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.

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.