Judge: Mark A. Young, Case: 19SMCV00603, Date: 2023-03-16 Tentative Ruling

Case Number: 19SMCV00603    Hearing Date: March 16, 2023    Dept: M

CASE NAME:           Snukal, et al., v. 926 Broadway LLC, et al.

CASE NO.:                19SMCV00603

MOTION:                  Motion for Summary Judgment

HEARING DATE:   3/16/2023

Legal Standard

            A party may move for summary judgment in any action or proceeding if it is contended the action has no merit or that there is no defense to the action or proceeding. (CCP, § 437c(a).) “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.)

            To prevail, the evidence submitted must show there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (CCP, § 437c(c).) The motion cannot succeed unless the evidence leaves no room for conflicting inferences as to material facts; the court has no power to weigh one inference against another or against other evidence. (Murillo v. Rite Stuff Food Inc. (1998) 65 Cal.App.4th 833, 841.) In determining whether the facts give rise to a triable issue of material fact, “[a]ll doubts as to whether any material, triable, issues of fact exist are to be resolved in favor of the party opposing summary judgment…” (Gold v. Weissman (2004) 114 Cal.App.4th 1195, 1198-99.) “In other words, the facts alleged in the evidence of the party opposing summary judgment and the reasonable inferences there from must be accepted as true.” (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 179.) However, if adjudication is otherwise proper the motion “may not be denied on grounds of credibility,” except when a material fact is the witness’s state of mind and “that fact is sought to be established solely by the [witness’s] affirmation thereof.” (CCP, § 437c(e).) 

            Once the moving party has met their burden, the burden shifts to the opposing party “to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (CCP § 437c(p)(1).) “[T]here is no obligation on the opposing party... to establish anything by affidavit unless and until the moving party has by affidavit stated facts establishing every element... necessary to sustain a judgment in his favor.” (Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 468.) 

“The pleadings play a key role in a summary judgment motion. The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues and to frame the outer measure of materiality in a summary judgment proceeding.” (Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 493, quotations and citations omitted.) “Accordingly, the burden of a defendant moving for summary judgment only requires that he or she negate plaintiff's theories of liability as alleged in the complaint; that is, a moving party need not refute liability on some theoretical possibility not included in the pleadings.” (Ibid.) 

EVIDENTIARY ISSUES

Plaintiff’s objections to Defendants’ moving evidence are OVERRULED. Critically, the objections are not in the proper format. (See Cal. Rules of Court, rule 3.1354(b).)

Furthermore, since Defendants failed to meet their initial burden to show entitlement to judgment as a matter of law as to the entire action against them, the parties’ evidentiary objections are immaterial. (CCP § 473q(c).)

Analysis

Defendants Coldwell Banker Residential Brokerage Company and Ellen Francisco (“Coldwell Defendants”) move for summary judgment against Plaintiffs 27234 PCH LLC and Club 55 LLC’s First Amended Complaint (FAC). The FAC alleges causes of action for negligent misrepresentation, negligence, failure to make statutory disclosures pursuant to Civil Code § 2079 and § 1102, and breach of fiduciary duty (Coldwell only), arising out of Plaintiffs' purchase of two adjacent beachfront real properties located at and commonly described as 27234 and 27242 Pacific Coast Highway, Malibu, California (the "Properties") The Properties were formerly owned by Sellers and Defendants Edward and Jane Fishman. In 2017, the Fishmans listed the Properties for sale with the Coldwell Defendants. Later, in April 2018, the Fishmans listed the Properties for sale with the Coldwell Defendants and David Eytan Levin and his broker, 4 Malibu Real Estate (“4 Malibu Defendants) for $25.9 Million. On July 2, 2018, Plaintiffs submitted an offer to purchase the Properties, and were represented by Cross-Defendant, Chris Cortazzo ("Cortazzo"), also an agent with Coldwell at the time of the subject transaction. Richard Weintraub ("Weintraub") executed the transaction documents on behalf of Plaintiffs.

Negligence and Negligent Misrepresentation

To prevail on a cause of action for negligence, a plaintiff must show: (1) a legal duty owed to plaintiffs to use due care; (2) breach of that duty; (3) causation; and (4) damage to plaintiff. (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal. App. 4th 292, 318.)

“The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 196.) Negligent misrepresentation differs from fraud, in that the defendant makes false statements, honestly believing that they are true, but without reasonable ground for such belief. (Buy v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407.) 

The FAC alleges that the Properties’ dry rot was so severe that the home was not structurally sound and was in danger of collapsing in on itself. (FAC ¶¶ 79– 82) The FAC further alleges Defendants knew or should have known of the significant water damage and prolific dry rot in the home, but did not disclose it to Plaintiffs. (FAC ¶ 85d-o.) Defendants also actively advised engaged in efforts to cosmetically conceal the evidence of water intrusion and water damage and failed to disclose certain reports and recommended repairs. (FAC ¶¶ 85(o-z, aa).)

The FAC further alleges that the Coldwell Defendants failed to disclose material issues, such as structural defects, dry rot, prior repairs, and failure to adequately repair the Property in the past, that they knew or should have known existed. More specifically, Defendants had a duty to Plaintiffs to assure that any representations affirmatively made to Plaintiffs were true and that all material facts were disclosed to Plaintiffs. (FAC ¶ 101.) Defendants made the affirmative assertion that they were not aware of and had no reason to have been aware of any material defects affecting the value of the property, other than what was disclosed in the TDS forms and the Agent Visual Inspection Disclosure (AVID) forms. (¶ 102.) As such, Plaintiffs contend that Defendants misrepresented the true condition of the Properties and withheld material facts about the Properties. (¶ 107.) This includes: a) Failing to disclose all material facts and defects discoverable by a reasonable and competent visual inspection in the AVID forms; b) Failing to disclose all material facts and defects they were aware of or should have been aware of; and c) Failing to disclose efforts to cosmetically conceal extensive water damage and structural damage, including significant and extensive dry rot. (Id.) Defendants had no grounds for believing their misrepresentations regarding the Properties were true at the time they made them. (¶ 111.) Defendants intended that Plaintiffs rely on the misrepresentations. (¶ 112.) Plaintiffs reasonably and justifiably relied on misrepresentations. (¶ 113.)

The negligence cause of action similarly alleges that Defendants had a legal duty to disclose all facts materially affecting the value or desirability of the property which they knew or should have been aware of, and which were not known to, or within the reach of the diligent attention and observation of Plaintiffs. (FAC ¶ 117.) Defendants breached their disclosure duties as set forth above as set forth above, including but not limited: 1) Failing to disclose all material facts and defects discoverable by a reasonable and competent visual inspection in the AVID forms; 2) Failing to disclose all material facts and defects they were aware of or should have been aware of; and 3) Failing to disclose efforts to cosmetically conceal extensive water damage and structural damage, including significant and extensive dry rot. (¶¶119-125.)   

In their motion, the Coldwell Defendants assert Plaintiffs have no evidence to prove that Coldwell Defendants made any misrepresentations, failed to disclose any known material information, breached any duty of care, that Plaintiffs justifiably relied on any alleged misrepresentations, or that Plaintiffs suffered any damages as a result of any alleged breach or misrepresentation. Plaintiffs counter in their opposition that Coldwell Defendants fail to address the allegations of a joint venture, and thus do not defeat all of the alleged theories of liability.

Here, the FAC alleges that each of the Defendants was the agent, employee, and/or engaged in a joint venture with each of the remaining Defendants and was acting at all times within the purpose and scope of said agency, employment and/or joint venture. (FAC ¶ 13.) As to a joint venture, “the parties to the venture are vicariously liable for the torts of other in furtherance of the venture.”  (Cochurm v. Costa Victoria Healthcare, LLC (2018) 25 Cal.App.5th 1034, 1053; see also Leming v. Oilfields Trucking Co. (1955) 44 Cal.2d 343, 350.) “ ‘[T]he negligence of one joint venturer or of his employees acting in connection with the joint venture is imputed to the other joint venturers.’ ” (County of Riverside v. Loma Linda University (1981) 118 Cal.App.3d 300, 312; accord County of Mariposa v. Yosemite West Associates (1988) 202 Cal. App. 3d 791; Dixon v. City of Livermore (2005) 127 Cal.App.4th 32, 42.) California law recognizes a joint venture relationship when the parties: 1) agree to engage in a common business undertaking; 2) have an understanding as to the sharing of profits and losses; and 3) have a right of joint control. (Bank of California v. Connolly (1973) 36 Cal. App. 3d. 350, 364; See Unruh-Haxton v. Regents of Univ. of Cal. (2008) 162 Cal. App. 4th 343, 370 [a joint venture is “an undertaking by two or more persons jointly to carry out a single business enterprise for profit”].) “Whether a partnership or joint venture exists is primarily a factual question to be determined by the trier of fact from the evidence and inferences to be drawn therefrom.” (Filippo Industries, Inc. v. Sun Ins. Co. of N.Y. (1999) 74 Cal.App.4th 1429, 1444.) Whether a joint venture exists must largely depend upon determining the intention of the parties from the facts of a particular case because there is no certain and all-inclusive definition to be applied. (Holtz v. United Plumbing & Heating Co. (1957) 49 Cal.2d 501, 506.)

Here, the FAC provides for a basis of vicarious liability between Coldwell Defendants and 4 Malibu Defendants based upon a joint venture theory.  (FAC ¶ 13.) Thus, to prevail, Coldwell Defendants would have to present evidence that demonstrates they were not in a joint venture with 4 Malibu, or show why 4 Malibu would not be liable in addition to their own alleged liability.  In their motion, however, the Coldwell Defendants only focus on their own knowledge and statements. (See, e.g., UMFs 11-13, 67, 70-75, 80-85.)

As to the 4 Malibu Defendants, Colwell Defendants only mention that they co-listed the sale of the Properties with agent David Eytan Levin and 4 Malibu Real Estate for $25.9 Million. (UMF 1.) Critically, Coldwell Defendants do not present evidence that they and 4 Malibu Defendants were not engaged in a joint venture, as alleged in the FAC. In reply, Defendants merely cite the listing agreement between the Fishmans, on the one hand, and Coldwell and 4 Malibu on the other. Strictly construed, this does not meet their burden of production. The Listing Agreement makes no comment on Coldwell and 4 Malibu’s relationship or how they would split profits/losses, etc. Simply because they were co-listing the Properties does not controvert the alleged joint venture. Defendants would need to affirmatively demontrate that they did not agree to engage in a common business undertaking, did not share profits and losses, or did not have a right of joint control over the venture. Coldwell Defendants improperly attempt to shift the burden on this point by arguing that Plaintiffs have not proffered evidence that they and 4 Malibu had any share in profits/losses of their venture. If Defendants did not have a joint venture with 4 Malibu, or the other defendants, as they contend, then they had the burden of production on this motion to show that they were not joint venturers.

            Furthermore, Coldwell Defendants do not address whether 4 Malibu may be liable for negligence/negligent misrepresentation. Thus, it would be difficult for the Court to find that Coldwell Defendants meet their burden of production and persuasion as to any issue regarding 4 Malibu Defendants.

To an extent, Colwell Defendant’s arguments regarding justifiable reliance may also apply to 4 Malibu’s liability. However, at best, Coldwell Defendants only show Plaintiffs’ unreasonable reliance on any statements concerning the dry-rot issue. (See Mot. at pp. 6-11; UMFs 26-30, 42-47, 66.) Several of the defects were allegedly known by Defendants, and not actively disclaimed such as the dry rot issue. Furthermore, Coldwell Defendants only address their own knowledge of the other issues. For instance, the following issues are not completely addressed as to 4 Malibu:

Permits: FAC ¶ 85(a-b), see UMFs 15, 32, 65, and 67;

Escrow reports: FAC ¶ 85(c-f), see UMFs 48 and 68;

Bituthene on Bathroom Floor: FAC ¶ 85(g), no attendant UMFs;

Koi Pond leak: FAC ¶ 85(h), see UMF 70;

Sprinkler Malfunction: FAC ¶ 85(i-t), see UMFs 11, and 69-71; and

Sprinkler Cover-up: FAC ¶ 85(z-cc), see UMFs 72-73.

For these reasons, the Coldwell Defendants failed to meet their initial burden on the negligence causes of action. As the Coldwell Defendants moved for summary judgment only, and not summary adjudication of any specific issues, the motion must be denied in its entirety.