellers, except one, were not listed for sale with any real estate company. They assert the details of Vogt’s and Charles’s transactions would merely have been “an elaboration of the facts already known, i.e., that Vogt had represented [Charles] in previous real estate transactions.” (Citing Pagano v. Krohn (1997) 60 Cal.App.4th 1, 9 [after disclosing water intrusion problems at the property, agent had no duty to elaborate on details regarding various manifestations of water intrusions throughout a development or precise allegations in the homeowners’ association’s complaint against the developer].) Plaintiffs reply that the term “client” could mean “anything from a new client, a repeat client or, as in this case, a long-term client who had a significant prior business relationship with the broker,” and that there is no evidence what the parties understood the term to mean. To cut through the arguments, we look at the pertinent question and the legal framework within which we analyze that question.

Whether defendants’ duty of dual agency disclosure included the duty to sua sponte disclose the specifics of Vogt and Charles’s former business transactions prior to obtaining plaintiffs’ agreement to dual agency is a question of law to be determined based on the facts and circumstances of the case. (Carleton, supra, 14 Cal.App.4th at p. 754; Assilzadeh v. Cal. Fed. Bank (2000) 82 Cal.App.4th 399, 415; Padgett v. Phariss (1997) 54 Cal.App.4th 1270, 1283 [trial court properly considered all the relevant factual and legal circumstances in deciding the scope of the fiduciary duty involved]; Duffy v. Cavalier (1989) 215 Cal.App.3d 1517, 1535 [the scope or extent of a fiduciary obligation depends on the facts of the case].) The duty is viewed from the perspective of what

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defendants knew or should have known would reasonably affect plaintiffs’ judgment in permitting dual agency. (Anderson v. Thacher, supra, 76 Cal.App.2d at p. 68; Huijers, supra, 11 Cal.App.4th at pp. 685-686.)

Here, Kerr, an experienced real estate investor with a team of advisers, including an attorney, signed the representation agreements after Smith disclosed to Kerr that Vogt had a client who owned commercial properties that were not on the market, but who was potentially willing to sell them. The representation agreements accordingly included a six percent commission provision for the purchase of off-market properties. The term client indicated an existing business relationship between Vogt and Charles, such that Vogt had information about Charles’s real estate portfolio. (See Webster’s 3d New Internat. Dict. (1981) p. 422 [a client is “a person who engages the professional advice or services of another .…”; see also Black’s Law Dict. (7th ed. 1999) p. 247, col. 2 [a client is “[a] person or entity that employs a professional for advice or help in that professional’s line of work”].) The existing business relationship presented a potential benefit to plaintiffs given the possibility that Urban Sunrise could purchase off-market properties for which there would likely be no competing offers. Vogt’s client was in fact willing to sell some off-market properties and Urban Sunrise made offers to purchase those properties—in other words, plaintiffs got the benefit from the existing business relationship between Vogt and Charles that was previously disclosed to them. Plaintiffs were then given and signed five purchase agreements identifying defendants’ dual agency relationship and Charles’s identity, and agency disclosures detailing defendants’ duties and stating that, notwithstanding those duties, plaintiffs had the responsibility to protect their own interests.

These facts met defendants’ initial burden of demonstrating that the breach of fiduciary duty allegation lacked merit. Defendants disclosed the prior relationship between Vogt and Charles (Rest.2d Agency, § 392, com. b)—a relationship that benefited plaintiffs. The burden then shifted to plaintiffs to introduce a triable issue of fact that

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defendants knew or had reason to know that disclosure of Vogt and Charles’s 12 or so transactions over 3 or 4 years would be material to plaintiffs’ decision to agree to dual agency in the 5 transactions at issue. 12 Plaintiffs did not meet that burden. Plaintiffs merely assert that the information would be material to a reasonably prudent buyer, which is not the standard for assessing a dual agent’s duty of disclosure. (Anderson v. Thacher, supra, 76 Cal.App.2d at p. 68; Huijers, supra, 11 Cal.App.4th at pp. 685-686.) Plaintiffs introduced no evidence that defendants knew or had reason to know that the extent of the business relationship between Vogt and Charles was material to plaintiffs and why.

Plaintiffs’ actions after receiving the letter, in which Vogt disclosed the number of prior transactions with Charles and before signing the third addenda, further support defendants’ position. Kerr expressed no concerns about the alleged failure to disclose the information sooner and asked no questions in that regard. She did not reach out to Vogt in response to his offer to have a joint phone call “so there can be no misunderstandings.” Kerr received the letter at 1:31 p.m., and signed the third addenda approximately an hour later.

Plaintiffs’ attempt to analogize dual agency disclosure in real estate transactions to the selection of neutral arbitrators is unconvincing. An arbitrator is in a wholly different role and relationship to the parties (i.e., as a decisionmaker) than a dual agent is as to the agent’s clients. Because of an arbitrator’s role as decisionmaker, the Legislature imposed certain disclosure obligations on arbitrators. (See, e.g., Code Civ. Proc., § 1281.9, subd. (a).) The Legislature did not impose an analogous disclosure duty on dual agents, and we decline to impose such a duty under the facts of this case.

12 Vogt referred to the “5 transactions” in his letter and plaintiffs, in several places in their briefs, use the term “transactions” in reference to the real estate purchase agreements in this case.

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Because plaintiffs raised no triable issue of fact that defendants knew or should have known disclosure of the specific transaction information between Vogt and Charles would reasonably affect plaintiffs’ judgment in permitting dual agency, summary judgment was appropriate.

C. Defendants Had No Duty to Disclose Additional Insurance Information Plaintiffs alleged that defendants breached their fiduciary duties by failing to investigate material facts concerning the availability and cost of fire insurance for the properties. They argue defendants had a duty to provide insurance information specific to each of the properties because the broker must put himself in the principal’s position and provide the type of information required for the principal to make a well-informed decision. (Citing Field v. Century 21 Klowden-Forness Realty, supra, 63 Cal.App.4th at p. 25.) 13 Plaintiffs rely on statements by their consultant that defendants had a duty to disclose what they knew or should have known regarding the impact of wildfires on the availability and cost of fire insurance coverage. We find no merit in this argument.

When plaintiffs entered into the purchase agreements, plaintiffs knew that Urban Sunrise would need to obtain fire insurance to finance the properties. Kerr held herself out as an experienced investor with a “team” assisting her in the purchases, which included an insurance broker. Plaintiffs consulted with an insurance broker in Arizona to investigate the availability and cost of insurance for the properties.

Soon after entering into the purchase agreements, sellers disclosed that insurance for the properties were “much higher” than the year prior due to the most recent fire season and provided the name and contact information for sellers’ insurance agent pertaining to the properties. Plaintiffs also received contract documents indicating that

13 In their reply brief, plaintiffs also cite to Calamine v. Samuelson (2008) 176 Cal.App.4th 153. That citation, however, leads to People v. Black (2009) 176 Cal.App.4th 145.

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the properties were in a very high fire hazard severity zone and a wildfire disaster advisory specifically stating that the cost and availability of insurance could be impacted because the properties were in or around areas affected by wildfire. As to the location of the properties within a very high fire hazard severity zone, the buyer’s inspection advisory for each property further stated that such fact “may affect the availability and need for certain types of insurance.” Plaintiffs received these disclosures early in the transaction.

There is no triable dispute that plaintiffs were advised about potential issues with obtaining insurance for the properties and that plaintiffs indicated to defendants that they had an insurance broker to investigate the availability and cost of insurance. Moreover, defendants limited their duty to plaintiffs regarding insurance investigation through their agreements. The representation agreement and purchase agreements stated that plaintiffs agreed to seek insurance assistance from appropriate professionals. The wildfire disaster advisory also explained that real estate agents and brokers do not have the “authority or expertise” to provide guidance on insurance availability and recommended that plaintiffs determine the availability of insurance early in the transaction.

Under these undisputed facts, there is no triable dispute that plaintiffs had the information necessary to make a well-informed decision regarding the purchase of the properties based on potential insurance issues related to those properties. Plaintiffs contractually agreed to assume the responsibility for investigating the availability and cost of insurance and led defendants to believe that they had an insurance broker as part of the “team.” Plaintiffs cannot avoid the plain language of their signed contracts. (Stewart v. Preston Pipeline Inc., supra, 134 Cal.App.4th at p. 1588.) Summary judgment on this alleged breach of fiduciary duties was thus appropriate.

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D. There is No Triable Issue of Fact Regarding Vogt’s Alleged Conflict of Interest as an Attorney

Plaintiffs alleged that Vogt breached his fiduciary duties to them because he acted as an attorney in drafting the third addenda and his “performance of legal services on behalf of both sides to the transactions constituted an unwaivable conflict of interest.” Plaintiffs argue that the rendering of legal services is prima facie evidence of an attorney- client relationship. The pertinent question is whether plaintiffs have established a triable issue of fact that Vogt acted as an attorney in drafting the third addenda, such that he had an attorney-client relationship with buyer and sellers, which created an unwaivable conflict of interest. We conclude the answer is “no.”

Vogt declared that Charles said he would be willing to extend the close of escrow date, but because he “would lose a significant amount of money” in another real estate transaction if plaintiffs did not close escrow on time, he wanted all remaining contingencies removed, the existing earnest money passed through to sellers nonrefundable, as well as a payment of $200,000 per property that would also pass through to sellers nonrefundable. Charles put forth these terms to give him confidence that the escrows would close. Charles requested that Vogt prepare “his list of terms required to grant the extension of time” and e-mail it to him for review.

After Vogt sent Charles the list of terms, Charles called Vogt and said that “he was preparing his own specific language for the extension.” Charles sent Vogt an e-mail “with the extension language prepared exclusively” by Charles with a request for another phone call. The document that Charles sent to Vogt converted the list of terms that Vogt had previously sent into an addendum with a preamble, signature lines, and other language. Charles also modified some of the terms in the list. 14 When Vogt called

14 Plaintiffs cite to nothing in the record showing that Vogt determined “the type of legal document to effectuate the purposes of” the third addenda, as they assert. We thus do not address the cases cited by plaintiffs for the general proposition that such purported

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Charles as requested, Charles instructed Vogt to insert some clarifying language about the dates into the draft addendum, which Vogt did “as instructed.” Vogt then e-mailed the finalized language for each addendum to Smith. After Kerr signed the third addenda, Vogt had an eight-minute conversation with Charles, during which Vogt explained that he had received the signed addenda, “all with the language [Charles] prepared,” and had sent it to Charles for signature. Vogt attached to his declaration phone records showing his calls with Charles on May 14, 2021, when the third addenda were prepared.

Plaintiffs attempt to manufacture a triable issue of fact by arguing that Charles’s declaration and deposition testimony show Vogt provided the initial language of the third addenda to Charles via e-mail. In his declaration, however, Charles merely declared that Vogt sent him a list of seven points related to the extension of the close of escrow date and he copied and pasted the bullets into a document, made minor changes, and then sent the document back to Vogt. This statement does not create a triable issue of fact that Charles determined and set forth the terms that he was willing to accept to extend the close of escrow date, and that Vogt merely wrote down those terms, subject to Charles’s further revisions. 15 Similarly, in Charles’s deposition testimony upon which plaintiffs rely, Charles testified that he could not recall how it “all transpired” or any specifics regarding the conversation(s) he had with Vogt about the terms of the third addenda. Charles testified that, in looking back through the e-mails concerning the addenda, it appeared to him that Vogt sent the proposed language for the third addenda to him first. Again, however,

rendering of legal services by Vogt constituted prima facie evidence of an attorney-client relationship. 15 Defendants point to Charles’s declaration submitted in opposition to Vogt’s motion for summary judgment as to sellers’ cross-complaint, in which Charles confirmed that he “was only willing to extend the escrow period for the Properties on certain terms,” i.e., the terms in the third addenda.

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Charles’s testimony that Vogt sent the “initial language” of the third addenda to him does not contradict Vogt’s declaration that the initial language was dictated by Charles during their call. The evidence upon which plaintiffs rely thus does not create a triable issue of fact that Vogt acted as an attorney in drafting the terms of the third addenda. Plaintiffs further identify no evidence that Vogt otherwise provided any other legal services to Charles.

In their reply brief, plaintiffs assert that Vogt “does not disclaim that he recommended and/or advised [Charles] with respect to the final language changes,” citing a paragraph in Vogt’s declaration. In the cited paragraph, however, Vogt merely declared that, after he received an e-mail with “the extension language exclusively prepared” by Charles, he and Charles spoke for approximately 10 minutes about the language and Charles instructed Vogt to insert some clarifying language about dates. Nothing in that paragraph states that Vogt recommended or advised Charles with respect to the language of the terms. Plaintiffs also provide no citation to authority or any reasoned argument to support the statement that Vogt acted as an attorney because he “adopted the third addenda as his own when he instructed Smith to finalize the addenda and present them to the Buyer.” We thus deem such argument forfeited. (In re S.C., supra, 138 Cal.App.4th at p. 408.)

Plaintiffs further fail to point to anything in the record establishing that Vogt provided legal services to plaintiffs. Vogt asserts and plaintiffs do not dispute that Vogt never had any direct communication with Kerr about the terms of the third addenda; his sole communication with Kerr was the letter in which Vogt discussed Charles’s motivations for the terms to extend the close of escrow date. We find nothing in that letter showing that Vogt provided any legal “consultation and advice” to plaintiffs “with respect to the terms of the addenda,” as plaintiffs assert. Vogt explained his prior experience in working with Charles, Charles’s then-pending transaction in another matter, and that the terms in the third addenda were “what it would take for [Charles] to

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feel comfortable that [the] escrows would close in sufficient time for him to fund his other deal.”

We also reject the assertion that Vogt was acting as an attorney because the terms for the extension of the close of escrow date were drafted in separate addenda rather than a purported “available statutory form” pertaining to an increase in deposits as liquidated damages. Plaintiffs cite no authority for any such proposition with associated reasoned argument, and we thus deem the argument forfeited. (In re S.C., supra, 138 Cal.App.4th at p. 408.) Plaintiffs also provide no evidence that a revised liquidated damages addendum would have met Charles’s requirements, which included that the deposits be released to sellers immediately and that all contingencies be removed. Further, plaintiffs’ citation to their first amended complaint for the proposition that they challenged the enforceability of the third addenda “as reflecting valid liquidated damages” is immaterial to this appeal as any such claim was asserted against sellers and not against defendants.

Finally, plaintiffs cite no authority and provide no reasoned argument for the apparent assertions that, simply because Vogt is both a real estate broker and an attorney, his representation of a client as a real estate broker means that he also has an attorney- client relationship with that client, 16 or that Vogt’s use of “Esq.” in his e-mail signature line equals a finding that he was holding himself out as an attorney in connection with the

16 To the extent that plaintiffs rely on the State Bar of California’s Formal Ethics Opinion No. 1982-69 as apparent support for this proposition, we express no opinion. In that opinion, the State Bar of California considered whether an attorney may engage in dual occupations as an attorney and real estate broker in the purchase of real property. (Cal. State Bar, Com. on Prof. Responsibility & Conduct, Formal Opn. 1982-69 (1982).) The State Bar of California stated an attorney may ethically act in both capacities in the same transactions, but, in doing so, “must at all times conform to the standards of both professions and, to the extent that those standards are in conflict, the attorney must at all times conform to the standards of the State Bar of California.” (Ibid.) Because this issue is not encompassed within the briefings before this court, we do not address the ethics opinion.

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transactions. We thus do not address those apparent arguments. (In re S.C., supra, 138 Cal.App.4th at p. 408.)

Because plaintiffs have established no triable issue of fact that Vogt acted as an attorney in drafting the third addenda, Vogt was entitled to summary judgment on plaintiffs’ alleged breach of fiduciary duty in that regard.

E. Plaintiffs Present No Triable Issue of Fact that Vogt Recommended or Encouraged Them to Sign the Third Addenda Plaintiffs argue that Vogt breached his fiduciary duties by recommending and encouraging plaintiffs to accept sellers’ “unusual, uncommon, and unreasonable” demands in the third addenda. (Boldface & underline omitted.) The sole basis for plaintiffs’ allegation is Vogt’s letter to Kerr. 17 Defendants do not address the argument.

Plaintiffs assert that Vogt provided counsel and advice regarding the terms by stating Charles “ ‘never asked for anything odd or out of the ordinary’ ” and he encouraged Kerr to sign the addenda by stating that “ ‘no one is trying to play you, or obtain something they have not already agreed to.’ ” But, read in context, the statements in the letter pertained to Vogt’s opinion of and experience with Charles in the past and an explanation of Charles’s motivation in setting the terms for the extension of the close of escrow date. Plaintiffs had their own attorney reviewing the transactions and plaintiffs assert defendants knew they had “little choice but to accept the terms or risk the failure of the 1031 exchange.” There thus was no reason to encourage or recommend that plaintiffs accept the terms in the third addenda. Plaintiffs have failed to demonstrate a triable issue of fact as to this purported breach of fiduciary duty and defendants were accordingly entitled to summary judgment.

17 Plaintiffs also rely on their consultant’s opinion that defendants should have advised and cautioned plaintiffs regarding the adverse terms in the third addenda. As explained ante, we disregard the argument because it was not alleged in the complaint. Plaintiffs’ consultant’s opinions in that regard thus have no import on this issue.

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In sum, because all of plaintiffs’ causes of action against defendants were based on the acts and omissions alleged in the breach of fiduciary duty cause of action, and there was no triable issue of fact in that regard, summary judgment was appropriate on all claims against defendants.

IV

There Is No Triable Issue of Fact as to Vogt’s Cross-complaint Plaintiffs argue that the trial court erred in granting summary judgment on Vogt’s cross-complaint for the same reasons that it erred in granting summary judgment on their complaint. We thus affirm the judgment on Vogt’s cross-complaint for the same reasons stated ante. We do not address plaintiffs’ argument that the trial court erred in denying their request for judicial notice. Plaintiffs cite no authority and provide no reasoned argument as to how the trial court abused its discretion in that regard. (In re S.C., supra, 138 Cal.App.4th at p. 408.)

DISPOSITION

The judgment is affirmed. Defendants shall recover their costs on appeal. (Cal.

Rules of Court, rule 8.278(a)(1)-(2).)

/s/ BOULWARE EURIE, J.

We concur:

/s/ HULL, Acting P. J.

/s/ FEINBERG, J.