Judge: Gail Killefer, Case: 19STCV29675, Date: 2024-04-26 Tentative Ruling
Case Number: 19STCV29675 Hearing Date: April 26, 2024 Dept: 37
HEARING DATE: Friday, March 26, 2024
CASE NUMBER: 19STCV29675
CASE NAME: John O. O’Boyle, III v. Charles Eric Gray, et al.
MOVING PARTY: Defendants Motorcars West, LLC
fdba The Auto Callery, Hartford Fire Insurance Company, and Harrison M. Gray.
OPPOSING PARTY: Plaintiff John O. O’Boyle
TRIAL DATE: Not Set
PROOF OF SERVICE: OK
PROCEEDING: Motion for Summary
Judgment or, in the alternative, Summary Adjudication
OPPOSITION: 30 March 2024
REPLY: 5
April 2024
TENTATIVE: Defendants’
Motion for Summary Judgment or, in the alternative, Summary Adjudication is
denied. Defendants to give notice.
Background
This
action arises out of the purchase by John O’Boyle (“Plaintiff”) of a 2019
Porsche 911 GT3 RS (“Subject Vehicle”) from Defendant, Motorcars West, LLC dba
The Auto Gallery (“Dealer”). The Complaint alleges that on March 1, 2018,
Plaintiff entered into a Delivery Position Purchase Agreement (the “Agreement”)
with Defendant, Charles Eric Gray (“Charles”) for the purchase of the Subject
Vehicle from Dealer, which specified that the Subject Vehicle’s down payment
price was $58,000 and that the Subject Vehicle would have certain build
specifications. Nonparty Harrison M. Gray (“Harrison”) is alleged to be a part
owner of the Dealer. The Complaint alleges that while Plaintiff paid in full
pursuant to the Agreement, he did not receive the Subject Vehicle by April 12,
2018, or any indication that delivery would be forthcoming. Subsequently,
Plaintiff allegedly requested cancellation of the Agreement but did not receive
a response, leading to the instant action.
On February 7, 2020, Plaintiff filed the operative First Amended
Complaint (“FAC”) alleging four causes of action: (1) violation of the Consumer Legal Remedies Act
against Dealer and Charles, (2) deceit against Dealer and Charles, (3)
violation of Unfair Competition Law (Business and Professions Code § 17200, et
seq.) against Dealer and Charles, and (4) bond liability against Defendant,
Hartford Fire Insurance Company (Surety).
On May 12, 2022, the court granted Defendant
Charles' petition to compel arbitration, and the action was stayed as to all
remaining Defendants.
On January 23, 2023, a final arbitration award
was issued finding in favor of Plaintiff and against Charles, awarding Plaintiff
(1) the principal amount of $58,000; (2) interest in the amount of
$27,427; (3) attorney fees in the amount of $56,069; and (4) costs in the amount
of $26,966, for a total award of $168,462.
Plaintiff continues this action to enforce the judgment on the
remaining Defendants on a theory of agency liability. On December 29, 2023,
Defendants Dealer, Harrison, and the Hartford Fire Insurance Company
(“Hartford”) filed a motion for summary judgment. Plaintiff opposes the Motion.
The matter is now before the court.
I. Legal Standard
The purpose of a motion for
summary judgment or summary adjudication “is to provide courts with a mechanism
to cut through the parties’ pleadings in order to determine whether, despite
their allegations, trial is in fact necessary to resolve their dispute.”¿ (Aguilar
v. Atl. Richfield Co. (2001) 25 Cal. 4th 826, 843.) “Code of Civil
Procedure section 437c(c), requires the trial judge to grant summary judgment
if all the evidence submitted, and ‘all inferences reasonably deducible from
the evidence’ and uncontradicted by other inferences or evidence, show that
there is no triable issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp.
(1992) 7 Cal.App.4th 1110, 1119.) Summary adjudication may be granted as to one
or more causes of action within an action, or one or more claims for damages.
(CCP § 437c(f).)¿¿¿¿¿¿¿¿¿
¿¿¿¿
A defendant moving for
summary judgment bears two burdens: (1) the burden of production – presenting
admissible evidence, through material facts, sufficient to satisfy a directed
verdict standard; and (2) the burden of persuasion – the material facts presented
must persuade the court that the plaintiff cannot establish one or more
elements of a cause of action, or a complete defense vitiates the cause of
action. (CCP, § 437c(p)(2);¿Aguilar,¿supra, 25 Cal.4th at p.
850-851.) A defendant may satisfy this burden by showing that the claim “cannot
be established” because of the lack of evidence on some essential element of
the claim.¿¿(Union Bank v. Superior Court (1995) 31 Cal.App.4th 574,
590.)¿¿Once the defendant meets this burden, the burden shifts to the plaintiff
to show that a “triable issue of one or more material facts exists as to that
cause of action or defense thereto.”¿(Ibid.)¿¿¿¿¿¿¿¿
¿¿¿¿
“On ruling on a motion for
summary judgment, the court is to ‘liberally construe the evidence in support
of the party opposing summary judgment and resolve doubts concerning the
evidence in favor of that party.’” (Cheal v. El Camino Hospital¿(2014)
223 Cal.App.4th 736, 760.) On a summary judgment motion, the court must
therefore consider what inferences favoring the opposing party a factfinder
could reasonably draw from the evidence. While viewing the evidence in this
manner, the court must bear in mind that its primary function is to identify
issues rather than to determine issues. [Citation.]” (Binder v. Aetna Life
Ins. Co.¿(1999) 75 Cal.App.4th¿832, 839.)¿
II. Discussion
A. Factual
Summary
The following facts
are undisputed unless supported by citation to the record. On March 18, 2021,
Plaintiff executed the Delivery Position Purchase Agreement (the “Agreement”)
with Defendant Charles Harrison (“Harrisson”) for the purpose of purchasing a 2019
Porsche 911 GT3 RS (“Subject Vehicle”). (Undisputed Material Fact (“UMF”) 1.
The Agreement stated
that Charles “had secured the rights to purchase” the Subject Vehicle,
containing Plaintiff’s requested specification in the form of a Build Code
(“PKX4EYM6”). (Defendants’ Compendium of Evidence (“DCOE”) Ex.
3; Plaintiff’s Compendium of
Evidence (“PCOE”) Ex. D, E.)
The
Agreement was signed between Charles as “Provider” and EagerOrange, LLC and
John O. O’Boyle III together as “Acquirers.” (DCOE Ex. 3; PCOE Ex. D.) The last
paragraph of the Agreement states that the parties executing the Agreement are
“natural person” and “have the authority to sign in their capacity, in order to
bind their Party and selves in the within agreement.” (DCOE Ex. 3; PCOE Ex. D.)
At his deposition, Plaintiff stated he owned EagerOrange, LLC but intended to
hold title and registration for the Subject Vehicle in
his individual capacity. (PCOE Ex. 4 [Plaintiff’s Depo. at p. 26:14-16.) Plaintiff
also stated that the $58,000.00 paid as a downpayment for the purchase of the
Subject Vehicle was paid out of his personal account and not the EagerOrange,
LLC account. (Plaintiff’s Depo. at p. 26:22-24; PCOE
Ex. D.)
The
Agreement stated that Charles had “secured the rights to purchase” the Subject
Vehicle from “a franchised Dealer of the described Make and Model above, or
from a holder of a bona fide purchase order and delivery position for a vehicle
as described above (“Original Purchaser”), confirmed by a Dealer of the Make
and Model described above.” (DCOE Ex. 3; PCOE Ex. D.) Moreover,
if Charles failed to provide the Subject Vehicle “the Provider shall refund all
sums paid by Acquirer up to the date that such lack of availability becomes
known, with no interest or costs thereon.” (DCOE Ex. 3, PCOE
Ex. D.)
Plaintiff
asserts that he believed that the Dealership in question was Motorcars West, LLC dba The Auto Gallery (“Dealer”) because
Charles was Harrison’s son and Harrison was the owner of the Dealer, and
Plaintiff believed that the purchase would be made through the Dealer. (PCOE
Ex. 5 [Harrison Depo. at p. 23:16-23] Ex. 6 [Bourbon Depo. at pp. 17:21-23:9].)
Moreover, the Agreement stated that the purchase of the Subject Vehicle would
be made “upon arrival at the original selling deal of the Make of vehicle”
which Plaintiff believed was the Dealer. (DCOE Ex. 3; PCOE Ex.
D.)
Plaintiff
states that he was referred to Charles while at the Dealer and that
conversation with Charles revealed that he had worked at the Dealer, and that
the documentation about the purchase was sent from the Dealer’s email domain. (DCOE Ex. 10 [Plaintiff’s Depo. at pp. 21:4-13, 23:3-4.)
Plaintiff states that the Agreement came from the Dealer and believed that
Charles had signed the Agreement as an employee of Dealer, and that he would
purchase the Subject Vehicle from the Dealer after the vehicle was delivered to
the Dealer. (Plaintiff’s Depo. at pp. 28:12-16, 29:3-4,
40:3-10, 41:1-9 48:1-14; 61:24-62:2.)
Nicholas
Bourbon (“Bourbon”), an employee for Dealer, recalls that Charles came into the
Dealer to place the order for Plaintiff’s vehicle and that the order could not
have been placed without access to the Dealer’s software for Porche purchases. (DCOE Ex. 11 [Bourbon Depo. at p. 20:15:17, 21:2-25,
22:1-18.) Moreover, the Build Sheet for the Subject Vehicle identifies
Plaintiff as the customer and Dealer as the dealership placing the order on the
same day the Agreement was signed. (PCOE Ex. E.)
Plaintiff
presents evidence that he paid the $58,000.00 to Charles and communicated with
Charles about the status of his order. (Ex. PCOE Ex. D, G, H, I.) Plaintiff
also obtained assistance from Bourbon who helped check the status of
Plaintiff’s order. (DCOE Ex. 10 [Plaintiff’s Depo. at p. 41:11-18].) Bourbon also stated that he would
check with Charles about the Plaintiff’s order. (Plaintiff’s
Depo. at p. 43:16-18,
44:2-7.) When Plaintiff could not reach Charles about the order for
the Vehicle, Plaintiff reached out to Harrison who told Plaintiff that he had
spoken to Charles about the Agreement and that Charles would call them back.
(PCOE Ex. K; DCOE Ex. 6.)
Plaintiff
further asserts that Harrison ratified the Agreement on September 4, 2019, by
offering Plaintiff the $58,000.00 already paid as credit for a similar but
different Porsche vehicle. (PCOE Ex. M.)
The
text message states in the relevant part:
Dear Mr. O’Boyle,
In connection with your contract to purchase a 2019 Porsche GT3RS either
provided by, or from Charles Gray, I am hereby rendering to you a 2019 Porsche
GT3RS at the MSRP price that you agreed by contract to pay . . . Please tender
good funds equaling $233,535.00 plus all applicable taxes, fees, registration
title and license to Yonkers Kia . . . attn Harrison Gray by close of business September
9, 2019 which is 3 business days from tomorrow, September 5, 2019.
We have been directed by Charles Gray to offer this vehicle to you, according
to his contract with you.
According to the contract with Charles Gray, as he informs us, if you do
not purchase the subject vehicle, his duty under the contract with you will be
fulfilled-either by your purchase, or by your failure to purchase. . .
(PCOE
Ex. M.)
Plaintiff
declined to purchase the vehicle because it was not the one he ordered with the
requested specifications. (PCOE Ex. M.) Plaintiff was told that he either could
purchase the offered vehicle or he could pass on it and forfeit the $58,000.00
deposit. (PCOE Ex. M.) Plaintiff was not refunded the $58,000.00 nor did he
receive the Subject Vehicle, so Plaintiff commenced this action.
In
arbitration, the arbitrator found that Charles had represented that he had
connections with his father’s business, the Dealer, and with Porshe,
connections that “he did not have.” Due
to this conduct, Charles had violated the CLRA. (DCOE Ex. 1.) The arbitrator
declined to analyze claims for negligent misrepresentation and unfair
competition. (DCOE Ex. 1.)
The
remaining Defendants now move for summary judgment or, in the alternative,
summary adjudication.
B. First Cause of
Action: Consumer Legal Remedies Act (“CLRA”)
“The CLRA declares unlawful a variety of “unfair
methods of competition and unfair or deceptive acts or practices” used in the
sale or lease of goods of services to a consumer.” (Civ. Code,¿§ 1770(a);¿Bower
v. AT&T Mobility, LLC¿(2011) 196 Cal.App.4th 1545, 1556(Bower).)
However, a Plaintiff in a CLRA action must also show that she suffered “some
kind of tangible increased cost or burden . . .” (Bower, supra, 196
Cal.App.4th at 1556, quoting¿Meyer v. Sprint Spectrum L.P.¿(2009) 45
Cal.4th 634, 641.)¿
In Vandenberg v. Superior Court (1999)
21 Cal.4th 815, the California Supreme Court found that a private arbitration
award, even if judicially confirmed, has no collateral estoppel effect in favor
of “nonparties in litigation involving different causes of action” unless the arbitral parties
agreed that such a consequence should apply. (Id. at p. 931.) The Vandenberg court
emphasized that its hold was “narrowly circumscribed” to the context of
nonmutual collateral estoppel and that it was not addressing “the
circumstances, if any, in which a private arbitration award may have ‘issue
preclusive’ effect in subsequent litigation between the same parties on different causes of action.” (Id. at p. 824,
fn. 2.)
Defendants argue that under the derivative
liability exception, Plaintiff is bound
by the findings of the arbitrator on certain issues. (See Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566,
578 [claim or issue preclusion may apply against a
party where a party’s liability is derivative of its agent’s liability].) In
other words, Defendants assert defensive use of issue preclusion to prevent
Plaintiff from alleging that Charles had “connections” with the dealership.
(DCOE Ex. 1.) “[I]ssue preclusion applies (1) after final adjudication(2) of an identical issue (3) actually
litigated and necessarily decided in the first suit and (4) asserted against
one who was a party in the first suit or one in privity with that party.” (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 825.)
In arbitration, the arbitrator found that Charles had
violated three subsections of the CLRA, Civ. Code §§ 1770(a)(5), (a)(7), and
(a)(14) which state:
(5) Representing that goods or services
have sponsorship, approval, characteristics, ingredients, uses, benefits, or
quantities that they do not have or that a person has a sponsorship, approval,
status, affiliation, or connection that the person does not have.
[ . . . ]
(7) Representing that goods or
services are of a particular standard, quality, or grade, or that goods are of
a particular style or model, if they are of another.
[. . . ]
(14) Representing that a
transaction confers or involves rights, remedies, or obligations that it does
not have or involve, or that are prohibited by law.
(Civ. Code, 1770(a).)
The arbitrator stated as follows:
As to
subdivision (5), through his words and deeds, Charles effectively represented
he had connections with his father’s business, the Auto Gallery, and with
Porsche that he did not have. Contrary to the image he created, Charles was
nothing special.
Concerning
subdivision (7), Charles effectively represented he could get O’Boyle the car
O’Boyle had meticulously specified. Indeed, in the written agreement, Charles
asserted he had “secured the rights to purchase a 2019 Porsche 911 GT3 RS”
having the precise attributes O’Boyle had specified in his “build code
PKX4EYM6.”
Anent
subdivision (14) Charles promised, in a written agreement, O’Boyle would get
his deposit back if Charles could not produce the vehicle O’Boyle had
specified. That, he did not do.
Instead,
Charles gave O’Boyle “the run around” for some time, and then, after O’Boyle
had demanded his $58,000 back, went silent. Months later, Charles indicated he
secured a “similar” vehicle, claiming it constituted adequate performance under
the contract.
It did not.
O’Boyle had ponied up $58,000 toward a $240,000 dream car with the
understanding he would get that car for his not vaguely unsubstantial outlay.
To the extent Charles argues he is not liable because his efforts and the
proffer of a similar vehicle constituted adequate performance under the
contract, his argument is soundly rejected.
If this type of scenario is
not what the CLRA is designed to obviate, it is difficult, if not impossible,
to conjure what is. O’Boyle has established his right to compensation under the
Act.
(DCOE Ex. 1.)
Defendants now contend that due to issue
preclusion, Plaintiff is precluded from asserting that Charles had connections
to his father’ business because the arbitrator found that “he did not have” the
connections he represented.
First, the arbitration award does not explain
what connections Charles did not have with his father's business. Accordingly,
the court cannot say that the issue of Charles’ connections with his father's
business was necessarily decided in arbitration as the arbitrator found that
Charles had made representations about his connections. Second, the
arbitrator explained that “[n]either Harrison Gray nor [Dealer] is a party to
this present arbitration.” (DCOE Ex. 1.) Accordingly, the issue of Defendants’
liability was not decided in arbitration. Third, even if the court were to
accept that Charles had no connections with his father, this does not preclude
Plaintiff from arguing that Defendants are liable for Charles's
misrepresentations under agency theory. Contrary to Defendants’ representation,
the arbitrator made no finding that there was no agency relationship between
Charles and the Defendants. Thus, issue preclusion does not apply to the issue
of agency.
“Even when there is no written agency authorization, an agency
relationship may arise by oral consent or by implication from the conduct of
the parties.” (Flores v. Evergreen at San Diego, LLC (2007) 148
Cal.App.4th 581, 587.) An agency implied
by conduct, or an ostensible agency can be found by “some intentional conduct or neglect on the part of the alleged
principal creating a belief in the minds of third persons that an agency
exists, and a reasonable reliance thereon by such third persons.” (Lovetro v. Steers (1965) 234 Cal.App.2d 461, 475.)
The court agrees that Defendants have met their burden of showing
there is no express written agency relationship between Charles and Defendants.
However, Plaintiff’s evidence shows that there are triable issues of fact as to
whether an ostensible agency relationship exists because Defendants never
expressly informed Plaintiff that Charles was not an employee of Dealer and had
no authority to speak on behalf of Dealer, and after the Agreement was signed,
made no attempt to disavow Charles’ actions or the Agreement.
Dealer’s employee, Bourbon, recalled Charles coming into Dealer to
place an order for Plaintiff, and such an order could not be placed without the
help of the Dealer. (DCOE Ex. 11 [Bourbon Depo. at p. 20:15:17, 21:2-25,
22:1-18.) No deposition testimony or evidence is provided to rebut Plaintiff’s
testimony that Bourbon helped Plaintiff check the status of his order and that
Bourbon agreed to speak with Charles about Plaintiff’s order. (DCOE Ex. 10
[Plaintiff’s Depo. at pp. 41:11-18, . (DCOE Ex. 10 [Plaintiff’s Depo. at p.
41:11-18].) Moreover, Charles testimony states that he provided Plaintiff with
a Build Sheet from Dealer. (Charles Decl. ¶ 4, Ex. 4.) When Plaintiff reached
out to Harrison about the Agreement, Harrison responded using the domain name
of the Dealer and Harrison stated that he had spoken to Charles. (DCOE Ex. 6.)
Defendants at no point present evidence that they expressly
disavowed Charles’ relationship with the Dealer. These facts suggest a
reasonable jury could find that Defendants created the perception of an
ostensible agency relationship existing between Charles and Defendants due to
Defendant’s negligence and failure to inform Plaintiff that Charles was not an
employee or agent of Defendants.
In addition, Plaintiff’s opposition shows that triable issues of
fact exist. Plaintiff’s deposition testimony shows that Plaintiff believed that
Charles was an employee of Dealer and had signed the Agreement on behalf of
Dealer. (DCOE Ex. 10 [Plaintiff’s Depo. at p. 21:4-13, 23:3-4; 28:12-16,
29:3-4, 40:3-10, 41:1-9 48:1-14;
61:24-62.) When Plaintiff contacted Dealer, Bourbon offered no statement
to show that Charles had not placed the order with Dealer. Bourbon did not disavow the Dealer’s
relationship with Plaintiff, nor inform Plaintiff that Charles was not an
employee of Dealer, or in any way clarify the relationship between Charles and
Dealer. (DCOE Ex. 10 [Plaintiff’s Depo. at pp. 41:11-18, 43:16-18, 44:2-7.) Plaintiff
presents evidence that Defendants ratified the Agreement when Harrison reached
out to Plaintiff to offer him a different Porche. (PCOE Ex. M.) The trier of
fact could find that by validating the existence of an agreement, and offering
an alternative vehicle, Harrison ratified that it was “the original selling
dealer” referred to in the Agreement. (DCOE Ex. 3; PCOE Ex. D.)
“We acknowledge that the existence
or extent of an agency relationship is a question of fact
[citation], and summary judgment is improper where triable issues of fact exist as to whether there is an agency.” (Universal Bank v. Lawyers Title
Ins. Corp. (1997) 62 Cal.App.4th 1062, 1066.) The court finds that
triable issues of fact exist as to whether Charles acted as an agent for
Defendants with ostensible authority and whether Defendants ratified the agency
relationship by failing to expressly disavow any relationship with Charles.
The court also finds that triable issues of fact exist as to
Defendants’ direct breach of the CLRA because Defendants failed to disclose
that Charles was not an employee of Dealer and had no direct relationship with
Dealer. These were facts that Defendants
were obligated to disclose. (People v. Johnson & Johnson
(2022) 77 Cal.App.5th 295, 325 [“A fraudulent or deceptive omission is actionable if it is ‘contrary
to a representation actually made by the
defendant, or an omission of a fact the defendant was
obliged to disclose].) Here, the trier of fact could find that Defendants had a
duty to disclose Charles’ relationship as Defendants had exclusive knowledge of
this fact or because Defendants concealed the fact that there was no
relationship between Charles and Defendants during the duration of the
transaction and up until the filing this action. (See Id. at p. 325.)
Defendants also argue that Plaintiff was not a consumer under the
CLRA, because EagerOrange, LLC was the purchaser. However, the evidence before
the court reflects that Plaintiff paid the $58,000.00 out of his personal
account. (Plaintiff’s Depo. at p. 26:22-24; PCOE Ex. D.) The Agreement also
reflects the fact that Plaintiff agrees to be personally liable for any breach
of the Agreement. (DCOE Ex. 3, PCOE Ex. D.)
Defendants also fail to rebut Plaintiff’s evidence that Plaintiff
intended to register the vehicle in his name and use the Subject Vehicle for
his personal use. (PCOE Ex. 4 [Plaintiff’s Depo. at p. 26:14-16.) Therefore,
Defendants’ argument that Plaintiff is not a consumer under the CLRA is without
merit. (Civ. Code, § 1761(d).)
Based on the above, summary adjudication is denied as to the first
cause of action.
C. Second Cause of Action: Deceit
“The elements of fraud that will give rise to a tort action
for deceit are: ‘(a) misrepresentation (false representation, concealment, or
nondisclosure); (b) knowledge of falsity (or “scienter”); (c) intent to
defraud, i.e. to induce reliance; (d) justifiable reliance; and (e) resulting
damage.’”
(Engalla
v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974
[citations omitted].)
Defendants move for summary adjudication as the second cause of
action on the basis that there is no evidence of any relationship between
Plaintiff and the Dealer and Charles and the Dealer. For the reasons in the
preceding section, the court finds that triable issues of material fact exist
as to whether an agency relationship existed between Charles and Defendants
that preclude summary adjudication of the second cause of action.
D. Third Cause of
Action: Violation of Unfair Competition
Law (Business and Professions Code § 17200, et seq.)
Business and Professions Code § 17200 (“UCL”) prohibits “unfair
competition,” which is defined to include “any unlawful, unfair or fraudulent
business act or practice” and “unfair, deceptive, untrue or misleading
advertising” and any act prohibited by Bus. & Prof. Code § 17500. Bus.
& Prof. Code § 17500 (the “FAL”) prohibits false or misleading statements
in connection with the disposal of property or performance of services. A cause
of action under the UCL must be stated with “reasonable particularity.” (Gutierrez
v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234,
1261.) The UCL prohibits (1) unlawful conduct; (2) unfair business acts or
practices; (3) fraudulent business acts or practices; (4) unfair, deceptive,
untrue or misleading advertising; and (5) any act prohibited under sections
17500-77.5.¿ UCL actions based on “unlawful” conduct may be based on violations
of other statutes.¿ (See¿Klein v. Chevron U.S.A., Inc. (2012) 202
Cal.App.4th 1342, 1383.)
Defendants move for summary adjudication as the third cause of
action on the basis that there is no evidence of any relationship between
Plaintiff and the Dealer and Charles and the Dealer. For the reasons stated
above, the court finds that triable issues of material fact exist as to whether
an agency relationship existed between Charles and Defendants that preclude
summary adjudication of the third cause of action.
E. Fourth Cause of Action: Bond Liability
Vehicle Code § 11710
provides that the bond requirement is intended to compensate a purchaser when a
dealership engages in “fraud or make any
fraudulent representation which will cause a monetary loss to a purchaser[.]”
Section 11711 states in relevant part:
(a) If any person (1) shall suffer any loss or
damage by reason of any fraud practiced on him or fraudulent representation
made to him by a licensed dealer or one of such dealer's salesmen acting for
the dealer, in his behalf, or within the scope of the employment of such
salesman and such person has possession of a written instrument furnished by
the licensee, containing stipulated provisions and guarantees which the person
believes have been violated by the licensee, or (2) if any person shall suffer
any loss or damage by reason of the violation by such dealer or salesman of any
of the provisions of Division 3 (commencing with Section 4000) of this code, or
(3) if any person is not paid for a vehicle sold to and purchased by a
licensee, then any such person shall have a right of action against such
dealer, his salesman, and the surety upon the dealer's bond, in an amount not
to exceed the value of the vehicle purchased from or sold to the dealer.
As explained above, triable issues of fact exist as to whether
Charles’ was an agent of Defendants when he executed the Agreement promising he
had “secured the right to purchase” the Subject Vehicle from a franchised
Dealer. (DCOE Ex. 3, PCOE Ex. D.) There is no dispute that Charles breached the Agreement by failing
to purchase the subject vehicle and failing to refund Plaintiff the $58,000.00
paid. (DCOE Ex. 1.)
Moreover, triable issues of fact exist as to whether Defendants
are liable for failing to disclose that Charles had no relationship with Dealer
and/or concealing such a fact by failing to make an express disclosure during
the entire transaction. “There are four
circumstances in which nondisclosure or concealment may constitute actionable
fraud: “(1) when the defendant is in a fiduciary relationship with the
plaintiff; (2) when the defendant had exclusive knowledge of material facts not
known to the plaintiff; (3) when the defendant actively conceals a material
fact from the plaintiff; and (4) when the defendant makes partial
representations but also suppresses some material facts.” (Heliotis
v. Schuman (1986) 181 Cal.App.3d 646, 651.) Here, neither Harrison nor
Bourbon informed Plaintiff that Charles was not associated with the Dealer
despite having communicated with Plaintiff about the Agreement. (DCOE Ex. 10
[Plaintiff’s Depo. at pp. 41:11-18, 43:16-18, 44:2-7]; PCOE Ex. M.) Accordingly, the trier of fact could
find that Defendants were obligated to disclose the true nature of their
relationship with Charles.
Since triable issues of fact exist as to the fourth cause of
action summary adjudication is denied as to that claim.
Defendants’ motion for summary judgment is denied.
Conclusion
Defendants’
Motion for Summary Judgment or, in the alternative, Summary Adjudication is
denied. Defendants to give notice.