Assilzadeh v. California Federal Bank

In Assilzadeh v. California Federal Bank (2000) 82 Cal.App.4th 399, the buyer bought a condominium in a high-rise project. She purchased the unit from California Federal Bank, which had acquired it through foreclosure. The broker and California Federal disclosed in writing during escrow that the project homeowners association had sued the developer for construction defects and that the action recently had been settled for $ 5.1 million. They did not disclose a "'Brokers Price Opinion'" given by the broker to California Federal which stated that the building had "'many problems, although the extent is still not known.'" (Id. at p. 411.) This opinion also stated that the settlement of the lawsuit might enhance value of the units. But it warned that disclosure regarding the suit "'may present a sizable problem with many buyers'" because some issues were still outstanding, and the settlement might not cover required repairs. (Ibid.) It continued: "'Should some of the problems come to fruition it is conceivable that the values could drop by as much as 70%-80%.'" (Ibid.) The Assilzadeh court observed: "Conclusions as to how the legal or practical ramifications of disclosed facts adversely impact value are not facts subject to a duty of disclosure. " (Assilzadeh v. California Federal Bank, supra, 82 Cal.App.4th at p. 412.) It concluded that the Brokers Price Opinion simply contained opinions relating to possible future prices, which constituted a vague and general speculation about "the possible market value of the unit at some unspecified future time depending on factors that may never exist. The opinion does not constitute an additional fact about the construction defect litigation that required disclosure." (Id. at p. 412.) The court held that a seller satisfied its common law duty of disclosure when it informed a potential buyer that the homeowners association had filed a construction defect lawsuit and that the suit had been settled for $ 5.1 million shortly before the parties entered into escrow. The court held that once the seller had satisfied its duty of disclosure by informing the buyer of the existence of the litigation and its settlement, "the details of the suit were certainly within the diligent attention of the buyer, who could have examined the file in its entirety to learn all the details of the suit and its settlement." (Id. at p. 411.)