Tortious interference with broker contracts and relationships

By
Services for Real Estate Pros with The Law Offices of Steven C. Vondran, P.C. CA#232337 AZ#025911

TORTIOUS INTERFERRENCE WITH CONTRACT OR ECONOMIC BUSINESS ADVANTAGE IN CALIFORNIA

 

Broker interference with listing agent contract

Click on the picture to watch the video

We recently had a case come to our office where my client had an exclusive listing agreement with the seller of a residential property.  The broker was serving the client well, and then a competing broker (upset that she lost the listing to my client - a very successful broker) came back into the seller-brpoker relationship and interferred with the seller, and intending to disrupt the relationship.

The realtor code of ethics talks about respecting existing broker-seller exclusive relationships.  Even though my client brought in an offer OVER FUL PRICE, the intermingling agent was able to talk the seller into switching brokers and trying to get more money through her.  The broker for the intermingling agent seems to think of this as fair play and honest competition.  While there is an argument to be made that a defense of competition does exist in some cases, brokers should become familiar with the laws and cases in this area which might lead to a finding that you have just engaged in acts which could trigger civil liability or an arbitration action.  In short, there are rules that you must know and play by.  

Here is a recent video I did (excuse the last few minutes where there was a camera malfunction) which talks about three different legal theories that might be used to hold an interfering broker and their brokerage liable (failure to supervise licensed activity and ratifying, endorsing or encouraing the conduct).

Here are the California Jury Instructions on the three torts I talk generally about in the video:

1.  Toritous intent to induce breach of contract

California Civil Jury Instructions (CACI)

 

2200. Inducing Breach of Contract

[Name of plaintiff] claims that [name of defendant] intentionally caused [name of third party] to breach [his/her/its] contract with [name of plaintiff]. To establish this claim, [name of plaintiff] must prove all of the following:

1. That there was a contract between [name of plaintiff] and [name of third party];

2. That [name of defendant] knew of the contract;

3. That [name of defendant] intended to cause [name of third party] to breach the contract;

4. That [name of defendant]’s conduct caused [name of third party] to breach the contract;

5. That [name of plaintiff] was harmed; and

6. That [name of defendant]’s conduct was a substantial factor in causing [name of plaintiff]’s harm.

 

2.  Toritious interference with contract

 

California Civil Jury Instructions (CACI)

 

2201. Intentional Interference With Contractual Relations

[Name of plaintiff] claims that [name of defendant] intentionally interfered with the contract between [him/her/it] and [name of third party]. To establish this claim, [name of plaintiff] must prove all of the following:

1. That there was a contract between [name of plaintiff] and [name of third party];

2. That [name of defendant] knew of the contract;

3. That [name of defendant] intended to disrupt the performance of this contract;

4. That [name of defendant]’s conduct prevented performance or made performance more expensive or difficult;

5. That [name of plaintiff] was harmed; and

6. That [name of defendant]’s conduct was a substantial factor in causing [name of plaintiff]’s harm.

3.  Interference with prospect business advantage or economic relationship

 

 

2202. Intentional Interference With Prospective Economic Relations

[Name of plaintiff] claims that [name of defendant] intentionally interfered with an economic relationship between [him/her/it] and [name of third party] that probably would have resulted in an economic benefit to [name of plaintiff]. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of plaintiff] and [name of third party] were in an economic relationship that probably would have resulted in an economic benefit to [name of plaintiff];

2. That [name of defendant] knew of the relationship;

3. That [name of defendant] intended to disrupt the relationship;

4. That [name of defendant] engaged in wrongful conduct through [insert grounds for wrongfulness, e.g., misrepresentation, fraud, violation of statute];

5. That the relationship was disrupted;

6. That [name of plaintiff] was harmed; and

7. That [name of defendant]’s wrongful conduct was a substantial factor in causing [name of plaintiff]’s harm.

TIP: You may want to print these out and discuss with your real estate agents.  Keep a record of this.  This may help in regard to your duty of broker supervision, which the BRE takes very serious as we know from representing many brokers and licensees in BRE hearings, audits, investigations, accusations and other real estate license issues.

If you have a commission dispute or interference with your exclusive listing or other agreements contact us to discuss your case (877) 276-5084.  You may be entitled to money damages.  We don't accept all cases.

- Attorney Steve - 

 

 

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