CIV532571 GARY CECCATO, ET AL. VS. 1893 WOODLAND EPA LLC, ET AL.

GARY CECCATO PETER H. BONIS

1893 WOODLAND EPA LLC DAVID J. LONICH

CROSS—DEFENDANTS PENINSULA GOLD, INC. AND MANSA CONSTRUCTION CORPORATION’S DEMURRER TO THIRD AMENDED CROSS-COMPLAINT OF 1893 WOODLAND EPA LLC

TENTATIVE RULING:

Demurrer to the fifth cause of action (breach of fiduciary duty) is overruled.

A. The Pleading Sufficiently Alleges a Fiduciary Relationship

Brokers argue that an agency relationship does not exist unless reflected in a written agreement. Brokers rely on Civil Code section 1624(a)(4). The express language of section 1624(a)(4) describes contracts “for compensation or a commission.” When the claim against a real estate agent is unrelated to a commission, Section 1624 does not bar the claim despite that the agency agreement was oral. (Steiner v. Rowley (1950) 35 Cal. 2d 713, 717 (sellers sought to recover broker’s secret profit).) The fifth cause of action for breach of fiduciary duty does not seek recovery of any commission. Section 1624 is inapplicable.

Brokers argue that the pleading fails to allege that Brokers accepted the agency relationship. The pleading does not allege acceptance explicitly. However, it alleges that Brokers “held themselves out to 1893 Woodland” as its agents (TACC para. 20), Brokers received commission from the sale of 1893 Woodland’s interest (Id. para. 36), and that Brokers communicated with 1893 Woodland “throughout the sales process” (Id. para. 69.) A demurrer admits the truth of all properly pleaded facts, as well as “all reasonable inferences which can be drawn therefrom.” (Nieto v. City of Los Angeles (1982) 138 Cal. App. 3d 464, 467.) If the above allegations are proven, one reasonable inference is that Brokers accepted the agency relationship.

The Demurrer does not establish that the cross-complaint fails to allege an agency relationship.

B. The Pleading Does not Disclose a Statute of Limitations Defense.

The limitations period for breach of fiduciary duty depends on the nature of the breach. 1893 Woodland argues for a three-year limitations period based on the fraudulent nature of the claim, which alleges that Brokers concealed material information from 1893 Woodland in violation of Brokers’ fiduciary duties. Brokers’ Reply acknowledges the fraud theory, but argues that the pleading fails to meet the heightened pleading standard for fraud. Paragraph 71 alleges specific facts that Brokers knew concerning Ceccato’s and Montgomery’s fraudulent acts and plans concerning 1893 Woodland’s interest in the property. Paragraph 72 alleges that Brokers, as fiduciaries, concealed those facts from 1893 Woodland. The allegations sufficiently specific to meet the requirements of pleading fraud with specificity.

The pleading sufficiently alleges fraudulent acts of Brokers. Therefore, the three-year (fraud) statute of limitations applies. Brokers contend that the cause of action accrued in September 2014. Because the cross-complaint, filed in May 2017, the demurrer fails to establish that the cross-complaint discloses a statute of limitations defense.

Cross-defendants shall file and serve their respective answers no later than March 16, 2108.