Judge: Armen Tamzarian, Case: 23STCV21265, Date: 2024-01-19 Tentative Ruling

Case Number: 23STCV21265    Hearing Date: January 19, 2024    Dept: 52

Defendants Pinnacle Estate Properties, Inc.’s and Kenneth Winter’s Demurrers and Motions to Strike Portions of Plaintiffs’ Complaint

Demurrers

Defendants Pinnacle Estate Properties, Inc. (Pinnacle) and Kenneth Winter separately demur to plaintiffs Jacob Ongwiseth and Nipith Ongwiseth’s fourth, fifth, and sixth causes of action.

Summary of Allegations

            This action arises from plaintiffs’ lease of a house in Malibu.  Pinnacle and its agent and employee Winter served as the property owners’ listing agent.  (Comp., ¶¶ 4, 9.)  The property’s listing on a real estate website “described the Property as having a ‘gourmet kitchen [] fully quipped with Viking appliances,’ ‘[a] flat entertainer’s yard’, and a ‘luxurious ensuite bathroom,’ among other things.  It listed a dishwasher, dryer, range, oven, refrigerator and washer as included appliances.”  (¶ 8.)  When plaintiffs toured the property, “Winter represented to the Plaintiffs that” numerous problems at the property “would all be repaired prior to move-in.”  (¶ 12.)  Plaintiffs allege these “Listing Misrepresentations” and “Tour Misrepresentations”, respectively, were false.  (¶¶ 18, 54, 62, 69.)

            Plaintiffs agreed to lease the property for one year.  (Comp., ¶¶ 13, 17.)  They allege they “would not have entered into the Lease if Defendants had not made these misrepresentations” (¶ 22) or if defendants had “disclosed the existence of these defects prior to its execution” (¶ 23).  “After enduring months of” various problems at the house (¶ 24), plaintiffs vacated it and incurred at least $17,000 in relocation expenses (¶ 28).     

4th Cause of Action: Negligent Misrepresentation

            Plaintiffs allege sufficient facts for this cause of action.  “The elements of negligent misrepresentation are (1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.”  (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.)  “In contrast to fraud, negligent misrepresentation does not require knowledge of falsity.”  (Ibid.)

            Plaintiffs allege the ultimate facts required for each element.  First, they allege Pinnacle, through its agent and employee Winter, misrepresented facts about the property’s condition, including its appliances (Comp., ¶ 8) and that numerous problems “would all be repaired prior to move-in” (¶ 12). 

Second, they allege Pinnacle and Winter “knew or should have known that these representations and omissions were false when they were made, or acted with reckless disregard for the accuracy of these representations when they were made.”  (¶ 55.) 

Third, plaintiffs allege defendants intended them to rely on their misrepresentations.  (¶ 72.)  “[T]he only intent by a defendant necessary to prove a case of fraud is the intent to induce reliance.  Moreover, liability is affixed not only where the plaintiff's reliance is intended by the defendant but also where it is reasonably expected to occur.”  (Lovejoy v. AT&T Corp. (2001) 92 Cal.App.4th 85, 93.)  The factual allegations permit a reasonable inference that defendants intended to induce plaintiffs’ reliance on their alleged misrepresentations. 

Fourth, plaintiffs allege they justifiably relied on defendants’ misrepresentations.  (¶ 57.)  “[T]he reasonableness of the reliance is ordinarily a question of fact.  [Citations.]  However, whether a party’s reliance was justified may be decided as a matter of law if reasonable minds can come to only one conclusion based on the facts.”  (Guido v. Koopman (1991) 1 Cal.App.4th 837, 843.)  A reasonable factfinder could conclude plaintiffs justifiably relied on representations about the property made by the property’s listing agent.

Finally, plaintiffs allege they suffered resulting damages.  They allege they would not have entered the lease if they had known the truth.  (¶¶ 22-23.)  They vacated the property after less than six months of their one-year lease and incurred $17,000 in relocation expenses.  (¶ 28.)

5th & 6th Causes of Action: Fraudulent Inducement – Concealment & Misrepresentation

            Plaintiffs allege sufficient facts for these causes of action.  Fraudulent inducement of a contract requires: (1) the defendant “misrepresented or concealed a material fact … , (2) knowledge of the falsity of the fact or lack of reasonable grounds for believing it to be true, (3) an intent to induce reliance, (4) justifiable reliance by the [plaintiff], and (5) resulting damages.”  (Garamendi v. Golden Eagle Ins. Co. (2005) 128 Cal.App.4th 452, 470.) 

The allegations described above suffice to constitute a cause of action for fraudulent inducement of contract by concealment or by misrepresentation.  The complaint further alleges defendants “intentionally failed to disclose certain facts regarding the habitability, features, and quality of the Property” (¶ 62), “were aware of these material facts and intentionally concealed them” (¶ 63), and “knew that the representations were false when they made them, or made them recklessly and without regard for their truth” (¶ 71). 

Defendants argue plaintiffs do not meet the heightened standard for pleading fraud.  “[F]raud must be pled specifically.”  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)  “ ‘This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.’ ”  (Ibid.)  “A plaintiff’s burden in asserting a fraud claim against a corporate employer is even greater.  In such a case, the plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.’ ”  (Ibid.) 

Plaintiffs allege the required details.  The “Listing Misrepresentations” were made on “a listing for the Property on [a] real estate website” in March 2023.  (¶ 8.)  The tour occurred “[s]hortly thereafter” (¶ 10), and the “Tour Representations” were made during that tour (¶ 12).  Pinnacle, through agent and employee Winter, who is a “duly licensed real estate agent” (¶ 4.b), made the representations to plaintiffs.            

Motion to Strike

Defendants Pinnacle Estate Properties, Inc. and Kenneth Winter separately move to strike portions of plaintiffs’ complaint regarding punitive damages.  Courts may strike such allegations where the facts alleged “do not rise to the level of malice, oppression or fraud necessary” to recover punitive damages under Civil Code section 3294.  (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 64.)  For punitive damages, “ ‘[f]raud’ means means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”  (Civ. Code, § 3294(b)(3).) 

Defendants rely on the same arguments made in their demurrers.  For the reasons discussed above, plaintiffs allege sufficient facts to constitute causes of action for fraudulent inducement of contract by concealment and by misrepresentation.  The same factual allegations suffice for fraud under Civil Code section 3294. 

Disposition

Defendants Pinnacle Estate Properties, Inc.’s and Kenneth Winter’s demurrers to plaintiffs’ complaint are overruled.  Defendants Pinnacle Estate Properties, Inc.’s and Kenneth Winter’s motions to strike portions of plaintiffs’ complaint are denied.  Defendants Pinnacle Estate Properties, Inc. and Kenneth Winter shall answer the complaint within 15 days.