Real estate disputes arise in a number of different scenarios including breach of a sales agreement, broker/agent negligence, and fraud, among others.

CACI Jury Instruction 356.Buyer’s Damages for Breach of Contract for Sale of Real

Property (Civ. Code, § 3306)

To recover damages for the breach of a contract to sell real property,[name of plaintiff] must prove:1. The difference between the fair market value of the property on

the date of the breach and the contract price;

2. The amount of any payment made by [name of plaintiff] toward

the purchase;

3. The amount of any reasonable expenses for examining title and

preparing documents for the sale;

4. The amount of any reasonable expenses in preparing to occupy

the property; and

5. [Insert item(s) of claimed consequential damages].

New September 2003

Directions for Use

Read this instruction in conjunction with CACI No. 350, Introduction to Contract

Damages. If the appropriate rate of interest is in dispute, the jury should be

instructed to determine the rate. Otherwise, the judge should calculate the interest

and add the appropriate amount of interest to the verdict.

For a definition of “fair market value,” see CACI No. 3501, “Fair Market Value”

Explained.

Sources and Authority

• Damages for Breach of Contract to Convey Real Property. Civil Code section

3306.

• Interest on Contract Damages. Civil Code section 3289.

• “ ‘The rules of damages for a breach of a contract to sell or buy real property

are special and unique. To the extent that the measure of compensatory damages

available to a buyer or seller of real property for a breach of a contract are

different from the general measure of compensatory damages for a breach of

contract, the special provisions for damages for a breach of a real property sales

contract prevail.’ ” (Greenwich S.F., LLC v. Wong (2010) 190 Cal.App.4th 739,

751 [118 Cal.Rptr.3d 531].)

• “A simple reading of the statute discloses that by its explicit terms it is adaptable

only to a failure to convey, and not to a delay in conveying.” (Christensen v.

Slawter (1959) 173 Cal.App.2d 325, 330 [343 P.2d 341].)

• “This court itself has recently described section 3306 as providing for ‘loss-of-

178

bargain damages’ measured by the difference between the contract price and the

fair market value on the date of the breach.” (Reese v. Wong (2001) 93

Cal.App.4th 51, 56 [112 Cal.Rptr.2d 669], internal citation omitted.)

• “It is settled that when a seller of real property fails or refuses to convey, a

buyer who has made advance payments toward the purchase price may recover

interest on those payments as damages for breach of contract. This rule is not

limited to sales of real property; it applies to sales in general.” (Al-Husry v.

Nilsen Farms Mini-Market, Inc. (1994) 25 Cal.App.4th 641, 648 [31 Cal.Rptr.2d

28], internal citations omitted.)

• Section 3306 does not ordinarily apply to breach of an unexercised option to buy

property. (Schmidt v. Beckelman (1960) 187 Cal.App.2d 462, 470-471 [9

Cal.Rptr. 736].)

• “ ‘Generally, [consequential] damages are those which, in view of all facts

known by the parties at the time of the making of the contract, may reasonably

be supposed to have been considered as a likely consequence of a breach in the

ordinary course of events. This provision would conform the measure of

damages in real property conveyance breaches to the general contract measure of

damages which is specified in Civil Code 3300: “. . . all the detriment

proximately caused (by the breach), or which, in the ordinary course of things,

would be likely to result therefrom.” ’ ” (Stevens Group Fund IV v. Sobrato

Development Co. (1991) 1 Cal.App.4th 886, 892 [2 Cal.Rptr.2d 460], quoting the

Assembly Committee on Judiciary.)

• “Moreover, in none of the foregoing cases does it appear that the buyer

demonstrated the existence of the other requisites for an award of consequential

or special damages, i.e., that the seller knew of the buyer’s purpose in

purchasing the property and that the anticipated profits were proved with

reasonable certainty as to their occurrence and amount.” (Greenwich S.F., LLC,

supra, 190 Cal.App.4th at p. 757.)

• “The plain language of section 3306, adding consequential damages to the

general damages and other specified damages recoverable for breach of a

contract to convey real property, the legislative history of the 1983 amendment

acknowledging that the addition of consequential damages would conform the

measure of damages to the general contract measure of damages, and the

generally accepted inclusion of lost profits as a component of consequential or

special damages in other breach of contract contexts and by other states in the

context of breach of contracts to convey real property, taken together, persuade

us that lost profits may be awarded as part of consequential damages under

section 3306 upon a proper showing.” (Greenwich S.F., LLC, supra, 190

Cal.App.4th at p. 758, internal citations omitted.)

• “Rents received from the lease of the property in this case are not properly an

item of consequential damages. Here, plaintiff introduced evidence as to the fair

market value of the property which included these profits. To allow these as

consequential damages under these circumstances would have permitted a double

CONTRACTS CACI No. 356

179

recovery for plaintiff.” (Stevens Group Fund IV, supra, 1 Cal.App.4th at p. 892.)

• “[T]he phrase ‘to enter upon the land’ refers to the taking of possession rather

than the use of the property.” (Schellinger Brothers v. Cotter (2016) 2

Cal.App.5th 984, 1011 [207 Cal.Rptr.3d 82].)

• “We think the phrase ‘and interest’ should continue to be read as referring to the

generally applicable provisions of [Civil Code] section 3287 regarding

prejudgment interest. As amended in 1967, subdivision (a) of section 3287

establishes a right to recover prejudgment interest on damages ‘capable of being

made certain by calculation’ and subdivision (b) gives the court general

discretionary authority to award prejudgment interest where damages are ‘based

upon a cause of action in contract . . ..’ The discretionary authority conferred by

subdivision (b) will ordinarily apply to loss-of-bargain damages measured by the

contract price/market value differential.” (Rifkin v. Achermann (1996) 43

Cal.App.4th 391, 397 [50 Cal.Rptr.2d 661].)

Secondary Sources

1 Witkin, Summary of California Law (11th ed. 2017) Contracts, §§ 926-928

California Real Property Remedies Practice (Cont.Ed.Bar 1980; 1999 supp.) Breach

of Seller-Buyer Agreements, §§ 4.11-4.14

Greenwald & Asimow, California Practice Guide: Real Property Transactions, Ch.

11-D, Buyer’s Remedies Upon Seller’s Breach – Damages And Specific Performance,

¶ 11:184 (The Rutter Group)

50 California Forms of Pleading and Practice, Ch. 569, Vendor and Purchaser,

§ 569.22 (Matthew Bender)

9 California Legal Forms, Ch. 23, Real Property Sales Agreements, § 23.12 et seq.

(Matthew Bender)

1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 7, Seeking or

Opposing Damages in Contract Actions, 7.04[7][f]

1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 8, Seeking or

Opposing Equitable Remedies in Contract Actions, 8.37, 8.58

CACI No. 356 CONTRACTS

180

CACI Jury Instruction No. 357.Seller’s Damages for Breach of Contract to Purchase Real

Property

To recover damages for the breach of a contract to buy real property,

[name of plaintiff] must prove:

1. The difference between the amount that was due to [name of

plaintiff] under the contract and the fair market value of the

property at the time of the breach; [and]

2. [Insert item(s) of claimed consequential damages, e.g., resale

expenses].

New September 2003

Directions for Use

Read this instruction in conjunction with CACI No. 350, Introduction to Contract

Damages. If there is a dispute regarding the appropriate rate of interest, the jury

should be instructed to determine the rate. Otherwise, the judge should calculate the

interest and add the appropriate amount of interest to the verdict.

For a definition of “fair market value,” see CACI No. 3501, “Fair Market Value”

Explained.

Sources and Authority

• Damages for Breach of Contract to Purchase Real Property. Civil Code section

3307.

• “It is generally accepted that the equivalent of value to the seller is fair market

value. Fair market value is reckoned ‘in terms of money.’ ” (Abrams v. Motter

(1970) 3 Cal.App.3d 828, 840-841 [83 Cal.Rptr. 855], internal citations omitted.)

• “The “value of the property” to [plaintiff] is to be determined as of the date of

the breach of the agreement by [defendant].” (Allen v. Enomoto (1964) 228

Cal.App.2d 798, 803 [39 Cal.Rptr. 815], internal citation omitted.)

• There can be no damages where the value to the owner equals or exceeds the

contract price. (Newhart v. Pierce (1967) 254 Cal.App.2d 783, 792 [62 Cal.Rptr.

553], internal citation omitted.)

• “[T]he view that this section is exclusive, and precludes other consequential

damages occasioned by the breach, was rejected in Royer v. Carter. Under Civil

Code, section 3300, other damages are recoverable, usually embracing the out-

of-pocket expenses lost by failure of the transaction.” (Wade v. Lake County Title

Co. (1970) 6 Cal.App.3d 824, 830 [86 Cal.Rptr. 182], internal citation omitted.)

• “[C]ourts have permitted consequential damages, only where the seller has

diligently attempted resale after the buyer has breached the contract.” (Askari v.

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R & R Land Co. (1986) 179 Cal.App.3d 1101, 1107 [225 Cal.Rptr. 285], internal

citation omitted.)

• “[I]f the property increases in value before trial and the vendor resells the

property at a price higher than the value of the contract, there are no longer any

loss of bargain damages.” (Spurgeon v. Drumheller (1985) 174 Cal.App.3d 659,

664 [220 Cal.Rptr. 195].)

• “The same rule of no loss of bargain damages to the vendor applies where the

resale is for the same price as the contract price.” (Spurgeon, supra, 174

Cal.App.3d at p. 664, internal citations omitted.)

• “For the reason that no loss of bargain damages are available to a seller if there

is a resale at the same or a higher price than the contract price, the law imposes

on the seller of the property the duty to exercise diligence and to make a resale

within the shortest time possible. In discussing the duty to mitigate where the

vendee seeks return of a deposit, the Sutter court states the requirement that

resales be made with reasonable diligence ‘states a policy applicable to resales

of real property. Whether the resale is made one, two or three months later, or

whether it be a year or more, it should be made with reasonable diligence to

qualify the vendor to an allowance of an off-set against the vendee’s claim for

restitution of money paid.’ ” (Spurgeon, supra, 174 Cal.App.3d at p. 665,

internal citations omitted.)

• “Although it is well settled in the foregoing authorities that damages under Civil

Code section 3307 for the difference between the contract price and property

value may be insufficient to give the vendor the benefit of his bargain and he is

entitled also to resale expenses and some costs of continued ownership, he

should not be permitted to receive a windfall at the purchaser’s expense.” (Smith

v. Mady (1983) 146 Cal.App.3d 129, 133 [194 Cal.Rptr. 42].)

• “Inasmuch as under Abrams and Sutter the vendor has an obligation to resell

promptly in order to obtain consequential damages and the resale price may fix

the property value as a basis for Civil Code section 3307 damages, we are

impelled to conclude that there is no inherent separateness in the original sale

and subsequent resale transactions. The increased resale price should not be

disregarded in considering an offset to consequential damages awarded to a

vendor against a defaulting purchaser of real property.” (Smith, supra, 146

Cal.App.3d at p. 133.)

• “The owner of real or personal property may competently testify to its value.”

(Newhart, supra, 254 Cal.App.2d at p. 789, internal citations omitted.)

Secondary Sources

1 Witkin, Summary of California Law (11th ed. 2017) Contracts, §§ 929-934

California Real Property Remedies Practice (Cont.Ed.Bar 1980; 1999 supp.), Breach

of Seller-Buyer Agreements, §§ 4.37-4.43

California Practice Guide: Real Property Transactions, Ch. 11-C, ¶¶ 11:101-11:110,

Seller’s Remedies Upon Buyer’s Breach-Damages and Specific Performance (The

CACI No. 357 CONTRACTS

182

Rutter Group)

50 California Forms of Pleading and Practice, Ch. 569, Vendor and Purchaser,

§ 569.22 (Matthew Bender)

9 California Legal Forms, Ch. 23, Real Property Sales Agreements, § 23.12 et seq.

(Matthew Bender)

1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 7, Seeking or

Opposing Damages in Contract Actions, 7.04[7][f]

1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 8, Seeking or

Opposing Equitable Remedies in Contract Actions, 8.37, 8.58

CONTRACTS CACI No. 357

183

4100.“Fiduciary Duty” Explained

[A/An] [agent/stockbroker/real estate agent/real estate broker/corporate

officer/partner/[insert other fiduciary relationship]] owes what is known as

a fiduciary duty to [his/her/nonbinary pronoun/its]

[principal/client/corporation/partner/[insert other fiduciary relationship]]. A

fiduciary duty imposes on [a/an] [agent/stockbroker/real estate agent/real

estate broker/corporate officer/partner/[insert other fiduciary relationship]]

a duty to act with the utmost good faith in the best interests of [his/her/

nonbinary pronoun/its] [principal/client/corporation/ partner/[insert other

fiduciary relationship]].

New June 2006; Revised December 2010, December 2016

Directions for Use

This instruction explains the nature of a fiduciary duty. It may be modified if other

concepts involving fiduciary duty are relevant to the jury’s understanding of the

case. For instructions on damages resulting from misrepresentation by a fiduciary,

see CACI No. 1923, Damages – “Out of Pocket” Rule, and CACI No. 1924,

Damages – “Benefit of the Bargain” Rule.

The elements of a cause of action for breach of fiduciary duty are the existence of a

fiduciary relationship, its breach, and damage proximately caused by that breach.

(Knox v. Dean (2012) 205 Cal.App.4th 417, 432-433 [140 Cal.Rptr.3d 569].) No

fraudulent intent is required. (See Civ. Code, § 1573 (defining “constructive fraud”).)

Sources and Authority

• “A fiduciary relationship is ‘ “ ‘any relation existing between parties to a

transaction wherein one of the parties is in duty bound to act with the utmost

good faith for the benefit of the other party. Such a relation ordinarily arises

where a confidence is reposed by one person in the integrity of another, and in

such a relation the party in whom the confidence is reposed, if he voluntarily

accepts or assumes to accept the confidence, can take no advantage from his acts

relating to the interest of the other party without the latter’s knowledge or

consent. . . .’ ” ’ ” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29 [130

Cal.Rptr.2d 860], internal citations omitted.)

• “Whether a fiduciary duty exists is generally a question of law. Whether the

defendant breached that duty towards the plaintiff is a question of fact.” (Marzec

v. Public Employees’ Retirement System (2015) 236 Cal.App.4th 889, 915 [187

Cal.Rptr.3d 452], internal citation omitted.)

• “ ‘ “[B]efore a person can be charged with a fiduciary obligation, he must either

knowingly undertake to act on behalf and for the benefit of another, or must

enter into a relationship which imposes that undertaking as a matter of law.”

1002

[Citation.]’ ” (Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1338 [147

Cal.Rptr.3d 772].)

• “[E]xamples of relationships that impose a fiduciary obligation to act on behalf

of and for the benefit of another are ‘a joint venture, a partnership, or an

agency.’ But, ‘[t]hose categories are merely illustrative of fiduciary relationships

in which fiduciary duties are imposed by law.’ ” (Cleveland,supra, 209

Cal.App.4th at p. 1339, internal citation omitted.)

• “The investment adviser/client relationship is one such relationship, giving rise

to a fiduciary duty as a matter of law.” (Hasso v. Hapke (2014) 227 Cal.App.4th

107, 140 [173 Cal.Rptr.3d 356].)

• “There is a ‘strong public interest in assuring that corporate officers, directors,

majority shareholders and others are faithful to their fiduciary obligations to

minority shareholders.’ ” (Meister v. Mensinger (2014) 230 Cal.App.4th 381, 395

[178 Cal.Rptr.3d 604].)

• “Any persons who subscribe for stock have a right to do so upon the assumption

that the promoters are using their knowledge, skill, and ability for the benefit of

the company. It is, therefore, clear on principle that promoters, under the

circumstances just stated, do occupy a position of trust and confidence, and it

devolves upon them to make full disclosure.” (Cleveland,supra, 209

Cal.App.4th at p. 1339.)

• “[I]t is unclear whether a fiduciary relationship exists between an insurance

broker and an insured.” (Mark Tanner Constr. v. Hub Internat. Ins. Servs. (2014)

224 Cal.App.4th 574, 585 [169 Cal.Rptr.3d 39].)

• “It is a question of fact whether one is either an investment adviser or a party to

a confidential relationship that gives rise to a fiduciary duty under common law.”

(Hasso,supra, 227 Cal.App.4th at p. 140, internal citations omitted.)

• “[A] third party who knowingly assists a trustee in breaching his or her fiduciary

duty may, dependent upon the circumstances, be held liable along with that

trustee for participating in the breach of trust.” (Stueve Bros. Farms, LLC v.

Berger Kahn (2013) 222 Cal.App.4th 303, 325 [166 Cal.Rptr.3d 116].)

Secondary Sources

8 Witkin, Summary of California Law (10th ed. 2005) Agency and Employment,

§ 58

Greenwald et al., California Practice Guide: Real Property Transactions, Ch. 2-C,

Broker’s Relationship And Obligations To Principal And Third Parties, ¶ 2:158 et

seq. (The Rutter Group)

Vapnek et al., California Practice Guide: Professional Responsibility, Ch. 6-D,

Professional Liability, ¶ 6:425 et seq. (The Rutter Group)

10 California Forms of Pleading and Practice, Ch. 103, Brokers, § 103.31[1]

(Matthew Bender)

14 California Forms of Pleading and Practice, Ch. 167, Corporations: Directors and

Management, § 167.53 et seq. (Matthew Bender)

BREACH OF FIDUCIARY DUTY CACI No. 4100

1003

37 California Forms of Pleading and Practice, Ch. 427, Principal and Agent,

§§ 427.12, 427.23 (Matthew Bender)

5 California Points and Authorities, Ch. 52, Corporations, § 52.112 et seq. (Matthew

Bender)

6 California Legal Forms, Ch. 12C, Limited Liability Companies, § 12C.24[6]

(Matthew Bender)

CACI No. 4100 BREACH OF FIDUCIARY DUTY

1004

4101.Failure to Use Reasonable Care – Essential Factual

Elements

[Name of plaintiff] claims that [he/she/nonbinary pronoun/it] was harmed

by [name of defendant]’s breach of the fiduciary duty to use reasonable

care. To establish this claim, [name of plaintiff] must prove all of the

following:

1. That [name of defendant] was [name of plaintiff]’s

[agent/stockbroker/real estate agent/real estate broker/corporate

officer/partner/[insert other fiduciary relationship]];

2. That [name of defendant] acted on [name of plaintiff]’s behalf for

purposes of [insert description of transaction, e.g., “purchasing a

residential property”];

3. That [name of defendant] failed to act as a reasonably careful

[agent/stockbroker/real estate agent/real estate broker/corporate

officer/partner/[insert other fiduciary relationship]] would have

acted under the same or similar circumstances;

4. That [name of plaintiff] was harmed; and

5. That [name of defendant]’s conduct was a substantial factor in

causing [name of plaintiff]’s harm.

New June 2006

Directions for Use

The instructions in this series are intended for lawsuits brought by or on behalf of

the principal. They also assume that the plaintiff is bringing a legal cause of action,

not an action in equity. (See Van de Kamp v. Bank of America (1988) 204

Cal.App.3d 819 [251 Cal.Rptr. 530].) This instruction is not intended for cases

involving insurance brokers or agents.

In appropriate cases, element 3 may be tailored to reflect the particular fiduciary

duty at issue.

For a breach of fiduciary duty instruction in cases involving attorney defendants, see

CACI No. 4106, Breach of Fiduciary Duty by Attorney – Essential Factual

Elements.

While the advisory committee has not included “employee” as an option for

identifying the defendant agent in element 1, there may be cases in which certain

employees qualify as “agents,” thereby subjecting them to liability for breach of

fiduciary duty.

1005