Judge Thomas Falls, Case 22PSCV00301 2022-08-22 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, attorneys are advised to check this website to determine if any changes or updates have been made to the tentative ruling. Counsel may submit on the tentative rulings by calling the clerk in Dept. R at 909-802-1117 before 8:30 the morning of the hearing.

(1) Defendants’ MARTY RODRIGUEZ REAL ESTATE, INC.’S, MARTY RODRIGUEZ’S AND NADINE HERNANDEZ’S Demurrer to First Amended Complaint

(2) Defendants’ MARTY RODRIGUEZ REAL ESTATE, INC.’S, MARTY RODRIGUEZ’S AND NADINE HERNANDEZ’S Motion to Strike

(1) Defendants’ MARTY RODRIGUEZ REAL ESTATE, INC.’S, MARTY RODRIGUEZ’S AND NADINE HERNANDEZ’S Demurrer to First Amended Complaint is SUSTAINED in part with leave to amend (only as to NHernandez for the first cause of action) and OVERRULED in part (first cause of action as to Marty Rodriguez Real Estate and Marty Rodriguez and second-eighth causes of actions).

(2) Defendants’ MARTY RODRIGUEZ REAL ESTATE, INC.’S, MARTY RODRIGUEZ’S AND NADINE HERNANDEZ’S Motion to Strike is MOOT.

This case arises from a real property dispute between siblings and a real estate company. Plaintiffs Martin Hill and Michelle Rowcliffe (collectively, “Plaintiffs”) allege the following against Defendants MARTY RODRIGUEZ REAL ESTATE, INC. MARTY RODRIGUEZ; NADINE HERNANDEZ; BROTHERS FLIPS INVESTMENT, LLC; CHRISTIAN P. HERNANDEZ; DAVID HILL; ROCHELLE BERGERON: Plaintiffs are brother and sister. Defendant David Hill (“David”) is Plaintiffs’ brother. Defendant Rochelle Bergeron (“Rochelle”) was married to Defendant David Hill. Plaintiffs and Defendant Hill (collectively, “Hill Siblings”) received a quitclaim deed to a certain property from their mother. The quitclaim deed, executed in April 12, 2017, specified that Plaintiffs each own 40 percent of the property and that Defendant Hill would own 20 percent of the property. After their mother died, Plaintiffs and Defendant Hill decided to sell the property and Plaintiff Martin Hill, per all the siblings’ agreement, obtained a broker and a listing agreement for the purpose of marketing and selling the property. The Hill Siblings entered into a Listing Agreement with Marty Rodriguez Real Estate, Inc. (referred to as "C21MR" in the Complaint). Thereafter, Defendant Brothers Flips Investment, LLC ("BFIL") signed a full price $525,000 offer to purchase the Property prepared by C21MR. Plaintiffs made the following counteroffer: the buyer's deposit of $12,000 would be deposited with the escrow holder within one day after acceptance, and that the "buyer shall release $12,000 deposit on Day 3 after acceptance and will be non-refundable." On June 11, 2021, the counteroffer was accepted. On June 14, 2021, the title company told the Firm “that in order for the parties to the Purchase Agreement to be able to close escrow and/ or issue a title insurance policy to the Buyer named in the Purchase Agreement, David Hill would be required to tender to CM21MR or LTC, and in so doing first obtain from Rochelle Bergeron her signature on, a quitclaim deed disclaiming any interest in the Property.” (FAC ¶140.) Alternatively, “in order for the parties to the Purchase Agreement to be able to close escrow and/or assure issuance of a title insurance policy to the Buyer named in the Purchase Agreement, David Hill would be required to tender to CM21MR or LTC, and in so doing first obtain from Rochelle Bergeron her signature on, a quitclaim deed disclaiming any interest in the Property.” (FAC ¶142.) Alternatively, “the absence of a quitclaim deed from Bergeron also prevented the release of the $12,000 deposit to the Hill Siblings on 6/14/2021 or any time thereafter until said deed was tendered.” (FAC ¶143.) “The signing of a quitclaim deed to the Property by Rochelle Bergeron was not a term of the Purchase Agreement escrow instructions included or referenced therein.” (FAC ¶¶147, 164, 166) Rochelle refused to sign the quitclaim deed. (FAC ¶157.) Plaintiffs allege that the Firm and one of its agents “agreed or conspired or colluded with LTC to add a new term to the Purchase Agreement and escrow instructions establishing that a person not a party to the Purchase Agreement, Rochelle Bergeron, would have to execute a quitclaim deed in order for Buyer and LTC to perform their respective duties to Seller.” (FAC ¶170.) As a result of the aforementioned conduct, escrow has been canceled. (FAC ¶199.)[1]

1. Professional Negligence (Against Real Estate Broker And Agents Marty Rodriguez Real Estate, Inc., Marty Rodriguez, Nadine Hernandez)

2. Breach Of Fiduciary Duty (Against Real Estate Broker And Agents Marty Rodriguez Real Estate, Inc., Marty Rodriguez, Nadine Hernandez)

3. Fraud (Against Real Estate Broker And Agents Marty Rodriguez Real Estate, Inc., Marty Rodriguez, Nadine Hernandez)

4. Breach Of Listing Agreement (Against Real Estate Broker Marty Rodrigudez Real Estate, Inc., Marty Rodriguez)

5. Intentional Interference With Contractual Relations (Against Broker Marty Rodriguez Real Estate, Inc., Marty Rodriguez Nadine Hernandez)

6. Negligent Interference With Contractual Relations (Against Broker Marty Rodriguez Real Estate, Inc., Marty Rodriguez, Nadine Hernandez)

7. Intentional Broker Interference With Prospective Advantage (Against Marty Rodriguez Real Estate, Inc., Marty Rodriguez, Nadine Hernandez)

8. Negligent Broker Interference With Prospective Advantage (Against Marty Rodriguez Real Estate, Inc., Marty Rodriguez, Nadine Hernandez)

9. Breach Of Contract (Against Real Estate Buyer Brothers Flips Investment, Inc.)

10. Breach Of Contract (Against Real Estate Buyer Cristian Hernandez As Alter Ego Of Brothers Flips Investment)

11. Intentional Interference With Contract (Against David Hill, Rochelle Bergeron)

12. Negligent Interference With Contract (Against David Hill, Rochelle Bergeron)

13. Intentional Interference With Prospective Advantage (Against Rochelle Bergeron)

14. Negligent Interference With Prospective Advantage (Against Rochelle Bergeron)

On June 3, 2022, Defendants Hill and Rochelle Bergeron (collectively, “Defendants”) filed a Demurrer, which the court continued pending supplemental briefing.

On May 6, 2022, Defendants MARTY RODRIGUEZ REAL ESTATE, INC., MARTY RODRIGUEZ AND NADINE HERNANDEZ[2] (collectively, “Century 21 Defendants”) filed the instant Demurrer.

A demurrer may be asserted on any one or more of the following grounds: (a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading; (b) The person who filed the pleading does not have legal capacity to sue; (c) There is another action pending between the same parties on the same cause of action; (d) There is a defect or misjoinder of parties; (e) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain (“uncertain” includes ambiguous and unintelligible); (g) In an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct; (h) No certificate was filed as required by CCP §411.35 or (i) by §411.36. CCP §430.10. Accordingly, a demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. CCP §430.30(a); Blank v. Kirwan, (1985) 39 Cal.3d 311, 318.

The face of the pleading includes attachments and incorporations by reference (Frantz v. Blackwell, (1987) 189 Cal.App.3d 91, 94); it does not include inadmissible hearsay. Day v. Sharp, (1975) 50 Cal.App.3d 904, 914.

The sole issue on demurrer for failure to state a cause of action is whether the facts pleaded, if true, would entitle the plaintiff to relief. Garcetti v. Superior Court, (1996) 49 Cal.App.4th 1533, 1547; Limandri v. Judkins, (1997) 52 Cal.App.4th 326, 339. The question of plaintiff’s ability to prove the allegations of the complaint or the possible difficulty in making such proof does not concern the reviewing court. Quelimane Co. v. Stewart Title Guaranty Co., (1998) 19 Cal.4th 26, 47. The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. Marshall v. Gibson, Dunn & Crutcher, (1995) 37 Cal.App.4th 1397, 1403. Nevertheless, this rule does not apply to allegations expressing mere conclusions of law, or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken. Vance v. Villa Park Mobilehome Estates, (1995) 36 Cal.App.4th 698, 709.

For all demurrers filed after January 1, 2016, the demurring party must meet and confer in person or by telephone with the party who filed the pleading for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. CCP §430.31(a). As part of the meet and confer process, the demurring party must identify all of the specific causes of action that it believes are subject to demurrer and provide legal support for the claimed deficiencies. CCP §430.31(a)(1). The party who filed the pleading must in turn provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency. Id. The demurring party is responsible for filing and serving a declaration that the meet and confer requirement has been met. CCP §430.31(a)(3).

Real estate agents and brokers owe the purchaser a duty to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to the prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal. (See Leko v. Cornerstone Building Inspection Service (2001) 86 Cal.App.4th 1109, 1115-16.)

The crux of Plaintiffs’ cause of action for professional negligence against moving Defendants is that they “recommend[ed] for the listing price of the Property a figure lower than market value without full disclosure of Seller's options and without disclosure by C21MR and Rodriguez of their knowledge of the market.” (FAC ¶206.)

Century 21 Defendants in their Demurrer argue that “Plaintiffs’ conclusory allegation that the subject property was listed for a figure below market value is pure speculation.” (Demurrer p. 6.)

Here, however, the court takes the allegations of a complaint most favorable to the plaintiff. Thus, even if the allegation is based on speculation, the assumption is regarded as true. Moreover, Century 21 Defendants maintain that Nadine Hernandez was not an agent for Plaintiffs. However, as the complaint states that “BFIL either was or came to be represented in its offer to purchase the Property by Defendant Nadine Hernandez, a real estate agent employed by or associated with C21MR,” (FAC ¶75) this yields contrary facts that are inappropriate for resolution on a demurrer.

That said, the court agrees with Century 21 Defendants that there are no specific allegations against Nadine Hernandez within this cause of action.

Therefore, the court OVERRULES the demurrer as to the first cause of action for professional negligence as to Defendants C21MR and Marty Hernandez but SUSTAINS the demurrer as to Nadine Hernandez, with leave to amend.

“Real estate brokers representing buyers of residential property are licensed professionals who owe fiduciary duties to their own clients.” (William L. Lyon & Associates, Inc. v. Superior Court (2012) 204 Cal.App.4th 1294, 1312; see Leko v. Cornerstone Bldg. Inspection Service (2001) 86 Cal.App.4th 1109, 1116.) “[A] broker’s fiduciary duty to his client requires the highest good faith and undivided service and loyalty.” (Field v. Century 21 Klowden-Forness Realty (1998) 63 Cal.App.4th 18, 25.)

Plaintiffs assert this cause of action against Century 21 Defendants on a similar allegation above. Additionally, Plaintiffs allege that both NHernandez and C21MR “took the additional step calculated to protect only BFIL to the detriment of Seller and Plaintiffs, consisting of requiring Hill Siblings to sign the Release in order to provide a pretext to Buyer for not releasing his deposit by his subsequent failure to sign it.” (FAC ¶260.)

In its Demurrer, Defendants argue that “Plaintiffs’ conclusory allegations that the Century 21 Defendants created obligations for Plaintiffs that did not exist is not sufficient and is directly contradicted by Plaintiffs’ allegation that Lawyers Title Company required a quit claim deed from Rochelle Bergeron.” (Demurrer p. 8.)

However, as noted by Plaintiffs, the FAC alleges that Century 21 Defendants asked for that requirement or that they failed to point out the inconsistency of the requirement with the agreement. (Opp. p. 9, citing FAC ¶¶141-49.)

Therefore, the court OVERRULES the demurrer as to the second cause of action for breach of fiduciary duty.

“The essential allegations of an action for fraud are a misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage.” (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109.) “Constructive fraud is a unique species of fraud applicable only to a fiduciary or confidential relationship. [A]s a general principle constructive fraud comprises any act, omission or concealment involving a breach of legal or equitable duty, trust or confidence which results in damage to another even though the conduct is not otherwise fraudulent.” (Assilzafeh v. California Federal Bank (2000) 82 Cal.App.4^th 399, 415.)

“Fraud must be pleaded with specificity…[t]o withstand a demurrer, the facts constituting every element of the fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4^th 772, 782 [emphasis in original].) “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 (emphasis in original), quoting Hills Trans. Co. v. Southwest (1968) 266 Cal.App.2d 702, 707.)

The crux of Plaintiffs allegation to support its fraud cause of action is that “[a]t the time that C21MR and NHernandez presented an "in-house" offer for the Property, C21MR and Rodriguez did not alter any of the representations including the representation of loyalty that had been made to Plaintiffs upon the signing of the Listing Agreement.” (FAC ¶269.)

In its Demurrer, Defendants focus on the allegation that Lawyers Title Company required a quit claim deed from Rochelle Bergeron.

However, as this misses the main allegation against Defendants—that they proposed an "in-house offer" from BFIL for $525,000—the court OVERRULES the demurrer.

Defendants have not cited authority to support their position as to this cause of action.

Therefore, the argument is waived, and the demurrer is OVERRULED as to this cause of action.

5. Fifth Cause of Action for Intentional Interference with Contractual Relations

A claim for intentional interference of contractual relationship requires the following elements: (1) plaintiff had a valid and existing contract with a third party; (2) defendant had knowledge of the contract; (3) defendant committed intentional and unjustified acts designed to interfere with or disrupt the contract; (4) actual interference with or disruption of the relationship; and (5) resulting damages. (Davis v. Nadrich (2009) 174 Cal.App.4th 1, 10.)

Plaintiffs allege that the signed quitclaim deed from Rochelle amounts to intentional interference with contractual relations.

6. Sixth Cause of Action for Negligent Interference with Contractual Relations

7. Seventh Cause of Action for Intentional Interference with Prospective Advantage

Under Youst v. Longo (1987) 43 Cal.3d 64, 71, the elements of the tort of intentional interference with prospective economic relationship (IIPER) include the following:

(a) An economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff.

(e) Economic harm to the plaintiff proximately caused by the acts of the defendant.

(f) Conduct that was wrongful by some legal measure other than the fact of interference itself.

“[W]hile intentionally interfering with an existing contract is a wrong in and of itself, intentionally interfering with a plaintiff's prospective economic advantage is not. To establish a claim for interference with prospective economic advantage, therefore, a plaintiff must plead that the defendant engaged in an independently wrongful act. An act is not independently wrongful merely because defendant acted with an improper motive…We conclude, therefore, that an act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1158–59, internal citations omitted.)

Based on the foregoing, the demurrer OVERRULED in part and SUSTAINED in part (only as to first cause of action as to NHerndandez).

Despite overruling most of the demurrer, the court shares the moving defendants’ concern that Plaintiffs use alternative pleadings has created much confusion as to the exact nature of allegations.

[1] The lengthy complaint is in part due to Plaintiffs’ pleading numerous alternate allegations. However, pleading of factually and legally inconsistent theories is allowed because “when a pleader is in doubt about what actually occurred or what can be established by the evidence, the modern practice allows that party to plead in the alternative and make inconsistent allegations.” (Mendoza v. Continental Sales Co. (2006) 140 Ca.App.4th 1395, 1402.)