Judge: Jon R. Takasugi, Case: 19STCV25208, Date: 2023-03-16 Tentative Ruling

Case Number: 19STCV25208    Hearing Date: March 16, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Intero Defendants’ motion for summary judgment is DENIED.

On 2/16/2022, Plaintiff filed a second amended complaint (SAC) against Kristopher Rene Gomez, KMD Property Solutions, LLC, and Victor Mendiola, alleging: (1) fraud and intentional misrepresentation; (2) concealment; (3) violation of the Unfair Competition law; (4) violation of California Civil Code section 1102; (5) breach of contract; (6) negligent misrepresentation; (7) negligence; and (8) violation of Civil Code section 2079.

Now, Defendants Intero Real Estate Service, Inc. and Intero Franchise Services, Inc. (collectively, Intero Defendants or Defendants) move for summary judgment, or in the alternative summary adjudication, of Plaintiff’s SAC.

Factual Background

            This case arises out of a 2017 real estate transaction (the Transaction) between Plaintiff Yu and Defendants Kristopher Gomez and KMD Property Management Solutions, LLC. Plaintiff alleges that Mr. Gomez, KMD, and their alleged agent—Defendant Victor Mendiola—told him prior to the closing of the Transaction that the tenants at the Property paid for their own utilities, and that all of the residential units were properly permitted and that all of the existing tenants were “in good standing with their rental obligations.” (SAC ¶ 21.) Plaintiff alleges that, after the closing of the Transaction, he discovered that Mr. Gomez’, KMD’s, and Mr. Mendiola’s representations to him were, in fact, inaccurate and false. Specifically, according to Plaintiff, the tenants were not paying for their own utilities, certain units were not properly permitted, and certain tenants were not in good standing. (SAC ¶¶ 31-33.)

Plaintiff alleges that Defendant Mendiola acted as an agent of Intero Defendants.

Discussion

            Intero Defendants argue that Plaintiff cannot establish a claim against them because they are entirely uninvolved with the Transaction, and they have and have never had any relationship with the parties involved with this transaction. In support, Intero Defendants submitted evidence that:

-         Neither Intero Defendant employed Victor Mendiola and Victor Mendiola did not work as an agent for either Intero Defendant. (SS ¶ 1.)

-         Neither Intero Defendant brokered the real estate transaction which forms the basis of Mr. Yu’s lawsuit. (SS ¶ 2.)

-         No one from Intero ever made any representations to Mr. Yu regarding the real estate purchase that forms the basis of Mr. Yu’s lawsuit. (SS ¶ 3.)

-         Intero Real Estate Services, Inc. has no relationship with the Omar Morel and Danny Morel partnership and / or Avance Real Estate, Inc. (SS ¶ 4.)

-         Intero Franchise Services, Inc. had a franchisor / franchisee relationship with the Omar Morel and Danny Morel Partnership and / or Avance Real Estate, Inc. from 2011 until 2020. (SS ¶ 5.)

-         Intero Franchise Services, Inc. never exercised control over the operations of the Morels’ partnership or Avance Real Estate. (SS ¶ 6.)

-         The Intero Defendants did not receive any commission in connection with the real estate transaction which forms the basis of Mr. Yu’s complaint. (SS ¶ 13.)

-         Plaintiff admitted that, prior to closing the Transaction, he did not have any conversations with anyone about either Intero Defendant and that he had no reason to believe that the Intero Defendants had anything to do with the Transaction. (Yu Depo. 6:10-7:3; 34:2-16; 37:2-38:2.)

-         The only connection between either Intero Defendant and Mr. Mendiola is that, for several years, the owners of Avance Real Estate, Inc.—Omar and Danny Morel—operated their real estate partnership (eponymously named “Omar Morel and Danny Morel, a General Partnership”) as an Intero Franchise. The franchisor / franchisee relationship lasted from May 2011 until December 2020. (Kavalaris Decl. ¶ 7.) It was memorialized by a written Franchise Agreement. (Kavalaris Decl. ¶7, Exh. 1.) At some point, the Morels formed Avance Real Estate, Inc. and began operating through the corporation. Plaintiff’s allegation that Mr. Mendiola worked for Avance is based on information and belief alone. However, even accepting it as true, there is no evidence to show that Mr. Mendiola became an agent/employee of Intero because of the franchise relationship between Intero and the Morels/Avance.  

Intero Defendants evidence supports a reasonable inference that they were entirely uninvolved with the Transaction and were not acting as an agent or employee of Defendants KMD and Property Solutions in the Transaction. Accordingly, the burden shifts to Plaintiff to disclose a triable issue of material fact.

In opposition, Plaintiff argues that: (1) Defendant Mendiola was the de facto agent representing Defendant Gomez for the transaction; (2) Defendant Mendiola was working as an agent for Intero Avance during the transaction period; (3) at least one of the Intero Defendants had a franchisor/franchisee agreement with Intero Avance during the transaction period; (4) Intero Defendants controlled almost every facet of Intero Avance’s business operations; and (5) there is a triable issue as to commission payments to Intero Avance and/or Defendant Mendiola.

In support, Plaintiff submitted:

- An email from Defendant Mendiola to Defendant Gomez which lists Intero Real Estate Services as a part of Defendant Mendiola’s email signature (Exh 1.)  

- A record from the State of California Department of Real Estate showing that Intero Avance was operated as an Intero franchise from January 22, 2013 to May 12, 2021. (Exh 2.)

- The Franchise Agreement between Intero and Intero Avance. (Exhs 3, 4.)

- A copy of Defendant Mendiola’s certified license history which shows that he was an agent for Avance from November 5, 2015 to September 13, 2017. (Exh. 5.)

The Court agrees this evidence is sufficient to disclose a triable issue of material fact. Plaintiff’s evidence supports a reasonable inference that Defendant Mendiola was an agent of Avance during the transaction period, and that Intero Avance was operating as an Intero franchise at the time. As such, there is a triable issue of material fact as to whether or not Defendant Mendiola had an agent-broker relationship with Intero Avance at the time at of the transaction.

In light of the language of the Franchise Agreement, there is also a triable issue as to whether or not Defendant Mendiola was an agent of Intero Defendant by virtue of his relationship with Intero Avance.

As noted by Plaintiff, in Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997) 59 Cal. App. 4th 741, the Court reversed summary judgment in favor of the real estate corporation because a triable issue of fact existed as to ostensible agency. Coldwell Banker could be found liable for acts or omissions of a real estate broker who independently owned and operated one of its franchises under such agency theory. The Court there wrote:

Here Coldwell Banker made no specific representations to appellant personally. It did, however, make representations to the public in general, upon which appellant relied. We understand why appellant, and members of the public generally, might believe that Coldwell Banker ‘stood behind’ Marsh's realty company. The venerable name, Coldwell Banker, the advertising campaign, the logo, and the use of the word ‘member’ were and are designed to bring customers into Coldwell Banker franchises.”

            Here, similarly, Intero Avance using the Intero name and its logo and d/b/a as Intero Real Estate, Inc., could give rise to the public’s and Plaintiff’s justifiable reliance that Intero “stood behind” Avance Real Estate, Inc. As such, Plaintiff has introduced “some evidence raising a triable issue of fact on an ostensible agency theory, [and] such is sufficient to withstand summary judgment.” (Id. at p. 748.)

            Moreover, Plaintiff submitted evidence that: (1) Intero Avance’s day-to-day operations in terms of computers, training, phone systems, appearance, professional standards are all controlled and direction by the Interos Defendants’ Franchise Agreement. (Exh. 3.); (2) Defendant Mendiola is a real estate agent who represents parties to real estate transaction, and thus does not perform work outside the usual course of Defendant Intero’s business; and (3) Defendant Mendiola was reasonably viewed as providing services to Avance and Defendants Intero “comparable to that of an employee,” as he facilitated the sale of the Property as the seller’s agent, like other agents do for Defendants Intero in their real estate transactions. As such, per Dynamex Operations W. v. Superior Court and Charles Lee, Real Party in Interest (Cal. 2018) 4 Cal.5th 903, there is a triable issue of material fact as to the employment relationship dynamics between Defendant Mendiola, Intero Avance and the Intero Defendants.

            Based on the foregoing, Intero Defendants’ motion for summary judgment is denied.

It is so ordered.

Dated:  March    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

            Due to Covid-19, the court is strongly discouraging in-person appearances.  Parties, counsel, and court reporters present are subject to temperature checks and health inquiries, and will be denied entry if admission could create a public health risk.  The court encourages the parties wishing to argue to appear via L.A. Court Connect.  For more information, please contact the court clerk at (213) 633-0517.  Your understanding during these difficult times is appreciated.