Judge Michael P. Linfield, Case 20STCV07655 2023-03-29 Tentative Ruling

Judge: Michael P. Linfield, Case: 20STCV07655, Date: 2023-03-29 Tentative Ruling

SUBJECT: Motion for Summary Judgment, or in the Alternative, Summary Adjudication of Issues on Plaintiff’s Verified First Amended Complaint

Moving Party: Defendants/Cross-Defendants Compass California, Inc., Shane Douglas Markland, Anthony J. Stellini, and Sherri Ann Rogers

Defendants/Cross-Defendants’ Motion for Summary Judgment, or in the Alternative, Summary Adjudication of Issues on Plaintiff’s Verified First Amended Complaint is DENIED.

On February 24, 2020, Plaintiff Zohar Management, LLC filed its Complaint against Defendants Holloway Drive, LLC, Lubov Azria, Compass California, Inc., Shane Douglas Markland, Anthony J. Stellini, Sherri Ann Rogers, Utopia Development, Inc., and Daniel Angelo Moizel. This action arises out of allegations of the breach of a real estate contract regarding four residential units located at 8451 Carlton Way, Los Angeles, CA 90069.

On June 26, 2020, by request of Plaintiff, the Clerk’s Office dismissed without prejudice Defendants Daniel Angelo Moizel and Utopia Development, Inc.

On June 2, 2021, Plaintiff amended its Complaint to substitute Doe 1 for Compass, Inc.

On October 27, 2021, Defendants/Cross-Complainants Holloway Drive, LLC and Lubov Azria filed their Cross-Complaint against Defendants/Cross-Defendants Compass California, Inc., Shane Douglas Markland, Anthony J. Stellini, and Sherri Ann Rogers.

On November 1, 2021, Defendants/Cross-Complainants filed their Verified Answer to Plaintiff’s First Amended Complaint.

On November 3, 2021, Defendants/Cross-Defendants Compass California, Inc., Shane Douglas Markland, Anthony J. Stellini, and Sherri Ann Rogers filed their Verified Answer to Plaintiff’s First Amended Complaint.

On November 30, 2021, Defendants/Cross-Defendants filed their Answer to Cross-Complainants’ Cross-Complaint.

On January 13, 2023, Defendants/Cross-Defendants filed their Motion for Summary Judgment, or in the Alternative, Summary Adjudication of Issues on Plaintiff’s Verified First Amended Complaint. Defendants/Cross-Defendants concurrently filed: (1) Separate Statement; (2) Declaration of Alexandra N. Anast; (3) Declaration of Shane Douglas Markland; (4) Proposed Order; and (5) Proof of Service.

On March 15, 2023, Plaintiff filed its Memorandum of Points and Authorities in Support of its Opposition (“Opposition”). Plaintiff concurrently filed: (1) Responding Separate Statement; (2) Declaration of Wiseman Dawoody; (3) Request for Judicial Notice; (4) Evidentiary Objections to the Declaration of Alexandra N. Anast; and (5) Evidentiary Objections to the Declaration of Shane Douglas Markland.

On March 24, 2023 at 4:40 p.m., Defendants/Cross-Defendants late filed their Reply. Defendants/Cross-Defendants concurrently filed: (1) Objections to the Declaration of Wiseman Dawoody; and (2) Reply to Separate Statement. Even though the Reply and concurrent filings were filed late, the Court still considers them in its analysis below.

On March 27, 2023, Plaintiff filed its Motion to Strike Defendants’ Reply Separate Statement.

Plaintiff filed evidentiary objections to the Declaration of Alexandra N. Anast. The following are the Court’s rulings to these evidentiary objections.

Plaintiff also filed evidentiary objections to the Declaration of Shane Douglas Markland. The following are the Court’s rulings to these evidentiary objections.

Note: Paragraph 2 of the Markland Declaration states, “I have personal knowledge of the facts set forth herein, and if called as a witness to testify thereto, I could competently and truthfully do so.” Plaintiff has objected to this statement on the grounds of “Lack of Personal Knowledge.” (See Objections to Declaration of Markland.) Such an objection is frivolous and a waste of the Court’s time.

Plaintiff’s Objections to and Motion to Strike the Reply Separate Statement is DENIED.

Defendants/Cross-Defendants filed evidentiary objections to the Declaration of Wiseman Dawoody. The following are the Court’s rulings to these evidentiary objections.

Objection
1		OVERRULED
2		OVERRULED
3		OVERRULED
4		OVERRULED
5		OVERRULED
6		OVERRULED
7		OVERRULED
8		OVERRULED
9		OVERRULED
10		OVERRULED
11		OVERRULED
12		OVERRULED
13		OVERRULED
14		OVERRULED
15		OVERRULED
16		OVERRULED
17		OVERRULED
18		OVERRULED
19		OVERRULED
20	SUSTAINED
21		OVERRULED
22		OVERRULED
23		OVERRULED
24		OVERRULED
25		OVERRULED
26		OVERRULED
27		OVERRULED
28	SUSTAINED
29	SUSTAINED
30	SUSTAINED
31	SUSTAINED

Note: The basis for most of the objections to the Dawoody declaration is that the testimony is “irrelevant.” (See Objections to Declaration of Dawoody.) Such objections are frivolous; if the statements are truly irrelevant, then they would not make a difference to the Court’s analysis, and hence objecting to them is a waste of time. (See, e.g., Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 257, fn. 6.)

(1) Defendant/Cross-Defendant Compass California, Inc.’s licensure by the State of California Department of Real Estate as a real estate broker, California Real Estate Broker’s License No. 01991628, downloaded from the Department of Real Estate’s website;

(2) Defendant/Cross-Defendant Shane Douglas Markland’s licensure by the State of California Department of Real Estate as a real estate sales person, California Real Estate Sales Person License No. 02077410, downloaded from the Department of Real Estate’s website;

(3) Defendant/Cross-Defendant Anthony J. Stellini’s licensure by the State of California Department of Real Estate as a real estate sales person, California Real Estate Sales Person License No. 01710680, downloaded from the Department of Real Estate’s website;

(4) Defendant/Cross-Defendant Sherri Ann Rogers’ licensure by the State of California Department of Real Estate as a real estate sales person, California Real Estate Sales Person License No. 01420104, downloaded from the Department of Real Estate’s website;

(5) Non-Party Chloe Rivka Courtois’s licensure by the State of California Department of Real Estate as a real estate sales person, California Real Estate Sales Person License No. 02052043, downloaded from the Department of Real Estate’s website;

(6) The Stop Work Order issued on December 6, 2012 by City of Los Angeles Department of Building and Safety to Defendant Holloway Drive, LLC, in care of Defendant Max Azria; and

(7) The second Order to Comply issued on February 24, 2017 by the City of Los Angeles Department of Building and Safety to Defendant Holloway Drive, LLC, in care of Defendant Max Azria.

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law[.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)

“[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Id.; Smith v. Wells Fargo Bank, N.A. (2005) 135 Cal.App.4th 1463, 1474 [summary judgment standards held by Aguilar apply to summary adjudication motions].)

Further, in line with Aguilar v. Atlantic Richfield Co., “[o]n a motion for summary adjudication, the trial court has no discretion to exercise. If a triable issue of material fact exists as to the challenged causes of action, the motion must be denied. If there is no triable issue of fact, the motion must be granted.” (Fisherman's Wharf Bay Cruise Corp. v. Super. Ct. (2003) 114 Cal.App.4th 309, 320.)

“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. Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839 [cleaned up].)

Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true. Nor may the trial court grant summary judgment based on the court's evaluation of credibility.” (Id. at p. 840 [cleaned up]; see also Weiss v. People ex rel. Dep’t of Transp. (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)

Defendants/Cross-Defendants move for summary judgment, or in the alternative for summary adjudication, arguing: (1) all the claims have no merit because Plaintiff has not established the requisite element of duty; (2) the fourth cause of action is without merit; (3) the fifth cause of action is without merit; (4) the sixth cause of action is without merit; (5) the seventh cause of action is without merit; and (6) the eighth cause of action is without merit; and (7) the ninth cause of action is without merit. (Motion, p. 8:9–12, 12:14–16, 14:7–8, 14:23–24, 15:17–18, 16:9–11.)

Plaintiff opposes the Motion, arguing: (1) that the Motion should be denied because it is not supported by competent, admissible evidence; (2) that multiple triable issues of fact exist regarding the fourth, fifth, and seventh causes of action; (3) that Defendants/Cross-Defendants’ arguments regarding the misrepresentation and concealment causes of action are without merit; and (4) Defendants/Cross-Defendants have not met their burden to show they are entitled to summary judgment or summary adjudication on the breach of fiduciary duty, professional malpractice, and negligence causes of action. (Opposition, pp. 3:11–12, 3:25–28, 15:15–17, 17:4–6.)

Defendants/Cross-Defendants reiterate their arguments in their Reply. Defendants/Cross-Defendants also make specific rebuttals to Plaintiff’s arguments, such as by arguing that Plaintiff’s reliance on Roberts v. Lomanto (2003) 112 Cal.Ap.4th 1553 is without merit and that Padgett v. Phariss (1997) 54 Cal.App.4th 1270 is relevant to this case. (Reply, pp. 7:9–22, 9:1–6.)

“Whether a legal duty of care exists in a given factual situation is a question of law to be determined by the court, not the jury. Where a duty is found to exist, a real estate agent must fulfill it by exhibiting the degree of care and skill ordinarily exhibited by professionals in the industry.” (Carleton v. Tortosa (1993) 14 Cal.App.4th 745, 754, citations omitted.)

“The degree of care and skill required to fulfill a professional duty ordinarily is a question of fact and may require testimony by professionals in the field if the matter is within the knowledge of experts only. However, expert testimony is incompetent on the predicate question whether the duty exists because this is a question of law for the court alone.” (Id. at 754–55, citations omitted.)

“Real estate brokers are subject to two sets of duties: those imposed by regulatory statutes, and those arising from the general law of agency.” (Id. at 755, citations omitted.)

"The existence and extent of the duties of the agent to the principal are determined by the terms of the agreement between the parties, interpreted in light of the circumstances under which it is made, except to the extent that fraud, duress, illegality, or the incapacity of one or both of the parties to the agreement modifies it or deprives it of legal effect." (Id., quotation and internal quotation marks omitted.)

Defendants/Cross-Defendants argue that Plaintiff’s claims have no merit because Plaintiff cannot establish the requisite element of duty. (Motion, p. 8:9–11.) Their sub-arguments are: (1) that Defendants/Cross-Defendants owed no duty to inspect public records or permits; (2) that Defendants/Cross-Defendants owed no duty to verify the accuracy of information provided by Defendants/Cross-Complainants; and (3) that Plaintiff knew Defendants/Cross-Defendants made no guarantees regarding the subject property.

Plaintiffs counter by arguing that Defendants/Cross-Defendants were acting as dual agents for both Plaintiff and Defendants/Cross-Complainants, and thus a duty existed. Plaintiffs point to the Motion, which seemingly admits that Defendants/Cross-Defendants were “acting as agents of both parties.” (Motion, p. 1:15–17.)

In evidence before the Court is a document titled “Disclosure Regarding Real Estate Agency Relationship”, which includes signatures by Plaintiff’s representative Wiseman Dawoody and Defendant/Cross-Defendant Compass California, Inc.’s representative Shane Markland. (Decl. Anast, Ex. 6.)

Considering the evidence submitted in the light most favorable to the nonmoving party for the purposes of a motion for summary judgment, the evidence supports a finding that, as a matter of law, an agency relationship existed between Plaintiff and Defendants/Cross-Defendants, and that Defendants/Cross-Defendants correspondingly owed a duty to Plaintiff.

The Court DENIES summary judgment on the grounds that Defendants/Cross-Defendants did not owe a duty to Plaintiff.

“The elements of a cause of action for intentional misrepresentation are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s reliance on the misrepresentation, (4) actual and justifiable reliance, and (5) resulting damage.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)¿¿

The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.)¿¿

To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

Defendants/Cross-Defendants argue that the fourth cause of action for fraud by intentional misrepresentation and concealment of material facts is without merit because: (1) Defendants/Cross-Defendants made no actionable misrepresentations; and (2) Plaintiff cannot establish the element of reliance. (Motion, pp. 12:14–16, 13:1–2, 13:26–27.)

Plaintiff points the Court to an email dated October 24, 2019 from Non-Party Chloe Courtois (a.k.a. Chloe Azria) to Defendant/Cross-Defendant Shane Markland, and which Shane Markland then forwarded on October 25, 2019 to the other individual Defendants/Cross-Defendants. (Decl. Anast, Ex. 2, actual pages 104–07 (Bates COMPASS000334 – COMPASSS000337.) Among other things, this email states:

It is approximately 5,400 SF land with a partially built home (2,450 SF). Don’t ask me why we stopped construction on it. From my understanding the existing structure has been exposed for too long to build from. Unfortunately, this property is sandwiched between two homes one which was just demolished and under construction. I am not sure what the value is, we spent $1,700,000 to purchase it in 2006. My mom gave me verbal approval, but I thought to make it SUPER interesting for the buyer we could offer Seller back financing: no down payment, no interest for three years, a balloon payoff of $1.75 million in 2023. We would be the lender on the deed of trust, they [sic] buyer can build and then refinance out of it or sell it before 2023. Danny our in house contractor said it will cost $244/ SF @2450 SF total to rebuild nicely. This would price the house at $2.35 million. Homes in the area are roughly listed at this price, but there would be no margin for a developer/builder. I think it will be worth less than what the prices are on the market this [sic] because of the street and parking situation. Potentially if priced around $1.5 million with the seller backed financing incentive it can sell…

Plaintiff also provides testimonial evidence regarding multiple representations about the condition of the property that Shane Markland made to Mr. Dawoody between November 11, 2019 to December 5, 2019 regarding the condition of the property. (Decl. Dawoody, ¶¶ 13–22.) According to this testimony, none of these representations mentioned details included in the October 24, 2019 email, including that “the existing structure has been exposed too long to build from.” (Id. at ¶ 23.) Similarly, Defendant/Cross-Defendant Shane Markland did not make Mr. Dawoody aware at that time that Defendant/Cross-Defendant Shane Markland had been told “[d]on’t ask me why we stopped construction on it.” (Id.)

Finally, Mr. Dawoody’s testimony is that, on behalf of Plaintiff, he relied on these misrepresentations, and that Plaintiff was subsequently harmed because of the price Plaintiff offered for the property. (Id. at ¶¶ 24, 26, 28, 31.h.)

Taken in the light most favorable to Plaintiff for the purpose of the Motion, there are triable issues of material fact: (1) that Defendants/Cross-Defendants made multiple misrepresentations about the condition of the property; (2) that Defendants/Cross-Defendants knew about the misrepresentations; (3) that Defendants/Cross-Defendants intended to induce reliance on the misrepresentations; (4) that Plaintiff actually and justifiably relied on the misrepresentations; and (5) that damage resulted.

The Court DENIES summary adjudication to the fourth cause of action for fraud by intentional misrepresentation.

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.)¿¿¿

The same evidence as discussed above for the fourth cause of action for fraud by intentional misrepresentation support findings for the fifth cause of action for fraud by concealment of material facts.

The Court DENIES summary adjudication to the fifth cause of action for fraud by concealment of material facts.

“California courts have recognized a cause of action for negligent misrepresentation, i.e., a duty to communicate accurate information, in two circumstances. The first situation arises where providing false information poses a risk of and results in physical harm to person or property. The second situation arises where information is conveyed in a commercial setting for a business purpose.” (Friedman v. Merck & Co. (2003) 107 Cal.App.4th 454, 477.)

The same evidence as discussed above for the fourth cause of action for fraud by intentional misrepresentation support findings for the sixth cause of action for negligent misrepresentation.

The Court DENIES summary adjudication to the sixth cause of action for negligent misrepresentation.

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (City of Atascadero v. Merrill Lynch, Pierce, Fenner, & Smith, Inc. (1998) 68 Cal.App.4th 445, 483.)¿

“There are¿two kinds¿of fiduciary duties — those imposed by law and those undertaken by agreement.” (Gab Bus. Servs. v. Lindsey & Newsom Claim Servs. (2000) 83 Cal.App.4th 409, 416, emphasis omitted, overruled in part on other grounds by Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1154.)¿¿

“Fiduciary duties are imposed by law in certain technical, legal relationships such as those between partners or joint venturers, husbands and wives, guardians and wards, trustees and beneficiaries, principals and agents, and attorneys and clients.” (Id., citations omitted.) ¿¿

“A fiduciary duty is undertaken by agreement when one person enters into a confidential relationship with another.” (Id. at 417.)

The Court already noted earlier in this Order that “the evidence supports a finding that, as a matter of law, an agency relationship existed between Plaintiff and Defendants/Cross-Defendants, and that Defendants/Cross-Defendants correspondingly owed a duty to Plaintiff.” This is a fiduciary relationship and duty that is imposed by law, as there is a legal agreement that sets out a principal-agent relationship between Plaintiff and Defendants/Cross-Defendants.

The question of whether there was a breach of this duty based on the evidence previously discussed (i.e., the misrepresentations about the condition of the property based on information Defendants/Cross-Defendants had that they did not share with Plaintiff) is a triable question of material fact, not a question of law. That makes resolution of this issue inappropriate on a motion for summary judgment.

The Court DENIES summary adjudication to the seventh cause of action for breach of fiduciary duty by real estate licensees.

“It is not disputed that current law requires a broker to disclose to a buyer material defects known to the broker but unknown to and unobservable by the buyer.” (Easton v. Strassburger (1984) 152 Cal.App.3d 90, 99, citations omitted.)

“In sum, we hold that the duty of a real estate broker, representing the seller, to disclose facts, as that fundamental duty is articulated in [prior case law], includes the affirmative duty to conduct a reasonably competent and diligent inspection of the residential property listed for sale and to disclose to prospective purchasers all facts materially affecting the value or desirability of the property that such an investigation would reveal.” (Id. at 102.)

As indicated above, there are triable issues of material fact that Defendants/Cross-Defendants did not disclose to Plaintiff a material defect with the structure on the property. Defendants/Cross-Defendant’s failure to disclose this is sufficient for a cause of action of professional malpractice and negligence.

The Court DENIES summary adjudication to the eighth cause of action for professional malpractice and negligence by real estate licensees.

In order to state a claim for negligence, Plaintiff must allege the elements of (1) “the existence of a legal duty of care,” (2) “breach of that duty,” and (3) “proximate cause resulting in an injury.” (McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.)¿¿

As indicated above, there are triable issues of material fact that Defendants/Cross-Defendants had a legal duty to care for Plaintiff and that there was an injury to Plaintiff. Also, as discussed regarding the seventh cause of action, a determination of whether there was a breach of the duty is a triable question of material fact that is not properly resolved on a motion for summary judgment.

The Court DENIES summary adjudication to the ninth cause of action for negligence.

Defendants/Cross-Defendants’ Motion for Summary Judgment, or in the Alternative, Summary Adjudication of Issues on Plaintiff’s Verified First Amended Complaint is DENIED.

Objection
¶ 2		OVERRULED
¶ 3		OVERRULED
¶ 4		OVERRULED
¶ 5		OVERRULED