Judge: Joel L. Lofton, Case: EC068858, Date: 2023-09-06 Tentative Ruling
Case Number: EC068858 Hearing Date: September 6, 2023 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: September
6, 2023 TRIAL DATE: October 10, 2023
CASE: JOHN C. LUKES v.
GLENN GOLDER, an individual; SOTHEBY’S INTERNATIONAL REALTY, a California
corporation; GREGORY ROLLIN PROUT, an individual; N3 INC., a California
corporation dba PACIFIC REALTY CENTER; MKK CAPITAL LLC, a limited liability
company, and DOES 1 through 25.
CASE NO.: EC068858
MOTION
FOR SUMMARY JUDGMENT
MOVING PARTY: Defendants MKK Capital, LLC Michael
Kronsburg, and Gary Casmano (“Moving Parties”)
RESPONDING PARTY: No
response filed.
SERVICE: Filed May 25, 2023
OPPOSITION: No opposition filed.
REPLY: Filed September 1, 2023
RELIEF
REQUESTED
Moving Parties move for summary
judgment, or in the alternative for summary adjudication, as to Plaintiffs’
claims for alter ego and Plaintiffs’ first, second, third, fifth, sixth,
seventh, eighth, ninth, tenth, and twelfth causes of action.
BACKGROUND
This case arises out of Plaintiff John C. Lukes’s (“Plaintiff”) claim
that a property he purchased contained serious and undisclosed defects.
Plaintiff filed this complaint against Defendants Glenn Golder (“Golder”),
Sotheby’s International Realty (“Sothesby”), Gregory Rollin Prout (“Prout”), N3
Inc. (“N3”), dba Pacific Realty Center, MKK Capital LLC (“MKK”), Clipper
Commodities, Inc. (“Clipper”), Gary Casmano (“Casmano”), Joseph Gorman
(“Gorman”) and Michael Kronsburg (“Kronsburg”).
Plaintiff alleges that Sotheby and
Golder represented Plaintiff and his wife, Kathryn A. Lukes, in the purchase of
real property located at 2062 Midwick Drive, Altadena California 91001
(“Subject Property”), as the buyers’ broker and agent, respectively. Plaintiff
alleges N3 was the seller’s broker and Prout was the seller’s agent. Plaintiff
alleges that MKK was the seller of the Subject Property. Plaintiff alleges that
Kronsburg is the managing member of MKK, Clipper held title to the property
with MKK in 2016, prior to the subject sale, Casmano is Kronsburg’s business
partner who was also the managing agent of an entity that had an interest in
the Subject Property, and Gorman is Casmano’s business partner.
Plaintiff alleges that he purchased
the property based on representations made by MKK, Kronsburg, Clipper, Casmano,
and Gorman. Plaintiff alleges that the property had multiple defects that had
not been disclosed by the seller. The defects include code violations, defects
in the structure of the house, and failures to remodel the house.
Plaintiff filed a fifth amended
complaint (“FAC”) on March 16, 2023, alleging thirteen causes of action for (1)
breach of contract, (2) violation of Civil Code section 1102, (3) fraudulent
concealment, (4) breach of fiduciary duty, (5) fraud, (6) breach of duty to
disclose, (7) breach of duty to be honest and truthful, (8) negligence, (9)
negligent misrepresentation, (10), constructive fraud, (11) breach of contract,
(12) civil conspiracy, and (13) aiding and abetting breach of fiduciary duty.
TENTATIVE RULING
Moving
Parties’ motion for summary judgment, or in the alternative for summary
adjudication, as to Plaintiffs’ alter ego claims and Plaintiffs first, second,
sixth, seventh, eighth, and tenth causes of action is GRANTED.
Moving
Parties’ motion for summary judgment, or in the alternative for summary
adjudication, is denied as to Plaintiffs’ third, fifth, and ninth causes of
action is DENIED.
Casmano and
Kronsburg’s motion for summary judgment, or in the alternative for summary
adjudication as to Plaintiffs’ twelfth cause of aciton is GRANTED. MKK’s motion
for summary judgment, or in the alternative for summary adjudication as to
Plaintiffs’ twelfth cause of aciton is DENIED.
LEGAL STANDARD
“The purpose of the law of summary
judgment 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. Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 843.) “A party may move for summary judgment in an
action or proceeding if it is contended that the action has no merit or that
there is no defense to the action or proceeding.” (Code of Civil Procedure
section 473c subd. (a)(1).) “The motion for summary judgment shall be granted
if all the papers submitted show that there is no triable issue as to any
material fact and that the moving party is entitled to a judgment as a matter of
law.” (Code of Civil Procedures section 473c subd. (c).)
A three-step analysis is employed in
ruling on motions for summary judgment. First, the court identifies the issues
framed by the pleadings. Next, the court determines, when the moving party is the
defendant, whether it has produced evidence showing one or more of the elements
of the cause of action cannot be established or there is a complete defense to
that cause of action. If the defendant does so, the burden shifts to the
plaintiff to show the existence of a triable issue of material fact as to that
cause of action or defense. (Kline v. Turner (2001) 87 Cal.App.4th 1369,
1373.) The court must “view the evidence in the light most favorable to
the opposing party and accept all inferences reasonably drawn therefrom.” (Ibid.;
see also Dore v. Arnold Worldwide,
Inc. (2006) 39 Cal. 4th 384, 389 [Courts “liberally construe the evidence
in support of the party opposing summary judgment and resolve doubts concerning
the evidence in favor of that party.”].)
“A defendant moving for summary
judgment must show that one or more elements of the plaintiff's cause of action
cannot be established or that there is a complete defense. The defendant can
satisfy its burden by presenting evidence that negates an element of the cause
of action or evidence that the plaintiff does not possess and cannot
reasonably expect to obtain evidence needed to establish an essential element.
(Veera v. Banana Republic, LLC, (2016) 6 Cal.App.5th 907, 914.)
DISCUSSION
As a preliminary note, the court
observes that Plaintiff has failed to file an opposition to Moving Parties’
motion for summary judgment. California Rules of Court, Rule 3.1350,
subdivision (e), provides that an opposition to a motion for summary judgment must
consist of a memorandum in opposition, a separate statement in opposition, and
evidence or requests for judicial notice, if appropriate. Here, Plaintiff has
submitted neither a memorandum in opposition nor a separate statement in
opposition.
Alter Ego
Moving Parties first argue that
there is no evidence to establish Plaintiffs’ alter ego claims.
“Ordinarily,
a corporation is regarded as a legal entity, separate and distinct from its
stockholders, officers and directors, with separate and distinct liabilities
and obligations. [Citations.] A corporate identity may be disregarded—the
“corporate veil” pierced—where an abuse of the corporate privilege justifies
holding the equitable ownership of a corporation liable for the actions of the
corporation. [Citation.] Under the alter ego doctrine, then, when the
corporate form is used to perpetrate a fraud, circumvent a statute, or
accomplish some other wrongful or inequitable purpose, the courts will ignore
the corporate entity and deem the corporation's acts to be those of the persons
or organizations actually controlling the corporation, in most instances the
equitable owners.” (Sonora Diamond Corp. v. Superior Court (2000) 83
Cal.App.4th 523, 538.) “In California, two conditions must be met before the
doctrine will be invoked. First, there must be such a unity of interest and
ownership between the corporation and its equitable owner that the separate
personalities of the corporation and the shareholder do not in reality exist.
Second, there must be an inequitable result if the acts in question are treated
as those of the corporation alone.” (Ibid.)
Moving
Parties argue that there is no evidence to establish alter ego. Moving Parties
provide that Plaintiff testified he does not have any knowledge of MKK’s
finances or who has access to MKK’s finances. (SSUF No. 39.) Moving Parties
provide that MKK is a distinct legal entity operating separately from its
individual owners. (SSUF No. 42.) Moving Parties provide that MKK maintains
sufficient financial accounts and has never comingled its funds with C&G,
Casmano, or Gorman. (SSUF No. 45.)
Moving
Parties have met their burden of showing that Plaintiffs are unable to
establish alter ego. Because Plaintiffs have failed to submit an opposition,
Plaintiffs have failed to raise a triable issue of material fact. Moving
Parties’ motion for summary adjudication as to Plaintiffs’ claim for alter ego
is granted.
First Cause of Action for Breach of Contract
Moving Parties move for summary judgment as to Plaintiff’s first cause of
action for breach of contract.
The essential elements of a
breach of contract are: (1) the contract, (2) plaintiff’s performance or excuse
for nonperformance, (3) the defendant’s breach, and (4) the resulting damages
to the plaintiff. (Green Valley Landowners Assn. v. City of Vallejo
(2015) 241 Cal.App.4th. 425, 433.)
In their
first cause of action, Plaintiffs allege that they entered into an agreement to
purchase the Subject Property on June 25, 20216. (FAC ¶ 19.) Plaintiffs allege that Defendants
presented them with a real estate transfer disclosure statement. (Id. ¶
20.) Plaintiffs allege that Defendants breached the agreement by failing to
disclose and concealing material information about the condition of the
property. (Id. ¶ 24.)
Moving Parties first argue that Defendants Casmano and
Kronsburg are not parties to the agreement and cannot, therefore, have breached
the contract. (SSUF No. 48.) Additionally, Moving Parties provide that the sale
of the Subject Property was “as is”. (SSUF No. 49.) Moving Parties also provide
that Plaintiffs agreed to purchase the property while it was still undergoing
renovation and that Plaintiff agreed to assume the existing construction
contract. (SSUF No. 50.) Moving Parties further provide that Plaintiffs’
construction consultant inspected the property. (SSUF Nos. 51-52.) Moving Parties
additionally go through each defect Plaintiffs allege they failed to disclose
and provide that Plaintiff is unable to demonstrate a breach. (SSUF Nos.
54-62.)
“[A]ny sale of property ‘as is’ is a sale of the
property in its ‘present or existing condition’; the use of the phrase ‘as is’
relieves a seller of real property from liability for defects in that
condition. The only exception to this principle is when a seller, through
fraud or misrepresentation, intentionally conceals material defects not
otherwise visible or observable to the buyer.” (Shapiro v. Hu (1986) 188
Cal.App.3d 324, 333-34.)
Moving
Parties have met their burden of demonstrating that Plaintiffs are unable to
establish a cause of action for breach of contract. Specifically, Casmano and
Kronsburg have established they are not parties to the contract, and MKK has
established that Plaintiffs purchased the Subject Property “as is”. MKK has
further demonstrated that Plaintiffs are unable to establish it breached the
agreement by failing to disclose the alleged defects enumerated in Plaintiffs’
FAC. The burden now shifts to Plaintiffs. Plaintiffs have failed to submit an
opposition and failed to meet their burden of raising a triable issue of
material fact.
Moving Parties’ motion for summary judgment, or in the
alternative for summary adjudication, as to Plaintiffs’ first cause of action
is granted.
Second
Cause of Action for Violation of Civil Code sections 1102, et seq.
In their
second cause of action Plaintiffs generally allege that Defendants failed to
disclose material information regarding the condition of the Subject Property.
However, Moving Parties provide that the
sale of the Subject Property was “as is”. (SSUF No. 49.) Further, Moving
Parties provide that they provided Plaintiffs with the Real Estate Transfer
Disclosure Statement and an Agent Visual Inspection Disclosure Statement. (SSUF
No. 78 and 79.) Moving Parties have met their burden and Plaintiffs have failed
to meet their burden of raising a triable issue of material fact.
Moving Parties’ motion for summary judgment, or in the
alternative for summary adjudication, as to Plaintiffs’ second cause of action
is granted.
Third,
Fifth, and Ninth Causes of Action
Moving Parties
move for summary judgment as to Plaintiffs’ third cause of action for
fraudulent concealment, fifth cause of action for fraud, and ninth cause of
action for negligent misrepresentation.
“[T]he elements of an action for
fraud and deceit based on concealment are: (1) the defendant must have
concealed or suppressed a material fact, (2) the defendant must have been under
a duty to disclose the fact to the plaintiff, (3) the defendant must have
intentionally concealed or suppressed the fact with the intent to defraud the
plaintiff, (4) the plaintiff must have been unaware of the fact and would not
have acted as he did if he had known of the concealed or suppressed fact, and
(5) as a result of the concealment or suppression of the fact, the plaintiff
must have sustained damage.” (Boschma v. Home Loan Center, Inc. (2011)
198 Cal.App.4th 230, 248.)
“The elements of fraud, which give
rise to the 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.” (Beckwith v. Dahl (2012) 205
Cal.App.4th 1039, 1060, citations omitted.
The elements of negligent
misrepresentation are “[M]isrepresentation of a past or existing material fact,
without reasonable ground for believing it to be true, and with intent to
induce another's reliance on the fact misrepresented; ignorance of the truth
and justifiable reliance on the misrepresentation by the party to whom it was
directed; and resulting damage. (Hydro-Mill Co., Inc. v. Hayward, Tilton,
& Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154.)
Moving
Parties move for summary judgment as to Plaintiffs’ third, fifth, and ninth
causes of action. However, Moving Parties simply repeat their arguments without
pointing to any evidence or lack thereof demonstrating Plaintiffs’ inability to
establish the causes of action. Moving Parties do not reference the elements of
each cause of action. Moving Parties have failed to meet their burden. Moving
Parties’ motion for summary judgment as to Plaintiffs’ third, fifth, and ninth
causes of action is denied.
Sixth,
Seventh, Eighth, and Tenth Causes of Action
Moving Parties
move for summary judgment as to Plaintiffs’ sixth cause of action for breach of
duty to disclose, seventh cause of action for breach of duty to be honest and
truthful, eighth cause of action for negligence, and tenth cause of action for
constructive fraud.
“Although
the seller's agent does not generally owe a fiduciary duty to the buyer, he or
she nonetheless owes the buyer the affirmative duties of care, honesty, good
faith, fair dealing and disclosure, as reflected in Civil Code section 2079.16, as well as such other
nonfiduciary duties as are otherwise imposed by law.” (Holmes v. Summer (2010)
188 Cal.App.4th 1510, 1528.)
“The elements of a cause of action
for negligence are duty, breach, causation, and damages.” (Melton v.
Boustred (2010) 183 Cal.App.4th 521, 529.)
“[E]lements of constructive fraud
cause of action are ‘(1) a fiduciary or confidential relationship; (2)
nondisclosure (breach of fiduciary duty); (3) intent to deceive, and (4)
reliance and resulting injury (causation)’ ” (Prakashpalan v. Engstrom,
Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1131.) “Constructive fraud
exists in cases in which conduct, although not actually fraudulent, ought to be
so treated—that is, in which such conduct is a constructive or quasi fraud,
having all the actual consequences and all the legal effects of actual fraud.”
(Ibid.)
Moving Parties first argue that
Plaintiffs’ causes of action fail as to Casmano and Kronsburg because they are
not parties to any agreement with Plaintiffs and that therefore, Plaintiffs are
unable to establish Casmano and Kronsburg owe any duty to Plaintiffs. (SSUF No. 48.) Further MKK
argues that based on the fact that Plaintiffs purchased the property “as is”
and MKK produced disclosure statements, Plaintiffs are unable to establish a
breach of any duty owed them. (SSUF
No. 49; 78-79.) Moving Parties have met their burden, but Plaintiffs have
failed to meet their burden of raising a triable issue of material fact.
Moving Parties’ motion for summary
judgment, or in the alternative for summary adjudication, to Plaintiffs’ sixth,
seventh, eighth, and tenth causes of action is granted.
Twelfth
Cause of Action for Civil Conspiracy
“Although
conspiracy to commit a tort is not a separate cause of action from the tort
itself, alleging a conspiracy fastens liability on those who agree to the plan
to commit the wrong as well as those who actually carry it out. The elements of
a civil conspiracy are the formation and operation of the conspiracy and damage
resulting to plaintiff from an act done in furtherance of the common design.” (Stueve
Bros. Farms, LLC v. Berger Kahn (2013) 222 Cal.App.4th 303, 323.) “A cause
of action for civil conspiracy may not arise, however, if the alleged
conspirator, though a participant in the agreement underlying the injury, was
not personally bound by the duty violated by the wrongdoing and was acting only
as the agent or employee of the party who did have that duty.” (Doctors’ Co.
v. Superior Court (1989) 49 Cal.3d 39, 44.)
Plaintiffs are
unable to establish that Casmano and Kronsburg owed a duty to them. However,
MKK’s conclusory argument that there is no underlying wrong is unsupported
because the wrongful conduct could include the fraud causes of action, which MKK
has not been successful in moving for summary judgment against. Casmano and
Kronsburg’s motion for summary judgment, or in the alternative for summary
adjudication as to Plaintiffs’ twelfth cause of aciton is granted. MKK’s motion
for summary judgment, or in the alternative for summary adjudication as to
Plaintiffs’ twelfth cause of aciton is denied.
CONCLUSION
Moving
Parties’ motion for summary judgment, or in the alternative for summary
adjudication, as to Plaintiffs’ alter ego claims and Plaintiffs first, second,
sixth, seventh, eighth, and tenth causes of action is GRANTED.
Moving
Parties’ motion for summary judgment, or in the alternative for summary
adjudication, is denied as to Plaintiffs’ third, fifth, and ninth causes of
action is DENIED.
Casmano and
Kronsburg’s motion for summary judgment, or in the alternative for summary
adjudication as to Plaintiffs’ twelfth cause of aciton is GRANTED. MKK’s motion
for summary judgment, or in the alternative for summary adjudication as to
Plaintiffs’ twelfth cause of aciton is DENIED.
Moving
Party to give notice.
Dated: September 6,
2023 ___________________________________
Joel
L. Lofton
Judge
of the Superior Court