Fidelity’s Disclosure Source Accuses Agent of Negligence for Relying on Disclosure Source’s Own NHD Report

We were surprised to learn that Disclosure Source would accuse a Century 21 agent of negligence for using and relying on Disclosure Source’s inaccurate report in a real estate transaction.

It’s actually even much worse than that. Here’s the story:

In May 2012 buyers of a home in Palmdale California, sued upon discovering that the Mello-Roos assessment on their home was almost $1,700 more per year than had been disclosed by Fidelity’s wholly-owned subsidiary Disclosure Source.
despair

The lawsuit is entitled Thomas and Alexandria Massari, and Randall Hayes vs. Kirk Swirczynski, in the Superior Court of the State of California, Los Angeles County – CASE NO: MC 023500.

The plaintiffs are the buyers of the property and claim that defendant Swirczynski, the Century 21 agent, who represented the seller, misrepresented the annual Mello-Roos special tax. The buyers claim that Swirczynski falsely disclosed to them that the Mello-Roos tax would be a maximum of only $80.90 per year through the 2044-2045 tax years. The complaint alleges that the actual annual tax was $1,773.34 and the plaintiffs are seeking damages against the seller’s agent (Swirczynski) for the difference in the tax rates plus punitive damages against Swirczynski.

In his defense, Century 21 agent Kirk Swirczynski filed a cross-complaint against Disclosure Source, among others, seeking indemnity for any damages, fees or costs which he would incur in defending himself against this lawsuit. Swirczynski states that he purchased a Disclosure Source NHD report (including Mello-Roos disclosures) and provided that report to the buyers’ agent. Swirczynski notes in his cross-complaint that Disclosure Source “promotes its expertise, and encourages sellers, buyers and real estate professionals to rely on DS’ disclosures with complete peace of mind, knowing their report was prepared by qualified experts, thus shifting potential liability away from themselves.” He further states that if he is determined to be liable to the buyers as a result of the incorrect Mello-Roos disclosure, then Disclosure Source should be held responsible and should indemnify him.

Rather than accepting responsibility for the incorrect Mello-Roos disclosures alleged by Swirczynski, Disclosure Source responded to Swirczynski’s cross-complaint with 29 affirmative defenses explaining why they are not responsible to Swirczynski for any attorneys’ fees or for damages in the lawsuit.

Here are just three of the defenses that Disclosure Source listed in their court documents against the agent including:

  • Swirczynski (Century 21 agent) is “guilty of negligence.” (See complete Answer, 3rd affirmative defense)
  • Swirczynski’s damages (i.e., any liability to plaintiffs for the incorrect Mello-Roos disclosure and the attorneys’ fees and costs incurred by Swirczynski in defending against plaintiffs’ claims arising out of the incorrect Mello-Roos disclosure) are the responsibility of others, and not Disclosure Source’s responsibility. (see complete Answer, 4th affirmative defense)
  • Swirczynski is “guilty of unclean hands.” (unethical behavior) (see complete Answer, 6th affirmative defense)
  • In responding to the lawsuit filed by Swirczynski against them, Disclosure Source asked the court to award Swirczynski “nothing”, and that the Court award Disclosure Source its “cost of suit” against Swirczynski.

    At press time, calls to the lawyer and plaintiffs in this case have not been returned.

    Agents and brokers rely on Fidelity and other vendors to ensure accuracy and accountability provided to them in real estate transactions. Having Disclosure Source refuse to support the agent, who purchased their faulty product, is like biting the hand that feeds you.

    Is this action as shocking to you as it is to us?

    What action should Disclosure Source or any NHD provider do in a situation like this? We’d like to hear from you.

    • Egbert Pellington

      Wow, I’m surprised that DS didn’t support the Century 21 agent when he got sued!

    • Secret RE Agent Man

      why am I soooo not surprised!

    • Rosemary Potter

      Why do we order DS? Wasn’t the report to inform our clients?

    • Tony Williams

      What an expensive nightmare for the unfortunate Realtor.
      I’ll just stick with Property ID, thank you!

    • Sherry

      Disclosure Source should pay for the damages. They are normally my first chose when I order a NHD Report, but now I just do not feel I can depend on them for the reliable information. This is not good as I would hate to be the agent getting sued.

    • REALPRO INC

      I will not use Disclosure Source, or Fidelity Title in any future transactions. You need to call for all agents to do the same. Unfortunately, this typical of Title Companies when claims are presented against their insurance policies. You can add First American to the list.
      Todd A. Key
      California Real Estate Broker

    • reo411pro@gmail.com

      And who should DS put blame into? Aside from the agent who purchased their disclosure policy? I guess they will now also terminate and sue the people that they contract with who prepared the report for them.

    • carol

      What’s the point of purchasing nhd if the nhd company doesn’t take responsibility on the data they provided? I won’t buy nhd from Disclosure Source anymore.

    • CA real estate

      While I do agree that the agents involved should have known of the additional tax, if Disclosure source provided information that was not, or could not be attained by other methods (Such as tax rolls), they should stand alongside the agent(s).

      Mistakes are made by everyone in this industry. Unfortunately, the vendors will rarely, if ever, hone up to theirs. They would rather protect their “good name” and see a lowly agent go by the wayside than do the right thing and stand beside those that recommend their “services”.

      I certainly hope that Century 21 will stand behind their agent and, if the story is complete, refuse to do any future business with Fidelity or ANY of their subsidiaries. A HUGE umbrella that includes almost every major title and service provider in our industry.

    • Carol Lynn

      Really bad decision on Fidelity and Disclosure Source’s part. I’m surprised they are so willing to throw an agent, who trusted their expertise, under the bus. I can see it coming: yet ANOTHER disclosure to be signed by all parties regarding the legitimacy of the information on the NHD reports. Who is going to be buying these reports from Fidelity now??? Way to shoot yourself in the foot, Fidieltiy/Disclosure Source. In the end, will it have been worth it? I think not.

    • Ann McDonald

      What about the E & O that disclosure source supposedly has? If the report provided by them was in error, shouldn’t the E & O cover that?

    • Fredy Rodriguez

      Flagged. They will lose more business in the future.

    • MaryAnn Cortez

      Shame on Disclosure Source for not standing behind their mistake and making it right. They should be stepping in and taking reasonability for their error. I think the agent is also at fault as he should have never stated that taxes of any kind would stay a certain amount through 2045-2055 tax year. We can only truely know what current taxes are. Remember, we live in America and taxes can increase at any point in time. The city can decide they need more money. I don’t think an experienced agent would have made a statement for 30 years down the road without a claim that the mello roos would possible change within that 30 year period.

    • bob.stickney@yahoo.com

      Kirk Swirczynski is my agent. An NHD report is a requirement for all of our transacitons. Disclosure Source was the NHD company selected. A legal complaint was filed by the buyer against DS and also against our brokerage because we relied upon DS data. (NOTE: The buyer was represented by another brokerage and we had no communication with him.)

      Disclosure Source/Fidelity has failed us miserably.

      They are claiming non-responsibility for their data, they are not defending us for using their data, and they have forced us to seek our own legal councel. DS has been unresponsive to our communications and our attorney’s over the past 9 months.

      We have to date incurred over $14,000 in legal fees.

      In my experience, DS is the most unprofessional company in real estate. They do not back their product and they do not defend the consumer of their product. In the future, if products or services have Fidelity’s name associated with them, we would not risk exposing our clients to them.

    • sguy707

      Great article! Thanks for bringing this to our attention

    • Robert Loughran

      Interesting article. Seems like they should stand behind all parties, they have insurance for just such a situation I’ve been told.

      • RE_Insider

        We agree.

    • RE_Insider

      Robert thank you for your comment. Journalists don’t wait for the outcome of a trial to report on an issue or pending lawsuit. If they did then they would be reporting OLD news. The facts of this case are: an agent has been sued by a buyer because of inaccurate information in a Disclosure Source NHD report (including Mello-Roos disclosures). The agent was not supported by Disclosure Source in fighting the suit. He filed a counter suit against Disclosure Source and then Disclosure Source, through their affirmative defense court documents, has accused the agent of being: Negligent, having unclean hands and then they claim that any liability to plaintiffs for the incorrect Mello-Roos disclosure and the attorneys’ fees and costs incurred by Swirczynski (Century 21 agent) in defending against plaintiffs’ claims arising out of the incorrect Mello-Roos disclosure) are the responsibility of others, and not Disclosure Source’s responsibility.

      If you haven’t read the court documents see the link we provided:
      http://www.scribd.com/doc/174857076/Fidelity-s-Disclosure-Source-Accuses-Agent-of-Negligence.

      The court documents speak for themselves. I am shocked that Disclosure Source didn’t support this agent.

    • denise

      They should pay what is asked in the lawsuit and cut their losses. We have been trained by their reps to completely relay on their accurate reports. They then should issue a promise to do better in the future. I for one will use another report after reading this.

    • Cynthia Holiday

      Under no circumstances should Fidelity and Disclosure Source be rewarded by the real estate community for any more business until they make right with the buyers of the property and with the agent. I will personally boycott Fidelity and Disclosure Source until they make this right.

    • Deborah Gallagher

      There’s been an outcome, or so I’ve heard, and would appreciate an update.

      Wouldn’t the Mello-Roos assessment also be noted on the preliminary title report? Here in Northern CA that information is available in the pre-lim.

    • Has there been an outcome or resolution for this? I think an update is warranted, especially since the story was such a shocker. Please provide an update. Thanks.

      • RE_Insider

        I haven’t heard anything yet but will make a few calls on this one.

        • Hi again. Any update yet?

        • I asked for an update several weeks ago for the resolution of this caseand RE-Insider rep replied that they would “make a few calls.” so, what happened?

          • RE_Insider

            Sorry Lisa but there hasn’t been any progress in this case and no settlement yet. We will actively watch for progress. Stay tuned!

      • Pam Reilly

        Unbelievable! Can this be real? I have used Disclosure Source for years, always wondering why Mello Roos is even ON an NHD report to start with, but always assuming the info was accurate. How dare they put this agent and broker through this. I am appalled and sickened that they made these claims against this agent. I don’t know what else to say here. Shame on you Disclosure Source, and how dare you? I will NEVER order another Disclosure Source report. Pam Reilly, San Diego Broker.

      • RGraceLaw

        Looks like the case got settled.

        01/22/2015 at 08:30 am in Department ATV10, BRIAN C. YEP, Presiding
        Order to Show Cause (RE DISMISSAL PENDING SETTLEMENT) – Continued by Court

        11/24/2014 at 08:30 am in Department ATV10, BRIAN C. YEP, Presiding
        Conference-Case Management (OSC RE DISMISSAL PENDINGSETTLEMENT) – Continued by Plaintiff