Yergan

Appellants Vartanush Yergan and Ardem Vartanian appeal from the trial court’s judgment in favor of respondent the Department of Real Estate (Department) on their claim for entitlement to payment under the Real Estate Recovery Program (Bus. & Prof. Code, § 10470 et seq.). 1 The Department denied appellant’s claim, and the trial court concurred, on the ground that the underlying judgment obtained against defendant, REM Westfield, Inc. (REM), a licensed real estate corporation, was not based on fraud, but on professional negligence and breach of duty. We affirm.

Background Facts

Appellants Yergan and Vartanian are sisters. Through Yergan’s daughter, they became acquainted with Vartevar “Varto” Mazmanian, a licensed real estate agent and broker. According to stipulated facts, 2 Mazmanian was a licensed real estate salesperson since 1985. In May 1987, he went to work for Dorn-Platz & Co. In 1989, he was terminated from Dom-Platz’s employ and formed his own company, REM, which was a licensed real estate corporation until its license expired in February 1994.

At the time they met Mazmanian, appellants jointly owned an apartment building located on Afton Place in Los Angeles,…