Strategic Business Holdings, INC. vs. Zoom Business Brokers

3 Saadeh vs. Bdair

2022-01248722 Motion to Be Relieved as Counsel of Record

The motion of attorney Robert A. von Esch IV and David V. Luu of von Esch Law Group ALC to withdraw as attorney of record for Defendant Goldenlinens, LLC is GRANTED and effective upon filing of the proof of service on client. (Code Civ. Proc. § 284, CRC 3.1362.)

Moving attorney is to give notice.

7 Strategic Business Holdings, INC. vs. Zoom Business Brokers

2024-01446779

Motion for Summary Judgment and/or Adjudication

As a preliminary statement, the court notes that the issues of whether or whether not a fiduciary duty existence is a question of law for the court to decide. Clake v. Hoek (1985) 174 Cal.App.3d 208. Conflicting expert opinion testimony on whether a defendant owed a duty to a plaintiff does not create a disputed factual issue on the existence of such duty, because duty remains a matter of law for the court to decide. Clarke v. Hoek (1985) 174 Cal.App.3d 208. Whether such a duty exists and the scope of that duty are questions of law, which courts consider de novo. Lorenzo v. Calex Engineering, Inc. (2025) 110 Cal.App.5th 49.

With regard to Strategic’s proposed “issue of duties,” many of the items appear to conflate multiple questions—whether the agreement modified common law duties, what the scope of those duties were, and whether those duties included disclosure of the buyer’s intent to violate federal law—without completely disposing of the ultimate question of whether Zoom owed a fiduciary duty to Strategic. As discussed below, not all of the issues are entirely appropriate for adjudication.

Plaintiff Strategic Business Holdings, Inc.’s motion for summary adjudication as to its

claims against defendants Zoom Business Brokers (“Zoom”), Jim Moazez (“Moazez”), Sara Vaziri Fard (“Vaziri”) and James Williams Mucciola (“Mucciola”) is GRANTED in part and DENIED in part as follows:

Summary adjudication as to issue 1 is denied.

California law does require that exclusive representation agreements contain a definite, specified date of final and complete termination. However, whether a broker has an affirmative duty to release a principal from such an agreement, as opposed to whether the principal has a contractual right to terminate or whether the agreement is enforceable, is not the type of duty question contemplated by the summary adjudication statute. The fiduciary duties a broker owes concern how the broker must act within the agency relationship, not whether the broker must terminate that relationship upon request.

Summary adjudication as to issue 2 is granted.

Zoom contends the contract between the parties specifically agreed in the Representation Agreement that any action involving any breach of duty, etc. shall not be brought more than 1 year after the expiration of the agreement. Strategic contends the language does not apply to a common law claim for breach of fiduciary duty. Strategic is correct.

Courts will generally enforce parties’ agreements for a shorter limitations period than otherwise provided by statute, provided it is reasonable. Moreno v. Sanchez (2003) 106 Cal.App.4th 1415. Parties to a contract may stipulate therein for a period of limitation shorter than that fixed by the statute of limitations, and that such stipulation violates no principle of public policy, provided the period fixed is not so unreasonable as to show imposition or undue advantage. Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010.

However, a significant constraint applies in the exclusive representation context. Where a breach of fiduciary duty claim is based on a common law fiduciary duty — rather than a duty that arises under the contract itself — the contractual limitations clause does not govern the timeliness of that claim, and the applicable statutory limitations period controls instead. William L. Lyon & Associates, Inc. v. Superior Court (2012) 204 Cal.App.4th 1294. In William L. Lyon, the court concluded that breach of fiduciary duty, fraud, negligence, and negligent misrepresentation claims based on common law fiduciary duty did not arise under the buyer-broker agreement, and therefore the applicable statutes of limitations governed those claims rather than the contractual limitations provision.

This distinction is particularly relevant in exclusive representation agreements. In Field v. Century 21 Klowden-Forness Realty (1998) 63 Cal.App.4th 18, the court recognized that a broker who exclusively represents a purchaser owes a fiduciary duty rooted in common law, and that the statutory limitations framework, not a contractual provision tied to a seller’s broker statute, governs such claims.

In sum, plaintiff’s claims are not barred by the contractual statute of limitations provision.

Summary adjudication as issue 3 is granted in part and denied in part.

The Court grants adjudication as to the legal component (whether the contract modified the common law duties) and denies adjudication as to whether that duty prohibited Zoom from refusing Strategic’s demand to be released from the Written Exclusive Representation Contract so that Strategic could be represented by a new broker.

Summary adjudication as to issue 4 is granted.

This issue asserts that Zoom’s fiduciary duty compelled disclosure of the buyer’s intent to violate federal law. A broker’s duty of disclosure extends to facts materially affecting the value or desirability of the property, including violations of zoning regulations and building codes. Horiike v. Coldwell Banker (2016) 1 Cal.5th 1024. Whether a buyer’s undisclosed intent to use or obtain property in violation of federal law constitutes a material fact within the scope of the broker’s disclosure duty to the seller is a legal question about the scope of duty. The existence of the fiduciary relationship and the general duty of full disclosure are not genuinely disputed under the law; the contested question is whether the specific category of information (buyer’s intent to violate federal law) falls within the duty’s scope.

In light of the above, the Court grants adjudication as to this issue of duty (but makes no determination as to whether that duty was actually violated.)

Summary adjudication as to issue 5 is granted for the same reasons set forth in connection with issue 4.

Summary adjudication as to issue 6 is granted.

The specific allegation — that Zoom referred the buyer to litigation counsel to take adverse legal action against Strategic — falls squarely within the recognized scope of the duty of loyalty. An agent has the duty not to act as, or on account of, an adverse party without the principal’s consent. Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621. Assisting a party in initiating litigation against one’s own principal would constitute precisely the type of adverse action that the duty of loyalty is designed to prohibit. But again, the grant is only as to the issue of duty, not as to whether Zoom actually breached that duty.

Summary adjudication as to issue 7 is granted for the reasons discussed above in connection with issue 6.

Summary adjudication as to issue 8 is granted.

The proposition that Moazez, as Zoom’s licensed salesperson and associate licensee in a dual agency, owed Strategic the same fiduciary duties — including the duty of loyalty — that Zoom owed Strategic presents a well-defined legal question with clear statutory and judicial authority. California Civil Code § 2079.13 expressly equates the associate licensee’s duty with the broker’s duty, and Horiike confirms that this equivalence applies fully in dual agency contexts. The issue is not novel or unsettled.

Summary adjudication as to issue 9 is denied.

The issue is not appropriate for adjudication as stated because it misstates the legal framework governing partnership fiduciary duties. A partner’s fiduciary duties run to the partnership and to the other partners, not automatically to third parties such as Strategic.

California Corporations Code § 16404 provides that the fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and the duty of care. The duty of loyalty includes the obligation to account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct and winding up of the partnership business, including the appropriation of a partnership opportunity. The statute frames these duties as running between partners and to the partnership — not to outside third parties.

The fiduciary duty owed between partners extends to all aspects of the partnership relationship and all transactions between the partners. BT-1 v. Equitable Life Assurance Society of the United States (1999) 75 Cal.App.4th 1406. Partners are held to the

standards and duties of a trustee in their dealings with each other, and in proceedings connected with the conduct of a partnership, partners are bound to act in the highest good faith to their copartners. Everest Investors 8 v. McNeil Partners (2003) 114 Cal.App.4th 411. These duties are owed to copartners and the partnership — not to outside entities like Strategic.

California courts have reinforced that to plead a cause of action for breach of fiduciary duty, there must be a fiduciary relationship between the parties. Everest, id. A nonfiduciary cannot be held liable for conspiring to breach a duty owed only by a fiduciary, and the mere fact that one party is a partner of a fiduciary does not automatically extend that fiduciary’s duties to the partner vis-à-vis third parties.

The issue assumes that Vaziri, by virtue of being Moazez’s partner, automatically inherited the same fiduciary duties Moazez owed to Strategic. This framing is legally flawed. The fiduciary duty owed among partners is not unlimited and applies only to situations where one partner could take advantage of his position to reap personal profit or act to the partnership’s detriment. Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509. Moreover, a partner owes no fiduciary duties to another party solely by reason of being a partner. The existence of a fiduciary duty depends on the actual relationship between the parties, not on imputation from a co-partner’s separate obligations.

Summary adjudication as to issue 10 is denied.

The issue as framed conflates two distinct legal concepts. Under Civil Code § 2079.13(b), an associate licensee owes a duty to each party in a real property transaction that is equivalent to the duty owed each party by the broker under whom the associate licensee functions. Horiike v. Coldwell Banker Residential Brokerage Co. (2016) 1 Cal.5th 1024. In Horiike the court

confirmed that this statutory equivalence means a salesperson acting under a broker owes the same fiduciary duties — including loyalty — as the employing broker. However, a designated officer of a corporate broker occupies a different role: the designated officer’s statutory obligation runs to supervision and compliance, not directly to the client as an associate licensee’s does.

So, the issue as framed — that Mucciola, as Zoom’s designated officer/broker, owed Strategic the same fiduciary duties Zoom owed Strategic — is appropriate for adjudication only if Mucciola was also acting as an associate licensee directly representing Strategic in the transaction, not merely in his capacity as a supervisory designated officer. The court in Sandler v. Sanchez (2012) 206 Cal.App.4th 1431, made clear that the supervisory duty under § 10159.2 does not, standing alone, give rise to a personal fiduciary duty claim by a third-party client. A viable claim would require additional facts showing Mucciola’s direct personal involvement in representing Strategic.

Objections

Zoom’s objections to the declaration of Benjamin Martin are overruled.

Strategic’s objection to the declaration of Sara Vaziri is sustained as to #3 and overruled to the remainder.

Strategic’s objections to the declaration of Jim Moazez are sustained as to #3 and overruled as to the remainder.

Notice

Strategic shall give notice.