Judge: Barbara M. Scheper, Case: 22STCV19714, Date: 2023-10-18 Tentative Ruling

Case Number: 22STCV19714    Hearing Date: October 26, 2023    Dept: 30

Dept. 30

Calendar No.

29133 Grayfox LLC vs. Compass California, Inc., et. al., Case No. 22STCV19714

Tentative Ruling re:  Cross-defendant’s Demurrer to First Amended Cross-complaint

            Cross-Defendant Gail Copley (Copley) demurs to the First Amended Cross-Complaint (FACC) of Cross-Complainants Compass California, Inc., Tony Mark, Russel Grether, and Lily Harfouche. The Court sustains the demurrer as to the second, third, and fourth causes of action, and otherwise overrules the demurrer.

In reviewing the legal sufficiency of a complaint against a demurrer, a court will treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank); C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062.) It is well settled that a “demurrer lies only for defects appearing on the face of the complaint[.]” (Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) “The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Guclimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 (internal quotes omitted).) For purposes of ruling on a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.)

When ruling on a demurrer, the Court may only consider the complaint’s allegations or matters which may be judicially noticed. (Blank, supra, 39 Cal.3d at 318.) The Court may not consider any other extrinsic evidence or judge the credibility of the allegations plead or the difficulty a plaintiff may have in proving his allegations. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) A demurrer is properly sustained only when the complaint, liberally construed, fails to state facts sufficient to constitute any cause of action. (Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)

Plaintiff 29133 Grayfox LLC’s Complaint alleges that Cross-Complainants and other defendants intentionally suppressed and withheld geology and engineering reports during escrow for Plaintiff’s purchase of a home in Malibu, California. (SAC ¶¶ 18-20.) The seller of the home was Defendant Goosefish Invest LLC (Goosefish), acting through its owner Defendant Mikael Soderlindh (Soderlindh). (SAC ¶¶ 3-4.) Tony Mark and Russel Grether are allegedly licensed real estate brokers and/or sales agents employed by Compass California, Inc.; Compass and the agents served as brokers for Goosefish. (SAC ¶ 6.) Lily Harfouche, another agent employed by Compass, acted as Plaintiff’s broker in the transaction. (SAC ¶ 7.)

In the FACC, Cross-Complainants allege that Copley “agreed to act as an agent for Soderlindh and/or Goosefish in connection with the sale of the Property to Plaintiff. Copley’s role and responsibilities included obtaining and providing reports and disclosures to assist to inform Plaintiff as to the status/update regarding her efforts to obtain permits for the installation of a pool and wood deck at the Property.” (FACC ¶ 22.) Copley allegedly possessed the relevant reports prior to the close of escrow, but “either negligently or intentionally, failed to bring the reports to the attention of the parties to the real estate transaction. . . . Copley was aware that the parties were relying on her to provide all necessary reports.” (FACC ¶ 27.) The FACC alleges five causes of action against Copley, for:  (1) Equitable Indemnity; (2) Contribution; (3) Declaratory Relief; (4) Negligence; and (5) Negligent Misrepresentation.

First Cause of Action for Equitable Indemnity

Cross-Complainants’ first cause of action seeks equitable indemnification from Copley for any liability to Plaintiff arising from Copley’s fault related to Plaintiff’s purchase of the Property. (FACC ¶ 33.)

“Equitable indemnity, which ‘requires no contractual relationship,’ ‘is premised on a joint legal obligation to another for damages’; it is ‘subject to allocation of fault principles and comparative equitable apportionment of loss.’ [Citation.] ‘The elements of a cause of action for [equitable] indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is ... equitably responsible.’ ” (C.W. Howe Partners Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 700.)

Cross-Complainants allege that Copley was responsible for obtaining and providing the relevant geology and engineering reports during escrow, that Copley failed to inform the parties of those reports, and that this failure contributed to Plaintiff’s damages. (FACC ¶ 27.) These allegations are sufficient to plead a claim for equitable indemnity.

Copley demurs on the basis that she owed no duty to Plaintiff because she was not an agent in the transaction. While Cross-Complainants allege that Copley acted as an agent of sellers Goosefish and/or Soderlindh (FACC ¶ 22), Copley argues that the exhibits attached to Plaintiff’s incorporated Second Amended Complaint show that she was not an agent for the seller. However, this argument is wholly unsupported, as Copley fails to cite which part of the SAC or attached exhibits refutes her alleged agency.

Copley also argues that all claims in the FACC time-barred under Civ. Code § 2079.4, which provides, “[i]n no event shall the time for commencement of legal action for breach of duty imposed by this article exceed two years from the date of possession, which means the date of recordation, the date of close of escrow, or the date of occupancy, whichever occurs first.” The duty subject to this section is “the duty of a real estate broker or salesperson . . . to a prospective buyer of residential real property” to conduct a reasonably competent and diligent visual inspection of the property offered for sale, and to disclose to the buyer all material facts that such an investigation would reveal. (Civ. Code § 2079, subd. (a).)

Copley’s statute of limitations argument fails because Cross-Complainants do not allege that Copley acted as the real estate broker or salesperson for the sellers. Rather, Copley allegedly acted as an agent for Sonderlindh/Goosefish to oversee the permit application process for installation of a pool and wood deck at the Property. (FACC ¶ 13.) In the incorporated SAC, Plaintiff alleges that the Mark, Grether, and Jessica Jedvaj, as agents of Compass, acted as the sellers’ broker. (SAC ¶ 6.)

Second Cause of Action for Contribution

Under their second cause of action, Cross-Complainants seek contribution from Copley for any damages recovered by Plaintiff from Cross-Complainants in the underlying action that were proximately caused by Copley’s negligence or fault. (FACC ¶¶ 38-40.)

The Court agrees with Copley that the contribution claim is premature. “Contribution . . . is a creature of statute and distributes the loss equally among all tortfeasors. . . . [Contribution] requires a showing that one of several joint tortfeasor judgment debtors has paid more than a pro rata share of a judgment. . . . A right of contribution can come into existence only after rendition of a judgment declaring more than one defendant jointly liable to the plaintiff.” (Coca-Cola Bottling Co. v. Lucky Stores, Inc. (1992) 11 Cal.App.4th 1372, 1378.)

Contrary to Cross-Complainants’ argument, contribution and indemnity are not merely forms of one another; the California Supreme Court has recognized “that the statutory contribution remedy [is] separate and distinct from the judicially created doctrine of comparative indemnification.” (Id. at 1379 [citing American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 602].) By statute, contribution requires that a judgment has been jointly rendered against multiple tortfeasors. (Civ. Code § 875, subd. (a).) Here, because there has been no judgment rendered against Cross-Complainants, they have not pled any right to contribution. (See Coca-Cola Bottling Co., 11 Cal.App.4th at 1380 [“After the judgment in favor of plaintiff Shore and against both defendants had been entered and fully satisfied by Coca-Cola, then and only then was a claim for contribution ripe.”].)

Third Cause of Action for Declaratory Relief

            The third cause of action requests declaratory relief as to “the respective rights, duties, and obligations of Copley . . . to indemnify or provide comparative contribution to Cross-Complainants in regard to a verdict or judgment, if any, rendered against Cross-Complainants [for Plaintiff].” (FACC ¶ 42.)

“Any person interested under a written instrument, excluding a will or a trust, or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in . . . property . . . may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” (Code Civ. Proc. § 1060.)

The FACC fails to identify any proper subject for declaratory relief; Cross-Complainants have not alleged the existence of any written instrument or contract at issue. Consequently, this cause of action fails.

Fourth Cause of Action for Negligence

            Under their claim for negligence, Cross-Complainants allege that Copley “assumed the obligation of Soderlindh to provide all material information relative to the installation of a pool and wood deck at the Property to Cross-Complainants,” and that Copley breached this duty by failing to provide Tony Mark the Byer Report and Universal Engineering Report as part of the package of material information relating to the pool and deck. (FACC ¶ 49.)

            The Court agrees with Copley that she did not owe the alleged duty of care to Cross-Complainants. The premise of Copley’s alleged duty is that Soderlindh owed a duty to Cross-Complainants to provide material information relating to the pool and deck. But Cross-Complainants were allegedly acting as Soderlindh’s brokers in the transaction, and the duty to disclose material information is placed on the broker. (Civ. Code § 2079.) Soderlindh did not have any obligation to provide material information regarding the deck to Cross-Complainants; to the contrary, Cross-Complainants owed Soderlindh this duty. A Seller’s agent owes an “affirmative obligation” to the buyer and seller “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.” (Civ. Code § 2079.16.) Because Soderlindh did not owe the alleged duty to Cross-Complainants, Copley could not have assumed that duty, and so the negligence claim fails.

Fifth Cause of Action for Negligent Misrepresentation

To plead fraud by negligent misrepresentation, a plaintiff must allege: (1) a misrepresentation of a past or existing material fact; (2) made without reasonable grounds for believing it to be true; (3) made with the intent to induce another’s reliance on the fact misrepresented; (4) justifiable reliance on the misrepresentation; and (5) resulting damage. (Ragland v. U.S. National Bank Assn. (2012) 209 Cal.App.4th 182, 196.)

The liberal construction of pleadings does not apply to a fraud claim. Instead, a fraud claim must be pled with specificity. (Tenet Healthsystem Desert, Inc. v. Blue Cross of California¿(2016) 245 Cal.App.4th 821, 837.) “The particularity requirement demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)

Cross-Complainants allege under their claim for negligent misrepresentation that, on January 25, 2021, “Copley represented to Mark that the package of information she delivered to Mark contained all material information related to the installation of a pool and wood deck at the Property.” (FACC ¶ 54.) This representation was untrue, because the package that Copley presented omitted the Byer Report and Universal Engineering Report. (FACC ¶ 55.)

In a claim for negligent misrepresentation, “one who negligently supplies false information ‘for the guidance of others in their business transactions’ is liable for loss suffered ‘(a) [b]y the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.’ ” (Leko v. Cornerstone Building Inspection Service (2001) 86 Cal.App.4th 1109, 1121.)

The allegations are sufficient to state a cause of action for negligent misrepresentation against Copley. Copley allegedly agreed to prepare the requisite information regarding the pool and deck for Cross-Complainants to present to the buyer, and Cross-Complainants allegedly suffered damages in reliance on Copley’s incomplete information. (FACC ¶¶ 19-22.) The circumstances surrounding Copley’s alleged role are pled with sufficient specificity to support the claim.