Article Written by: Brian Smith
A recent decision from the California Court of Appeal highlights the often competitive nature of the residential real estate market in Los Angeles and the heated exchanges which can take place between property owners, neighbors, and real estate agents in such transactions. In fact, the decision explains that all parties involved should watch what they say, since their comments may be the subject of future litigation.
In Workman v. Colichman (2019) 33 Cal.App.5th 1039 the owner of a hilltop home in Bel Air listed the property for sale with her real estate agent. The agent held an open house, and the couple in the adjacent home stopped by, expressing their fascination with the property, yet lamenting the nearly $3 million listing price, as beyond their reach. The neighbor also told the agent that he was considering adding a second story to his house, with a rooftop deck on top of it.
Soon thereafter, the seller accepted an offer for over $3 million. The very day that escrow was opened, the seller’s agent received an email from the neighbor stating he wanted the agent to know that he has decided to proceed with adding a second story and rooftop deck to his house and that, “We mentioned this to you in person last week at the open house, but thought it important to put it in writing. As I am sure you are fielding offers as of this date on the property … it would be critical to disclose this fact to all prospective buyers, as it will impact their view.”
Naturally, the listing agent provided this email to her counterpart, the selling agent, and then, the buyer canceled the pending escrow. The listing agent surmised that this was caused by the neighbor’s email. Unfortunately, the next offer on the property was much lower, and the frustrated seller took legal action. She sued the neighbor for intentional interference with the contract, i.e. the offer which went into escrow, as well as related legal claims.
Confronted with this lawsuit, the neighbor responded by arguing that his comments at the open house and his follow-up email to the listing agent were made in connection with an issue of public interest. He filed a special motion to strike the lawsuit under California Code of Civil Procedure §425.16 (the Anti-Slapp statute) which insulates from liability statements made in connection with a public issue or an issue of public interest. The neighbor asserted that real property rights and restrictions in Los Angeles are public issues and that the listing agent, by marketing the property as having an unencumbered view, was making a false and misleading statement to a broad segment of the public. Therefore, according to the neighbor, the neighbor’s email related to consumer protection and public concern.
The seller, on the other hand, argued that there was not an issue of widespread public concern. The neighbor’s email merely discussed building on his own property and the view from the seller’s property – two private properties. If the neighbor’s position – that his email was protected speech under the Anti-Slapp Statute – was the state of the law, then virtually any transaction between two private persons could be treated as a matter of public concern. Fortunately, the Court of Appeal held otherwise, instructing, “The views from a private residence do not involve a matter of public concern. Defendant’s attempt to characterize this private dispute as a matter of public interest is not supported by any authority.” Thus, the neighbor’s attempt to dismiss the seller’s lawsuit was unsuccessful. Accordingly, neighbors, real estate agents, and other stakeholders in a residential real estate transaction should be advised that the seemingly public nature of buying a home in Los Angeles may not shield them from tort liability for misguided statements in the course of such transactions.