Easton v. Strassburger & Valley Of California, Inc.,

152 Cal.App.3d 90 (1984)

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Nature of the Case

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Facts

The property subject to this dispute is a one-acre parcel of land in the City of Diablo. The property has a 3,000 sq. ft. home, a swimming pool, and a large guest house. Easton (P) purchased the property from Strassburger (D1) for $170,000 in May 1976, and the escrow closed that July. Valley of California (D2) was the listing broker in the transaction. Shortly after the purchase, there was a massive earth movement on the parcel and slides destroyed a portion of the driveway in 1977 and 1978. Expert testimony showed that the slides occurred because a portion of the property was fill and that it had not been properly engineered or compacted. The slides caused the foundation of the house to settle and that caused cracks and warping doorways. A new appraisal of the property put the value at $20,000. Costs to repair was put at $213,000. The agents of D2 conducted several inspections prior to the sale, and there were red flags which should have indicated to them that there were soil problems. There were slides while D1 owned the home, but they did not tell D2's agents about them. The facts indicated that P purchased the property without knowledge of the problems. P sued. The jury returned a special verdict and found all Ds negligent. It awarded damages of $197,000. This was apportioned under comparative negligence. D2 appealed; the trial judge committed error by giving the jury instruction specifying a real estate broker's duty to investigate and disclose defects in property he lists for sale.