Judge: Colin Leis, Case: 22STCV11656, Date: 2025-03-06 Tentative Ruling

Case Number: 22STCV11656    Hearing Date: March 6, 2025    Dept: 74

Chiu v. Chen et al.  

Defendants Handoko Widjaja Chen and GIG Real Estate, Inc. Motion for Summary Judgment   

BACKGROUND 

This case arises from a contract fraud and elder abuse case.

Plaintiff John C. Chiu’s (Plaintiff) operative complaint against Handoko Widjaja Chen and GIG Real Estate Inc. (Defendants) alleges three causes of action: (1) Breach of Fiduciary Duty; (2) Fraud and Deceit; and, (3) Elder Abuse – Financial Abuse. Defendants move for summary judgment, or in the alternative, summary adjudication.

EVIDENTIARY OBJECTIONS

Defendant’s Objections to Plaintiff’s Exhibits

·         Sustained: 1 (authentication); 3 (authentication)

·         Overruled: 2; 4; 5; 6

Plaintiff’s Objection to Defendant’s New Evidence on Reply

            The Court sustains Plaintiff’s objection to Defendants’ evidence submitted for the first time with their reply.

DISCUSSION

            In 2020, Plaintiff purchased four apartment complexes, three of which were owned by Marc Barmazel (Seller).  (UMF Nos. 1, 2.)  Defendants had worked as Plaintiff’s real estate agent in 2012.  (UMF No. 3.)  In 2020, Plaintiff reached out to Defendants and expressed interest in purchasing additional properties.  (UMF No. 4.)  Plaintiff alleges three causes of action in relation to this transaction: (1) Breach of Fiduciary Duty – First Cause of Action; (2) Fraud – Second Cause of Action; and (3) Financial Elder Abuse – Third Cause of Action. 

Breach of Fiduciary Duty

            The elements of Breach of Fiduciary Duty are (1) fiduciary duty; (2) breach of duty; and (3) damage caused by breach.  (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 182.)  Parties dispute that Defendants breached their fiduciary duty and whether any such breach was a proximate cause of Plaintiff’s damages.  Defendants allege that they did not breach their fiduciary duty to Plaintiff.  Plaintiff alleges that Defendants breached their duty by (1) ignoring Plaintiff’s diminishing mental capacity, (2) using coercive tactics to get Plaintiff to agree to the real estate transactions, and (3) failing to disclose Defendant’s relationship with the Seller.

            In support of its motion Defendants assert the following:  Plaintiff and Defendants had previously worked together on a large real estate project.  (UMF No. 3.)  Plaintiff contacted Defendants expressing his interest in making a $100 million investment in additional properties.  (UMF No. 4.)  Plaintiff was a sophisticated real estate investor.  (Chen Depo. 36:6-25, 37:1-25.)  Plaintiff worked with a team of investors including his CPA, attorneys, executive staff and loan broker to secure the properties.  (Chen Depo. 70:25, 71:1-10.)  Defendants provided Plaintiff information through his employees.  (UMF No. 8.)   Plaintiff directed Defendants to make an offer on the Properties and later reviewed the seller’s counteroffer and directed Defendants to open escrow.  (UMF Nos. 9-10.)  Plaintiff and his employees were actively involved in the escrow and inspection process.  (UMF Nos. 12-17, 20, 23-27.)  Plaintiff’s General Contractor testified that Plaintiff’s behavior was normal and consistent during the inspections.  (UMF No. 21.)  After review, Plaintiff signed the Contingency Removal Form for three of four of the properties, indicating the desire to release the deposit and continue with the purchasing process.  (Chen Depo. 143:6-25.)  Plaintiff did not move forward with the fourth property.  (UMF No. 31.)  On July 16, 2020, Plaintiff demanded to end the deal and requested that Defendants convince Seller to return the deposit. (UMF No. 33.)  Plaintiff was not responsible for paying any commission on the sale under the Purchasing Agreement.  (UMF No. 39.)  Defendants had made an agreement with Seller to reduce his commission.  (UMF Nos. 40, 41.)   The Court finds Defendants have met their initial burden of establishing that there was no breach of fiduciary duty.

            In response, Plaintiff provides evidence that Plaintiff’s mental capacity had significantly declined, and he was incapable of entering into the real estate transactions.  (SSUMF No. 124.)   At the time of the transaction, Plaintiff did not have a team of advisors, Plaintiff made real estate decisions on his own, and did not discuss the decisions with members of his staff.  (Perera Depo. 30:25-32:24, 42:14-43:6, 45:2-14; Alfandary Depo. 48:15-49:7.)  Plaintiff’s General Contractor noticed that Plaintiff had started to mentally decline as early as 2019 and began to consult with Plaintiff’s daughter on projects that Plaintiff wanted to pursue.  (Desai Depo. 49:22-61:2.)  Plaintiff’s daughters and accountant had noticed his significant decline around or before the beginning of the real estate transaction.  (Alfandary Depo. 60:18-76:25; Perera Depo. 72:12-77:10.)  Plaintiff submits sufficient evidence that his cognitive decline was evident to staff and family who did not have medical degrees. 

            Defendants allege that they did not have a duty to notice Plaintiff’s mental decline because they exercised their diligent expertise and skill in the transaction.  A broker’s fiduciary duty requires the highest good faith, undivided service, and loyalty.  (Field v. Century 21 Klowden-Forness Realty (1998) 63 Cal.App.4th 18, 25.)  It is a question of fact as to whether Defendants breached their duty of loyalty and good faith by either failing to realize Plaintiff’s declining mental capacity or by proceeding with the significant real estate transaction despite the decline.  Therefore, Plaintiff has met his burden of establishing that a triable issue of material fact exists as to whether Defendants breached their fiduciary duty by failing to realize or respond to Plaintiff’s declining mental capacity. 

            Given that Plaintiff has establishing a triable issue of material fact regarding his mental capacity, the Court denies Defendants’ Motion for Summary Adjudication on the First Cause of Action.

Fraud

            The elements of Fraud are (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud; (4) justifiable reliance; and (5) resulting damage.  (Conroy v. Regents of Univ. of Cal. (2009) 45 Cal.4th 1244, 1255.)  Parties dispute whether Defendants misrepresented facts or coerced Plaintiff into the purchase.  Plaintiff alleges that Defendants (1) failed to disclose their separate commission agreement, (2) told Plaintiff there were other offers on the property when there were not, and (3) coerced Plaintiff into signing the Contingency Removal Form. 

            Defendants submit evidence that Seller was responsible for paying any commission and Defendants agreed to reduce the fee to complete the deal for Plaintiff.  (UMF Nos. 80-82.)  Defendants state in their separate statement that Defendants disclosed the agreement to Plaintiff, but this is not supported by the declaration.  Defendants also provide evidence that Plaintiff considered releasing the deposit for about a week as indicative of the lack of coercion.

            Defendants argue that the decision to cancel the transaction was a business decision but submits no evidence in support.  Similarly, Defendants assert in the moving papers that disputes exist whether Defendants stated there were other buyers and whether Defendants coerced Plaintiff during their private conversations.  Defendants submit no facts in the separate statement to support these contentions and do not cite to factually insufficient discovery responses by Plaintiff that Plaintiff cannot establish that Defendants misled or coerced Plaintiff.  (See Brantly v. Piscaro (1996) 42 Cal.App.4th 1591, 1598.)  Defendants state that Plaintiff’s discovery responses state that only Plaintiff and Defendants would have witnessed the coercion but does not submit evidence in the separate statement regarding the existence, or lack of, coercion.  Therefore, Defendants have not met their initial burned in establishing that no triable issue of material fact exists.  The Court denies summary adjudication of the Second Cause of Action.

Financial Elder Abuse

            Financial Elder Abuses occurs when a defendant (1) took, secreted, appropriated, obtained, or retained real or personal property of an elder for a wrongful use or with the intent to defraud or both, (2) assisted in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder for a wrongful use or with the intent to defraud or both, or (3) took, secreted, appropriated, obtained, or retained real or personal property of an elder through undue influence.  (Cal. Welf. & Inst. Code § 15610.30.)  Parties dispute whether Defendants ever possessed any money from Plaintiff.

            As discussed above, a triable issue of material fact remains as to whether Defendants defrauded Plaintiff in the transaction.  Defendants submit evidence that Plaintiff placed $1 million in escrow.  (UMF No. 93.)  Defendants have not met their burden in establishing that no triable issue of material fact remains regarding whether they assisted in taking the personal property of Plaintiff with an intent to defraud.  Therefore, the Court denies summary adjudication of the Third Cause of Action.

CONCLUSION

            The Court denies Defendants’ Motion for Summary Judgment, or in the Alternative Summary Adjudication.

            Defendants to give notice.