Procedural Posture

Defendant, a real estate broker, sought review of a judgment from the Superior Court of Los Angeles County (California), which quieted title to a condominium in favor of plaintiff buyer, awarded the buyer noneconomic damages on his causes of action for fraud, breach of fiduciary duty, and ejectment, and awarded the buyer punitive damages on the fraud and breach of fiduciary duty causes of action.

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Overview

The buyer had poor credit. The broker suggested that he could get a loan if the broker’s daughter also applied as a co-borrower. Although the buyer paid the down payment into escrow, the broker obtained a loan in her daughter’s name alone. The broker then instructed the buyer to sign an amendment in escrow to remove his name from title, telling him that the document was just a formality required to secure the loan and to close escrow. The broker’s daughter did not execute a quitclaim deed to transfer title to the buyer as the broker had promised. After the buyer had lived in the unit for several months, the broker evicted him. The court held that there was substantial evidence of both constructive fraud under Civ. Code, § 1573, and actual fraud under Civ. Code, § 1572, subd. 4. Because the evidence showed fraud by a fiduciary, the absence of a written contract was not a defense. Title could be quieted against a fraudulent holder of legal title. Although the buyer participated in misleading the lender, the doctrine of unclean hands did not bar equitable relief because the parties were not equally at fault. The award of punitive damages was proper because actual damages were awarded.