Judge: Margaret L. Oldendorf, Case: 23AHCV00185, Date: 2023-09-05 Tentative Ruling

Case Number: 23AHCV00185    Hearing Date: September 5, 2023    Dept: P

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

NORTHEAST DISTRICT

          I.        INTRODUCTION

          This is an action for fraud in connection with a real estate contract. Plaintiffs Scott Sadler and Caroline Yao (Plaintiffs) allege that they purchased a home in South Pasadena from Defendants Huijie and Bingzhe Liu (Sellers); who allegedly misrepresented that the property was connected to the sewer when it was not. Plaintiffs allege that Sellers’ listing agent, Defendant Fang Wang (Wang), represented in the listing that the property was served by and connected to the public sewer. Instead, it is serviced by a septic system.

          Before the Court is a motion to strike the prayer for punitive damages and attorney fees. Moving parties are Defendant High Ten Partners, Inc., dba Coldwell Banker George Realty (High Ten), and Wang. Wang seeks to only strike the prayer for attorney fees, not punitive damages. As the pleading does not allege the required factual predicate for punitive damages against an employer, the motion to strike punitive damages as to High Ten is granted. As the pleading does not allege facts supporting the prayer for attorney fees against either moving party, the motion to strike attorney fees is granted as to both of them.

II.       LEGAL STANDARD

          Code Civ. Proc. §436 provides: “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper:

(a) Strike out any irrelevant, false, or improper matter inserted in any pleading.

(b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”

          Grounds for the motion must appear on the face of the pleading or from any matter of which the court is required to take judicial notice. Code Civ. Proc. §437.

          The notice of motion “must quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count, or defense.” California Rules of Court, rule 3.1322(a).

III.     ANALYSIS

          A. Summary of Pleading

          Wang listed for sale the real property located at 156 Peterson Avenue, South Pasadena. Complaint, ¶16. Wang was the agent, servant, and employee of High Ten. ¶14. Plaintiffs made an offer on the property that was accepted by Sellers. ¶¶17, 18. A copy of the Purchase Agreement is attached as Exhibit 1 to the complaint.

          In the listing, Wang represented that the property was served by the public sewer. ¶19. Wang allegedly falsely represented that the property was connected to the sewer in the MLS listing. ¶20. Wang and her supervising broker, Peter Manleung Kam (Kam), are responsible pursuant to Civ. Code §1088 for the accuracy of the listing. Wang knew or should have known from information available to her that the property was serviced instead by a conventional septic system. ¶22.

          During the escrow period, Sellers and Wang allegedly actively misrepresented that the property was connected to the sewer system. ¶¶30, 31. Sellers allegedly falsely misrepresented on the Transfer Disclosure Statement that the property had a public sewer system. ¶33 and Exhibit 2.

          Plaintiffs reasonably relied on these representations. ¶34. The true facts were that the property was not connected to the sewer; and instead had a hidden, inaccessible cesspool buried underground, which was dilapidated and unable to adequately service the property. ¶35.

          Plaintiffs seek the actual cost of installing a proper septic system or sewer line, subject to proof at trial. ¶38. Plaintiffs lost rent from February 2022 to the present because the property cannot be rented until it has a workable sewer line or septic system. ¶39. Plaintiffs also suffered damages in the form of plumbing repair costs.

          Based on these facts, Plaintiffs allege the following causes of action:

1. Fraud v. all defendants

2. Negligent Misrepresentation v. all defendants

3. Breach of Contract v. Sellers

4. Negligence v. High Ten, Wang, and Kam

5. Unlawful Business Practice v. High Ten, Wang, and Kam.

          B. Procedural Considerations

          Moving parties failed to comply with the requirement that the notice of motion quote in full the portions to be stricken.

          Plaintiffs failed to timely file their opposition brief. It was filed and mail served on August 24, 2023, seven rather than nine court days prior to the hearing.

          Neither of these defects is substantial enough to have an impact on the Court’s  analysis, however.

          C. Punitive Damages Are Stricken As To High Ten

          “‘In order to state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damage statute, Civil Code section 3294.’ (Citation.)” Today IV’s Inc. v. Los Angeles County MTA (2022) 83 Cal.App.5th 1137, 1193.

          Code Civ. Proc. §3294(b) provides as follows:

An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.

          While the pleading contains facts sufficient to constitute a cause of action for fraud against High Ten based on a theory of respondeat superior, it does not contain facts sufficient to support a prayer for punitive damages against High Ten. This is so because there are no allegations that High Ten, through an officer, director, or managing agent, either: (1) had advance knowledge of Wang’s unfitness and employed her with a conscious disregard for the rights of others; or (2) that High Ten ratified Wang’s wrongful conduct; or (3) that High Ten itself is personally guilty of fraud. The prayer for punitive damages is therefore stricken as against High Ten.

          D. Attorney Fees Are Stricken As To High Ten and Wang

          Attorney fees are only recoverable when provided for by statute or contract. Code Civ. Proc. §§1021, 1033.5(a)(10). Neither basis for recovering attorney fees is alleged here. Plaintiffs argue in their opposition that Code Civ. Proc. §1021.5 may provide a basis for recovering fees.  This argument is unpersuasive; this litigation will benefit, at most, Plaintiffs. This action will not result “in the enforcement of an important right affecting the public interest.” It is true that the accuracy of the MLS system is an important right; but the pleading does not allege a pattern of fraud or even a pattern of negligent conduct. It only alleges negligence and fraud with respect to one listing and one sale.

IV.     CONCLUSION AND ORDER

          The motion to strike the prayer for punitive damages as to Defendant High Ten is granted.

          The motion to strike the prayer for attorney fees as to Defendants High Ten and Wang is granted.

          Plaintiffs are ordered to provide notice of this ruling.

Dated:                                                              _______________________________

                                                                              MARGARET L. OLDENDORF

                                                                       JUDGE OF THE SUPERIOR COURT