Circle Oaks Sales Co. v. Smith

Opinion

CHRISTIAN, J.

Respondent took judgment against real estate broker Carl F. Alaimo for $9,500, consisting of $6,500 damages for fraud and $3,000 treble damages for conversion of a $1,000 fee advanced by respondent. Respondent applied for satisfaction of the judgment from the Real Estate Education, Research and Recovery Fund (hereinafter called “the Fund”), pursuant to Business and Professions Code, section 10470 et seq.

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After a hearing the trial court directed the real estate commissioner to pay the entire judgment, and costs, from the Fund. The commissioner appeals, contending that the order erred insofar as it provides for payment, out of the Fund, of $2,000 in treble damages.

Section 10146 provides that a real estate broker must handle as trust funds, any fee advance collected from his principal. The section further provides that, “Where advance fees actually paid by or on behalf of any

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principal are not handled in accordance with the preceding paragraph, . . . [c]he principal may recover treble damages for amounts so misapplied and shall be entitled to reasonable attorneys’ fees in any action brought to recover the same.” It is undisputed that Alaimo violated section 10146 and that respondent was entitled to judgment against Alaimo for three times the $1,000 advance that was misapplied. But appellant contends that respondent may not recover treble damages from the Fund.

The Fund accrues from license fees and other special assessments against real estate brokers (§§ 10450.6, 10470). Eighty percent of the moneys in the Fund are allocated for education and research and 20 percent for satisfaction of judgments against insolvent brokers (§§ 10450.6, 10471 et seq.). Section 10471 provides, “When any aggrieved person obtains a final judgment . . . against any person or persons licensed under this part, under grounds of fraud, misrepresentation, deceit, or conversion of trust funds arising directly out of any transaction when the judgment debtor was licensed and performed acts for which a license is required under this part, ... the aggrieved person may ... file a verified application in the court in which the judgment was entered for an order directing payment out of the Real Estate Education, Research and Recovery Fund of the amount of