Judge Audra Mori, Case 22STCV09480 2023-01-18 Tentative Ruling

Plaintiff Angie Craft (“Plaintiff”) filed this action against defendants Dolce & Associates, Patrick Sullivan, Patricia Sullivan, Patricia Norwine, Staci's Home Inspections, Staci Goddard, 5650 Sumner Way Condominium Association, Caren Saiet, and Roe Agency for injuries Plaintiff sustained after she fell out of a third-story window in her recently purchased condominium.

Following an order sustaining a demurrer to the original complaint with leave to amend, Plaintiff filed the operative First Amended Complaint (“FAC”) alleging in part, “Defendant Caren Saiet ("Defendant Buyer's Agent") was the real estate broker acting on behalf of Plaintiff. Pursuant to the doctrine of respondeat superior, the employer of defendant Caren Saiet (hereinafter "ROE AGENCY") is liable to Plaintiff for the acts and omissions of defendant Saiet. Plaintiff relied upon the inspection completed by Staci's Home Inspections and their agent Staci Goddard ("Defendant Inspectors") in determining whether her home was free of dangerous conditions, as well as inspections required to be performed by Caren Saiet, ROE AGENCY, Patricia Norwine, Dolce &Associates and/or Defendant Sellers.” (FAC at p. 4.) The FAC asserts a single cause of action for negligence against all defendants.

Defendant Caren Saiet (“Saiet”) now demurs to the FAC arguing the FAC fails to state sufficient facts to constitute a claim against her and that the negligence claim is uncertain. Plaintiff opposes the demurrer, and Defendant filed a reply.

This matter was last heard on December 8, 2022, where it was continued to January 18, 2023, for the parties to meet and confer regarding the issues raised in the demurrer as required by Code. Saiet’s counsel filed a meet and confer declaration on December 13, 2022, providing that a resolution could not be reached following a telephonic meet and confer with Plaintiff’s counsel. Thereafter, Plaintiff filed a supplemental opposition, and Saiet filed a supplemental reply.

Saiet provides that she was Plaintiff’s real estate agent for the purchase of the subject property, but Saiet contends she is not liable under California law for Plaintiff’s injuries. Saiet argues that she owed no statutory duty under Civil Code § 2079(a) to Plaintiff and that the FAC does not allege that Saiet had a duty to determine if the property was free of any dangerous conditions. Further, Saiet contends that the statutory disclosure requirements of Civil Code § 1102 do not apply to Saiet as the buyer’s agent and that Saiet had no duty to verify the findings of the home inspector. Saiet argues that there are no facts alleging a breach of a duty of care by Saiet to Plaintiff and that the cause of any harm suffered by Plaintiff was Plaintiff’s own failure to exercise reasonable care to protect herself.

In opposition, Plaintiff contends that Saiet passed on an inspection report without verifying the contents thereof and that Plaintiff relied on that report and was injured as a result. Plaintiff further contends that Saiet failed to conduct a reasonably competent and diligent visual inspection, as Saiet failed to notice that the subject window was dangerously low, was not code-compliant, and posed an unreasonable risk of injury. Plaintiff asserts that arguments concerning the propriety of Saiet’s inspection demonstrate the need for discovery on that issue, and Plaintiff asserts that Saiet already admitted that she owed a duty to Plaintiff under Civil Code § 2079.

In reply, Saiet argues that there are no allegations in the FAC stating that Saiet knew about any issues relating to the windows at the property and that Plaintiff’s cited authority does not support Plaintiff’s position regarding Saiet’s alleged negligence. Additionally, Saiet asserts that after additional research, Saiet has determined that Civil Code § 2079 does not apply to her because she was not a seller’s agent or broker. Saiet contends that she has not made any judicial admissions regarding any duty owed to Plaintiff under Civil Code § 2079.

Plaintiff, in her supplemental opposition, again argues that Saiet admitted to owing a duty to conduct a reasonably competent inspection under Civil Code § 2079(a). In her supplemental reply, Saiet again contends that Civil Code § 2079(a) is not applicable to her, and that Defendant had no duty to disclose information that was not known to her to Plaintiff.

A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party's pleading (complaint, answer, or cross-complaint). (CCP §§ 422.10, 589; see Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purposes of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true. (Donabedian, 116 Cal.App.4th at 994.)

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian, supra, 116 Cal.App.4th at 994.) No other extrinsic evidence can be considered. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881 [error for court to consider facts asserted in memorandum supporting demurrer]; see also Afuso v. United States Fid. & Guar. Co. (1985) 169 Cal.App.3d 859, 862 [disapproved on other grounds in Moradi-Shalal v. Fireman’s Fund Ins. Cos. (1988) 46 Cal.3d 287] [error to consider contents of release not part of court record].)

A demurrer can be utilized where the “face of the complaint” itself is incomplete or discloses some defense that would bar recovery. (Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-72.) The “face of the complaint” includes material contained in attached exhibits that are incorporated by reference into the complaint; or in a superseded complaint in the same action. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94; see also Barnett v. Fireman’s Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505 [“[W]e rely on and accept as true the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal effect of the exhibits.”]).

A demurrer can only be sustained when it disposes of an entire cause of action. (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97,119; Kong v. City of Hawaiian Gardens Redev. Agency (2003) 108 Cal.App.4th 1028, 1046.)

Before filing a demurrer, the demurring party is required to meet and confer with the party who filed the pleading demurred to for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. (CCP § 430.41(a).)

Saiet has now fulfilled this requirement. (Horowitz Decl. ¶¶ 2-4, filed Dec. 13, 2022.)

With her supplemental reply, Saiet requests the Court take judicial notice of two redline versions of statutory language from December 2014 and January 2018 of Civil Code § 2079.13 obtained from Westlaw.com. Saiet provides no authority with her requests establishing that it is proper for judicial notice to be taken of the Westlaw.com documents. The request is denied.

The elements of a cause of action for negligence are duty, breach, causation, and damages. (Orey v. Superior Court (2013) 213 Cal.App.4th 1241, 1255; Johnson v. Prasad (2014) 224 Cal.App.4th 74, 78.) “Ordinarily, negligence may be alleged in general terms, without specific facts showing how the injury occurred, but there are ‘limits to the generality with which a plaintiff is permitted to state his cause of action, and ... the plaintiff must indicate the acts or omissions which are said to have been negligently performed. He may not recover upon the bare statement that the defendant’s negligence has caused him injury.’ [Citation].” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 527.) There is no requirement that plaintiff identify and allege the precise moment of the injury or the exact nature of the wrongful act. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Here, regarding Saiet, the FAC alleges that Saiet “was the real estate broker acting on behalf of Plaintiff,” and that Plaintiff relied on inspections required to be performed by Saiet, and the other defendants, in determining whether the property was free of dangerous conditions. (FAC at p. 4.) Plaintiff alleges Saiet “violated their common-law fiduciary duty to Plaintiff when they failed to disclose material facts affecting the safety of the dwelling.” (Ibid.) The FAC further alleges:

At all times relevant hereto, Defendant Buyer's Agent owed to Plaintiff a duty to conduct a reasonably competent and diligent visual inspection of the property purchased by Plaintiff and to disclose all facts materially affecting the value or desirability of that property under consideration. Defendant Buyer's Agent breached her duty to Plaintiff by failing to disclose that a worked [sic] had previoulsy [sic] (and fatally) fallen from the same window from which Plaintiff would later fall. On information and belief, Defendant Buyer's Agent knew or should have know [sic] about this prior incident. Further, Defendant Buyer's Agent failed to conduct a reasonably competent and diligent visual inspection (and/or failed to disclose to Plaintiff the results of such an inspection) in that Defendant Buyer's Agent failed to observe and/or disclose that the window sill from […] Plaintiff would later fall: 1) was dangerously low; 2) a non-code compliant; and, 3) represented an unreasonable risk of injury. Plaintiff further alleges that Defendant Buyer's Agent, as an experienced real estate professional knew, or should have know [sic], upon conducting a visual inspection of the premises, that the window sill was dangerously low, was non-code compliant; and represented an unreasonable risk of injury, and that failing to ascertain and/or disclose this information to Plaintiff was a violation of the duties Defendant Buyer's Agent owed to Plaintiff.

Further, A real estate broker cannot accept information received from another such as the seller, as being true, and transmit it to the [broker's client] without either verifying the information or disclosing to the client that the information has not been verified. In failing to verify and/or failing to disclose to Plaintiff that the information had not been verified, Defendant Buyer's Agent violated her fiduciary obligations to Plaintiff. Salahutdin v. Valley of Cal. (1994) 24 Cal.App.4th 555,562 [29 Cal.Rptr.2d 463]. Specifically, Plaintiff alleges that Defendant Buyer's Agent passed on to Plaintiff a third-party real estate inspection report without first verifying the veracity of that report or disclosing to Plaintiff that the information had not been verified. That report made no mention of the dangerous window, the non-code compliant nature of the window, or the death of a worked [sic] who had previously fallen from that same location. By failing to verify the contents of this report and/or failing to inform Plaintiff that she had not verified the contents of the report, Defendant Buyer's Agent breached her fiduciary obligations to Plaintiff. As a result thereof, Plaintiff was injured and suffered damages.

Saiet argues that she did not owe Plaintiff a duty Civil Code § 2079(a). This provision states:

It is the duty of a real estate broker or salesperson … to a prospective buyer of residential real property improved with one to four dwelling units or a manufactured home as defined in Section 18007 of the Health and Safety Code, to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective buyer all facts materially affecting the value or desirability of the property that an investigation would reveal, if that broker has a written contract with the seller to find or obtain a buyer or is a broker who acts in cooperation with that broker to find and obtain a buyer.

The fiduciary duty of a broker that “contracts to exclusively represent a purchaser of real property” to investigate for his or her client is “independent of the separate obligation imposed on a seller's broker to conduct a reasonable visual inspection of the marketed property for a buyer's protection” under Civil Code § 2079. (Field v. Century 21 Klowden-Forness Realty (1998) 63 Cal.App.4th 18, 21; see also Smith v. Rickard (1988) 205 Cal.App.3d 1354, 1360 noting that [legislature intended Civil Code § 2079 to apply only to brokers selling residential properties of four or fewer dwellings], Salahutdin v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 561-62 [“At issue here is not the inspection and disclosure duties of a seller's broker to the buyer described in … [CCP] section 2079. Rather, it is the broker's fiduciary duty to his own client to refrain from making representations of facts material to the client's decision to buy the property ...”], and William L. Lyon & Associates, Inc. v. Superior Court (2012) 204 Cal.App.4th 1294, 1305 [“The statutory duties owed by sellers' brokers under section 2079 are separate and independent of the duties owed by brokers to their own clients who are buyers.”].)

“Section 2079 requires sellers' real estate brokers, and their cooperating brokers, to conduct a ‘reasonably competent and diligent visual inspection of the property’, and to disclose all material facts such an investigation would reveal to a prospective buyer.” (Field, supra, 63 Cal.App.4th at 23, footnote omitted.)[1] However, “[u]nder the common law, unchanged by Easton and section 2079, a broker's fiduciary duty to his client requires the highest good faith and undivided service and loyalty.” (Id. at 25.) “[T]he fiduciary duty owed by brokers to their own clients is substantially more extensive than the non-fiduciary duty codified in section 2079.” (Ibid.; see also Civ. Code § 2079.12(b) [expressly noting the legislature did not intend to modify or restrict existing duties owed by real estate licensees].)

In this case, the FAC does not specifically allege that Saiet violated Civil Code § 2079. Rather, the FAC alleges that Saiet, which the FAC identifies as “Defendant Buyer’s Agent”, (FAC at p. 4), was the real estate broker that acted on behalf of Plaintiff in the purchase of the property. There are no allegations in the FAC to suggest that Saiet had “a written contract with the seller to find or obtain a buyer”, or that Saiet “act[ed] in cooperation with [a seller’s] broker to find and obtain a buyer.” (Civ. Code § 2709(a).)[2] The claims against Saiet are made against her as the broker for Plaintiff- the buyer of the property- so the claims against her do not arise under Civil Code § 2079. (Field, 63 Cal.App.4th at 23; William L. Lyon & Associates, Inc., 204 Cal.App.4th at 1305-06.) Rather, they invoke the “much broader “ fiduciary duty that buyers’ agents owe to their own clients. (Field, 63 Cal.App.4th at 25-26.)

Accordingly, whether the FAC sufficiently states a cause of action for negligence against Saiet depends on whether the FAC alleges that Saiet breached her fiduciary duty to Plaintiff as Saiet’s client.

Pursuant to Civil Code § 2079.16, a real estate agent acting for the buyer has the following affirmative obligations:

A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer.

(a) Diligent exercise of reasonable skill and care in performance of the agent's duties.

(c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties. An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative duties set forth above.

“A fiduciary must tell its principal of all information it possesses that is material to the principal's interests.” (Michel v. Moore & Associates, Inc. (2007) 156 Cal.App.4th 756, 762.)

“The broker as a fiduciary has a duty to learn the material facts that may affect the principal's decision. He is hired for his professional knowledge and skill; he is expected to perform the necessary research and investigation in order to know those important matters that will affect the principal's decision, and he has a duty to counsel and advise the principal regarding the propriety and ramifications of the decision. The agent's duty to disclose material information to the principal includes the duty to disclose reasonably obtainable material information. [¶] ... [¶] The facts that a broker must learn, and the advice and counsel required of the broker, depend on the facts of each transaction, the knowledge and the experience of the principal, the questions asked by the principal, and the nature of the property and the terms of sale. The broker must place himself in the position of the principal and ask himself the type of information required for the principal to make a well-informed decision. This obligation requires investigation of facts not known to the agent and disclosure of all material facts that might reasonably be discovered.” (Miller & Starr, Real Estate Law 2d, Agency, § 3.17, pp. 94, 96–97, 99.)

Furthermore, a broker “ ‘… cannot accept information received from others as being true, and transmit it to the principal, without either verifying the information or disclosing to the principal that the information has not been verified. Because of the fiduciary obligations of the broker, the principal has a right to rely on the statements of the broker, and if the information is transmitted by the broker without verification and without qualification, the broker is liable to the principal for negligent misrepresentation.” (Salahutdin v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 562-63.) “Accordingly, a buyer's agent is not required to verify information received from the seller and passed on to the buyer if the buyer understands the agent is merely passing on unverified information.” (Pagano v. Krohn (1997) 60 Cal.App.4th 1, 12.)

Failure of a real estate broker to satisfy its fiduciary obligations of disclosure and good faith constitutes negligence. (Cal. Civ. Prac. Torts § 34:35, citing Tackett v. Croonquist, 244 Cal.App.2d 572.)

Here, the FAC alleges that Saiet violated her duty to disclose material facts affecting the safety of the property. Specifically, the FAC alleges that Saiet knew or should have known, and failed to inform Plaintiff, that another person had previously fallen from the same window Plaintiff fell from and died. The FAC further pleads that Saiet gave Plaintiff a third-party real estate inspection report without first verifying the veracity of that report or disclosing to Plaintiff that the information had not been verified. Additionally, Plaintiffs alleges that Saiet failed to perform a reasonably competent and diligent visual inspection because Saiet, as a real estate professional, knew or should have known that the window was dangerously low, was not code-compliant, and represented an unreasonable risk of injury, which Saiet did not ascertain and disclose to Plaintiff.

Saiet, as Plaintiff’s broker, owed Plaintiff a fiduciary duty to provide Plaintiff with information material to determining whether Plaintiff should purchase the property. The FAC’s allegations sufficiently allege that Saiet breached her fiduciary duty by failing to uncover that the subject window was dangerous, was not code-complaint and posed an unreasonable risk of injury, which Plaintiff alleges Saiet knew or should have known as an experienced real estate agent. Plaintiff, thus, alleges the dangerous nature of the window was obtainable to Saiet. Further, Saiet allegedly knew or should have known that another person previously fell from the same window Plaintiff fell from and died but did not disclose this to Plaintiff, which, together with the above allegations, was material to the safety of the dwelling.

As to Saiet’s arguments concerning disclosure requirements under Civil Code § 1102, the FAC is not alleging a violation of this statute against Saiet.

Based on the foregoing the FAC sufficiently states a claim against Saiet. Defendant Saiet’s demurrer to the FAC is overruled.

[1] As the Fields Court further explained:

Section 2079 was enacted to codify and focus the holding in Easton v. Strassburger, supra, 152 Cal.App.3d 90, 199 Cal.Rptr. 383.10 In Easton, the court recognized that case law imposed a duty on sellers' brokers to disclose material facts actually known to the broker. Easton expanded the holdings of former decisions to include a requirement that sellers' brokers must diligently inspect residential property and disclose material facts they obtain from that investigation. Further, the case held sellers' brokers are chargeable with knowledge they should have known had they conducted an adequate investigation. (Id. at p. 99, 199 Cal.Rptr. 383.)

(Field, 63 Cal.App.4th at 24.)

[2] “[T]he case law and statutory scheme make it apparent that section 2079's reference to brokers who cooperate with a seller's broker is not intended to encompass brokers who exclusively represent a buyer as a direct fiduciary. The ‘cooperating broker’ encompassed by section 2079 is one who ‘acts in cooperation with [a seller's] broker to find and obtain a buyer.’ (§ 2079.)” (Field, 63 Cal.App.4th at 27.) In Fields, the broker contracted to act as sole agent for the buyer in their search for a residence to purchase, not to find a buyer for the seller's broker. The trial court thus correctly held the two-year statute of limitations of CCP § 2079.4 did not bar the buyer’s action against the broker that acted as their agent. (Ibid.)