Sotheby’s International Realty Faces Legal Setback in Elder Abuse and Fiduciary Breach Case
On May 14, 2024, Patricia Jean Macfadden filed a complaint against Sotheby’s International Realty, Inc. in the Superior Court of Los Angeles County. The case involves allegations of elder abuse and breach of fiduciary duty related to the sale of Macfadden's Hollywood home.
The lawsuit was initially filed on February 28, 2019, with Macfadden accusing Sotheby’s and its agent Guy Miracle of coercing her into selling her property for less than its market value. According to the complaint, the defendants had prearranged for the buyer to resell the property at a significantly higher price shortly after the initial transaction. This prompted Macfadden to claim that she was manipulated into an unfavorable deal while under duress.
Macfadden's complaint includes serious accusations against Sotheby’s and Miracle, alleging violations of elder abuse laws and breach of fiduciary duty. The plaintiff contends that the defendants exploited her vulnerable state to secure a financially advantageous deal for themselves or their associates. She argues that this conduct not only violated ethical standards but also broke specific legal statutes designed to protect elderly individuals from financial exploitation.
In response to these allegations, Sotheby’s attempted to compel arbitration based on clauses in both the listing agreement and purchase agreement signed by Macfadden. However, their motion was denied by Judge Michelle Williams Court due to what was perceived as an undue delay—over two years—before requesting arbitration. During this period, Sotheby’s engaged in extensive litigation activities including filing demurrers and motions to strike punitive damages claims without ever raising arbitration as an affirmative defense.
The trial court ruled that Sotheby’s had waived its right to arbitration due to this prolonged delay and inconsistent actions. Despite their appeal arguing that no prejudice had been caused by their delay, recent developments in federal law played a crucial role in upholding the trial court's decision. The United States Supreme Court's ruling in Morgan v. Sundance Inc., which stated that federal courts cannot condition a waiver of arbitration rights on showing prejudice, influenced this outcome.
Macfadden is seeking various forms of relief from the court including compensatory damages for financial losses incurred due to the alleged undervalued sale of her home, punitive damages for malicious conduct by the defendants, and any other relief deemed appropriate by the court.
The attorneys representing Patricia Jean Macfadden are John Machtinger from Machtinger Law and Edmond E. Salem from The Salem Law Firm. Representing Sotheby’s International Realty are Fredric W. Trester and Steven J. Renick from Manning & Kass Ellrod Ramirez Trester LLP; Guy Miracle is represented by Martin K. Deniston, Valeria Granata, and Robert Cooper from Wilson Elser Moskowitz Edelman & Dicker LLP. The case ID is B318882.