by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Remember Marty Ummell? She’s the lady that sued Mike Little, a REALTOR with RE/MAX in Carlsbad, CA. Her attorney ripped a page from the ambulance attorney play book and accused Mr. Little of misrepresentation, breach of fiduciary responsibility, and fraud.
From the New York Times, back in January:
Ms. Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.
Real estate lawyers and brokers say the case, which goes to trial in the north county division of San Diego Superior Court on Monday, is likely to be the first of many in which regretful or resentful buyers seek redress from the agents who found them a home and arranged its purchase.
I poked a bit of fun at this frivolous law suit, with my satirical post. In the comment thread, I had learned more about the plaintiff:
FWIW, the Ummels put down $900,000 on this home and borrowed $300,000. I’m guessing they didn’t need a full appraisal (1004) but had a drive-by w/o interior inspection (2075); that report requires no valuation but proof that the property is standing. Pure conjecture on my part.
I would think that a couple that has owned property(ies) in the Bay Area, for an extended period of time, who has $900,000 to invest in a home, and holds in a family trust, is sophisticated enough to forfeit the “ignorance” defense.
Of course, the accusation was extremely watered down by the time it went in front of a jury, last week. Fraud and misrespresentation were thrown out and only the charge of “breach of fiduciary duty” stood. The jury ate lunch, did a quick crossword puzzle, and ruled for the defendant (within 2 hours).
Marty Ummel is “devastated” while Mike Little is essentially out of business. From the same Voice of San Diego article:
The Ummels contended their agent had misrepresented a reasonable value to pay for their house and had breached his fiduciary duty to them, acting to protect his commission instead of their best interest. They filed suits in July 2006 to that effect against their agent, Mike Little, and Re/Max Associates, the parent franchise of 14 affiliated offices in San Diego County. The Ummels picketed, carrying signs that exclaimed “Caution, Beware: All Re/Max offices are independently owned,” and “It’s our money; we want justice” to Re/Max offices around the county and even to the Greenwood Hills, Colo., national headquarters of Re/Max.
The original lawsuit named the appraiser and the mortgage broker, who each settled with the Ummels for $10,000.
And though the case was decided in his favor Thursday, the impact of the picketing and the media attention over the last 18 months was significant for Little, Bright said.
“It’s been extremely hard,” Bright said. “Now, when he looks at a client, he’s got to wonder, what’s going to happen? Are these people going to second-guess me?”
I said that this case stinks because the Ummels were opportunists . Mike Little taxied them around San Diego County…(get this)…to look at OVER 80 HOUSES before they eventually settled on their current home. I also said that this case stinks because of the conflict of interest Mr. Little exhibited by operating as a dual capacity lender/agent:
This case stinks to high heaven. The Ummels are millionaires, who use trusts as financial planning tools, and have a history of owning California real estate in high-priced areas. They know (a) California real estate is cyclical, and (b) due diligence is required prior to any investment. This is opportunism at it’s worst. Their case is frivolous.
This case stinks to high heaven…and it’s our fault. As long as we allow California real estate brokers to engage in the business that is rightfully reserved for licensed finance lenders, we’ll always be answering the question, “Was there a conflict of interest?”
I’m happy the Ummels lost. Marty Ummel can claim she’s a “consumer advocate” all she wants but she only served her own ego, with this lawsuit.
She DID point out one thing, though. We need to stop letting REALTORs originate loans.
Eric Bramlett says:
I’ve been following this, as well. One of my friends is an agent in the area and he emailed me the comps on the Ummel’s house. Check them out if you have a chance. Not only was the lawsuit frivolous, they’ve actually made (theoretical) money on the property.
April 12, 2008 — 7:00 pm
Sue says:
Its nonsense. It reminds me of the lawsuit when someone spilled hot coffee on their leg and sued because the coffee burnt their leg. Coffee is hot! This kind of thing has to stop. Its definitely opportunist stuff in IMO.
April 12, 2008 — 7:07 pm
Bob Wilson says:
Eric, those comps are irrelevant. The argument was never about the property going down in value. It was about breach of fiduciary duty and Ummel having all the facts when the offer was tendered. While Ummel believed at the time of making the offer that he had enough info to determine value to make the offer, the issue was that Little failed to show them the comps on the street. They didn’t live here – they came down on weekends to see homes – so it wasn’t like they could simply drive by anytime and grab a brochure from the neighbor.
If Little had simply done that one thing – make sure his client knew model match comps when writing the offer – this would never have seen a court room. Doing the loan only added to the liability.
April 12, 2008 — 9:04 pm
Erion Shehaj says:
I wonder if Little would have a case against Ummel for the damage that such negative publicity has caused his business now that the verdict has been rendered in his favor. Because in the end, I agree with Brian… win or lose the case, their real estate business is “cooked” from the media coverage.
April 12, 2008 — 9:58 pm
Russell Shaw says:
I am quite glad they lost too. Also, I fully agree that Realtors have NO business making loans. NAR wants to keep banks out of real estate; I’ll go along with that one if they will keep Realtors out of lending.
April 12, 2008 — 11:31 pm
Brian Brady says:
That’s another topic, Russell. You and I could beat that horse dead. I think NAR can achieve both objectives:
http://delmar.typepad.com/brianbrady/2007/09/realtors-hold-t.html
Some might say that it’s not their responsibility but I believe the membership agrees more with you (and me) than not.
What really spoke to me about this case was that the agent (Little) had his office picketed, dealt with a frivolous lawsuit, and had his reputation smeared by this customer. He has little or no recourse, now; the court rules he wasn’t able to collect his attorneys’ fees.
April 13, 2008 — 12:01 am
Kaye Thomas says:
Real estate agents should sell real estate. They should not originate loans, have in house escrow companies or be involved in anything that smacks of conflict of interest. A one stop shop is not in the best of consumers or REALTORS.
April 13, 2008 — 2:06 am
Barry Cunningham says:
I wrote a couple of articles about this and wondered aloud , did it matter who won? It was dumb to begin with, cost a bunch of money on both sides as I doubt any attorney took this on a contingency and now months later she looks like more of a crackpot and the agent is stained as well as the broker.
I don’t know if vidication is rewarding in this instance.
April 13, 2008 — 7:24 am
Eric Blackwell says:
I, for one, like the British system, where if a lawsuit is tossed out AND it is deemed PATENTLY frivilous, the plaintiff must pay for not only the defendant’s attorney’s fee, but the court’s time as well.
Seems like such common sense for garbage suits by cranky folks like this…
Best;
Eric
April 13, 2008 — 9:33 am
Brian Brady says:
I agree, Eric. The British system of “loser pays all” dissuades frivolous lawsuits.
April 13, 2008 — 10:12 am
Robert Kerr says:
File Mr. Little under despicable, unethical and disreputable, but not criminal, at least not in California.
Mr. Little may have won his case but buyers’ agents in CA have lost significant respect. Now, buyers know that they are not necessarily getting an advocate when they retain their own buyer’s agent; that person is legally free to act contrary to the client’s best interests and even to enrich himself at the expense of the client.
April 13, 2008 — 10:51 am
Brian Brady says:
Robert,
Robert,
I consider you brilliant so I almost always give you free reign; I won’t today. That statement is completely incorrect.
The case was civil, not criminal. All Mr. Little would have lost was money, had he lost. You are trying to “connect the dots” through word association in your first paragraph.
Mr. Little is not despicable, unethical, nor disreputable. The fact that 12 jurors deliberated in less time than a made for TV movie affirms that statement. I’m sure you’ll say that jurors are not the brightest people in the world but that is the legal route the plaintiff chose.
Your second paragraph completely ignores the case. The only issue argued was fiduciary duty. 12 peers determined that Mr. Little did NOT “act contrary to the client’s best interests'”.
Make no mistake about it, Robert. This case affirmed that buyers have responsibilities. The adolescent approach consumers exhibit, when buying a home needs to stop. People need to grow up and get educated.
April 13, 2008 — 11:07 am
Erion Shehaj says:
Out of all buyers, these are the last people that can claim ignorance as this was obviously not their first rodeo. The same cyclical nature of the real estate market that netted them their 900k down payment is the very same that was the background for this lawsuit. But then again, in a country where there’s a website called http://www.sueeasy.com (look it up) is this really that much of a surprise?
April 13, 2008 — 1:14 pm
Eric Bramlett says:
hey bob – do you just like to follow me around and flame me wherever I go? I think I clearly stated that the comps are a side note, and interesting.
April 13, 2008 — 3:44 pm
Robert Kerr says:
Out of all buyers, these are the last people that can claim ignorance
Buyers retain their own agents so that they *can* be ignorant. In much the same way, people retain attorneys, so that they can remain ignorant about the law.
Buyers expect a buyer’s agent to gather data, offer objective sound advice and act in their best interests. From the evidence, Mr. Little hid damaging comp data, offered tainted advice and acted in his own interests.
Someone at voiceofsandiego? recently described this as: The Ummels lost the battle but won the war and caused damage to the reputation of real estate agents in CA.
I agree with that.
April 13, 2008 — 7:52 pm
Steve Berg says:
Brian – I fully agree with the premise that Realtors should quit making loans. I’ll go one step further to say that mortgage lenders should quit doing real estate.
April 13, 2008 — 9:20 pm
Bob Wilson says:
Eric, I didn’t flame you. And I must have missed the clearly stated reference to the comps being a side note in your comments above.
Brian and Kris, One of the most ethical people I have met in this business represented a buyer on one of my listings and did the loan. She did a wonderful job with both. It was one of the most transparent transactions I have seen in 19 years. It comes down to integrity and competency.
Put in Little’s place, she would not have been sued.
April 13, 2008 — 10:20 pm
Brian Brady says:
“From the evidence, Mr. Little hid damaging comp data, offered tainted advice and acted in his own interests.”
I’m confused. Were you on the jury?
April 13, 2008 — 11:26 pm
Brian Brady says:
Hey Steve!
I was thinking of you when I wrote this. Amen to your suggestion, as well.
April 13, 2008 — 11:28 pm
Michael Fisher says:
IMHO your last words should read: We need to stop loan originators from being Real Estate agents.
April 14, 2008 — 8:51 am