Judge Cynthia A Freeland, Case Number: 37-2022-00010990-CU-FR-NC, Date: 2024-04-19 Tentative Ruling

Judge: Cynthia A Freeland, Case: 37-2022-00010990-CU-FR-NC, Date: 2024-04-19 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - April 18, 2024

04/19/2024 01:30:00 PM N-27 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Cynthia A. Freeland

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Civil - Unlimited Fraud Demurrer / Motion to Strike 37-2022-00010990-CU-FR-NC GARCIA VS ORANGE COAST TITLE COMPANY OF SOUTHERN CALIFORNIA CAUSAL DOCUMENT/DATE FILED: Demurrer, 02/16/2024

Defendant Dan Marconi ('Defendant')'s demurrer to Plaintiffs Robert D. Garcia and Paulette D. Garcia (collectively, 'Plaintiffs')'s Third Amended Complaint (the 'TAC') is overruled.

Factual Background and Procedural History The TAC alleges that on January 25, 2018, Patricia Phelps listed for sale the real property located at 26626 Paradise Valley Road, Warner Springs, CA 92086 (the 'Property'). See TAC, �� 9, 15. Defendant Coldwell Banker Residential Mortgage Company ('Coldwell Banker') and Defendant served as Ms.

Phelps's real estate broker and real estate agent, respectively. Ibid., � 15. On March 22, 2017 [sic], Ms.

Phelps accepted an offer from Dave Corona ('Mr. Corona') to purchase the Property. On March 22, 2018, Defendant, as part of the sale, contacted Defendant Orange Coast Title Company of Southern California ('Orange Coast Title') to issue a preliminary title report. Defendant used Orange Coast Title primarily because his brother, Defendant John Marconi ('John'), was Orange Coast Title's founder, director, and executive officer. Ibid., � 16. Orange Coast Title engaged the services of Defendant Real Advantage Title Insurance Company ('Real Advantage') as Orange Coast Title's underwriter for title insurance transactions, and Real Advantage held such a role for the transaction between Ms. Phelps and Mr. Corona. John used Real Advantage because John's and Defendant's brother, Mike Marconi, was Real Advantage's Executive Vice President, Chief Operating Officer, and Secretary. Ibid., � 17. On March 28, 2018, Orange Coast Title issued a Preliminary Title Report. The Preliminary Title Report showed that: (1) the Property was effectively landlocked without access to any public roads, and (2) the Property was not the beneficiary of an easement that would allow the Property's owner to use the driveway located on the adjoining property at 2664 Paradise Valley Road, Warner Springs, CA 92086 (the 'Harris Property') owed by Rhonda and Sean Harris for access, ingress, and egress to and from the Property. The purchase agreement between Ms. Phelps and Mr. Corona ultimately failed to materialize.

Ibid., � 18.

On April 14, 2018, Ms. Phelps confirmed to Defendant that Ms. Phelps: (1) did not have a right to use the driveway on the Harris Property but had been using it with the Harrises' permission for the past 12 years; (2) had no reason to believe there was an easement on the Harrises' driveway; and (3) was unaware of an easement existing before her ownership of the Property. Ibid., � 19. Orange Coast Title and Real Advantage's due diligence and investigation in connection with the proposed sale to Mr.

Corona confirmed Ms. Phelps's understanding of the easement (or lack thereof) on the Harris Property.

Ibid., � 20. On March 11, 2018, Plaintiffs' real estate broker, Wendy Johnson ('Ms. Johnson'), called Defendant to discuss Plaintiffs' interest in the Property. On March 17, 2018, Defendant called Ms.

Johnson and confirmed that Plaintiffs could tour the Property. Toward that end, Defendant instructed Ms.

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3090141 CASE NUMBER: CASE TITLE: GARCIA VS ORANGE COAST TITLE COMPANY OF SOUTHERN 37-2022-00010990-CU-FR-NC Johnson and Plaintiffs to use the driveway on the Harris Property to access the Property. Ibid., � 23.

Plaintiffs contend that Defendant gave such instruction to give Ms. Johnson and Plaintiffs the impression that the Property could be accessed by way of an easement on the Harris Property and that they would not be trespassing when doing so. Ibid., � 24. Moreover, Defendant knew that the Property would be worth substantially less without such access point and therefore induced Plaintiffs into believing that an easement existed in order to obtain an inflated purchase price. Ibid.

On April 15, 2018, Ms. Phelps accepted Plaintiffs' offer to purchase the Property. As with the previous transaction between Ms. Phelps and Mr. Corona, Defendant selected Orange Coast Title to provide title insurance, with Real Advantage acting as the underwriter. Ibid., � 28. On April 16, 2018, Defendant called Defendant Cynthia Kack ('Ms. Kack') to order a Preliminary Title Report for the Property. During that call, Defendant allegedly indicated that he wanted Orange Coast Title and Real Advantage to issue a Preliminary Title Report stating that the Property was the beneficiary of an easement on the Harris Property (the 'Updated Preliminary Title Report'). Ibid., � 29. At the time, both Defendant and Ms. Kack were aware that such easement did not exist because they had seen the Preliminary Title Report issued by Orange Coast Title and underwritten by Real Advantage with respect to the proposed sale to Mr.

Corona. However, Defendant allegedly wanted the sale to Plaintiffs to close so that he could receive a commission. Ibid., � 30. John likewise was aware of the foregoing given his role in the proposed sale to Mr. Corona. Ibid., � 31. Nevertheless, John, as a favor to Defendant, instructed Real Advantage to underwrite a Preliminary Report and Title Insurance Policy to Plaintiffs that included a reference to the easement. Ibid., � 32. By April 19, 2018, John, Ms. Kack, and Defendant were aware that an easement did not exist. Ibid., � 33. On May 22, 2018, Orange Coast Title issued an Updated Preliminary Report containing a reference to the easement despite no easement existing. Ibid., � 34. The sale of the Property closed on June 13, 2018. Ibid., � 36. Upon the close of escrow, Orange Coast Title and Real Advantage issued a Policy of Title Insurance to Plaintiffs containing a reference to the easement. Ibid., � 41. On August 10, 2021, Ms. Harris informed Plaintiffs that they could not use the Harrises' driveway to access the Property and that Plaintiffs would have to construct their own driveway for such a purpose.

That same day, Mr. Garcia spoke with Ms. Kack, who confirmed that she was aware that the easement did not exist and that she had inserted it into the Update Preliminary Title Report at Defendant's behest.

Ibid., � 42. Orange Coast Title and Real Advantage sued the Harrises on Plaintiffs' behalf, Robert D.

Garcia, et al. v. Rhonda Harris, et al. (Case No. 37-2019-00061532-CU-OR-NC) (the 'Harris Action').

Plaintiffs did not prevail in the Harris Action, with the trial court and Court of Appeal finding that an easement never existed. Ibid., � 46.

On March 23, 2022, Plaintiffs commenced this action by filing a Complaint against Defendant, Orange Coast Title, Real Advantage, Coldwell Banker, John, and Ms. Kack. See ROA No. 1. On January 16, 2024, Plaintiffs filed the operative TAC alleging causes of action for: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) fraudulent misrepresentation; (4) fraudulent concealment; (5) promissory fraud; (6) intentional infliction of emotional distress ('IIED'); (7) negligent misrepresentation; and (8) violation of California Business & Professions Code �� 17200 et seq. See ROA No. 140. Defendant now demurs to the sixth cause of action for IIED.

Legal Analysis A demurrer tests the legal sufficiency of a pleading. See McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1469. When reviewing a demurrer, the court 'give[s] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.' Blank v. Kirwan (1985) 39 Cal. 3d 311, 318. The court 'treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law.' Durell v. Sharp Healthcare (2010) 183 Cal. App. 4th 1350, 1358. The court's analysis is limited to the complaint, exhibits attached to the complaint and incorporated by reference, and matters properly subject to judicial notice. See Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal. App. 4th 659, 665; Thorburn v. Department of Corrections (1998) 66 Cal. App. 4th 1284, 1287-1288; Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.

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3090141 CASE NUMBER: CASE TITLE: GARCIA VS ORANGE COAST TITLE COMPANY OF SOUTHERN 37-2022-00010990-CU-FR-NC The demurrer to the sixth cause of action for IIED is overruled. The elements for IIED are: '(1) outrageous conduct by the defendant; (2) the defendant's intention of causing or reckless disregard of the probability of causing emotional distress; (3) the plaintiff's suffering severe or extreme emotional distress; and (4) actual and proximate causation of the emotional distress by the defendant's outrageous conduct.' Yau v. Santa Margarita Ford, Inc. (2014) 229 Cal. App. 4th 144, 160. 'Extreme and outrageous conduct is conduct that is 'so extreme as to exceed all bounds of that usually tolerated in a civilized community' and must be 'of a nature which is especially calculated to cause, and does cause, mental distress.'' Chang v. Lederman (2009) 172 Cal. App. 4th 67, 86-87 (quoting Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal. 4th 965, 1001; Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal. 3d 148, 155, fn. 7). 'Behavior may be considered outrageous if a defendant (1) abuses a relation or position which gives him power to damage the plaintiff's interest; (2) knows the plaintiff is susceptible to injuries through mental distress; or (3) acts intentionally or unreasonably with the recognition that the acts are likely to result in illness through mental distress.' Smith v. BP Lubricants USA Inc. (2021) 64 Cal. App. 5th 138, 147. 'In order to avoid a demurrer, the plaintiff must allege with 'great[ ] specificity' the acts which he or she believes are so extreme as to exceed all bounds of that usually tolerated in a civilized society.' Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal. App. 4th 819, 832 (quoting Schlauch v. Hartford Accident & Indemnity Co. (1983) 146 Cal. App. 3d 926, 936). 'Severe emotional distress means 'emotional distress of such substantial quality or enduring quality that no reasonable [person] in civilized society should be expected to endure it.'' Hughes v. Pair (2009) 46 Cal. 4th 1035, 1051 (quoting Potter, 6 Cal. 4th at 1004).

The court finds that the TAC pleads facts sufficient to constitute a cause of action for IIED. To start, the court respectfully disagrees with Defendant that Plaintiffs fail to plead extreme and outrageous conduct on Defendant's part. Contrary to Defendant's characterization, this action does not concern solely the sale of the Property to Plaintiffs and the alleged fraudulent insertion of the easement into the Updated Preliminary Title Report and Policy of Title Insurance. Rather, Plaintiffs have set forth the existence of a conspiracy to defraud them, which conspiracy Defendant, using his position as a real estate agent, allegedly: (1) began on March 17, 2018 by inducing Plaintiffs into believing that they could access the Property by way of an easement on the Harris Property, and (2) played an integral role in for the purpose of closing the sale of the Property and collecting a commission. The TAC alleges in significant detail how Defendant was aware that an easement did not exist owing to his previous dealings with Mr.

Corona. Despite this knowledge, Defendant continued holding out the Property as being the beneficiary of an easement. Defendant allegedly was aware of Plaintiffs' interest in the Property and knew that the sale would net far less proceeds if it were discovered that an easement did not exist. Defendant subsequently leveraged his connections with John to ensure that an easement was included in the relevant title documents. Furthermore, the TAC alleges that this conspiracy, to which Defendant allegedly maintained a part at all relevant times and included the withholding of insurance benefits, continued through the conclusion of the Harris Action which ultimately damaged Plaintiffs in various ways. The foregoing is sufficient to allege extreme and outrageous conduct on Defendant's part.

In addition, the court finds that the TAC alleges sufficiently that Plaintiffs suffered severe emotional distress because of Defendant's conduct. Defendant argues that Plaintiffs merely allege that they have suffered discomfort, worry, anxiety, concern, and/or agitation which, without more, would not rise to the level of severe emotional distress. See Hughes, 46 Cal. 4th at 1051. The court respectfully disagrees. In this case, Plaintiffs have alleged more than mere anxiety or discomfort.

Accordingly, the court overrules the demurrer to the sixth cause of action.

Conclusion In light of the foregoing, the court overrules the demurrer. Defendant shall file and serve an answer or otherwise plead to the TAC within ten (10) days of this hearing. See Cal. R. Ct. 3.1320(j).

This is the tentative ruling for the hearing at 1:30 p.m. on Friday, April 19, 2024. If no party appears at the hearing, this tentative ruling will become the order of the court as of April 19, 2024. If the parties are Calendar No.: Event ID: TENTATIVE RULINGS

3090141 CASE NUMBER: CASE TITLE: GARCIA VS ORANGE COAST TITLE COMPANY OF SOUTHERN 37-2022-00010990-CU-FR-NC satisfied with the court's tentative ruling or do not otherwise wish to argue the motion, they are encouraged to give notice to the court and each other of their intention not to appear, though this notice is not required.

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