Case Number: BC540642    Hearing Date: August 11, 2014    Dept: 46
Case Number: BC540642
BRANDON CHASE VS HILTON & HYLAND REAL ESTATE INC ET AL
Filing Date: 03/27/2014
Case Type: Contractual Fraud (General Jurisdiction)

08/11/2014

Hilton & Hyland Real Estate, Inc., Branden Brent Williams and Rayni Lin Romito’s demurrer and motion to strike portions of the Complaint.

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This tentative ruling is posted at 3:00 p.m. on 08-08-2014 and the matter is set for hearing on 08-11-2014 at 8:30 a.m.

If there are no parties other than Plaintiff/Petitioner, then Plaintiff/Petitioner may submit to the tentative without appearance by telephonic notification to the clerk of Dept. 46 between 8:00 a.m. and 4:30 p.m. on a date prior to the hearing or morning prior to the hearing by calling (213) 974-5665, and the court will issue the tentative ruling as the final ruling. If the other parties have appeared in the action, then the parties must first confer and all agree that the tentative ruling will be the final ruling on the matter. If the parties to the matter before the court all agree, a representative of the parties may call the clerk and submit without an appearance, and the court will issue the tentative ruling as the final ruling. If an order is required, it should be lodged directly in Dept. 46 with a copy to adverse/other parties, if any.

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TENTATIVE RULING: Demurrers to the 1st-3rd and 5th-7th Causes of Action are SUSTAINED pursuant to CCP §430.10(e) with 20 day’s leave to amend. The motions to strike are ordered OFF-CALENDAR as moot.

The Complaint has 7 causes of action: (1) Breach of Written Contract; (2) Breach of the Implied Covenant of Good Faith and Fair Dealing; (3) Breach of Fiduciary Duty; (4) Negligence; (5) Constructive Fraud; (6) Fraud and (7) Elder Financial Abuse against Ds Hilton & Hyland Real Estate, Inc. (hereinafter, “H&H”); Branden Brent Williams (hereinafter, “Williams”); Rayni Lin Romito (hereinafter, “Romito”.) There is no demurrer to the 4th cause of action. As to the remaining causes of action, the demurrers are sustained as the pleading is insufficient to state a cause of action.

1. 1st COA: A Breach of Written Contract has not be adequately stated. Demurrer is sustained with leave to amend.

“A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff. (Reichert v. General Ins. Co. (1968) 68 C.2d 822, 830).” Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 C.A.3d 1371, 1388.

Plaintiff has alleged, in relevant part, as follows:

“21. Mr. Chase signed a residential listing agreement with Williams and Romito and their employing broker, Hilton & Hyland, on or about August 29, 2012 (the ‘Listing Agreement’). A true and correct copy of the Listing Agreement is attached as Exhibit ‘A’ and incorporated herein by this reference. The Listing Agreement was for a three month period, with the asking price set at $6.5 million…

40. The Listing Agreement imposed on Hilton & Hyland as broker, and upon Williams and Romito as licensed sales agents, the obligations to exercise reasonable care, skill, knowledge and prudence in the performance of their duties under that Agreement.

41. Hilton & Hyland and Williams and Romito materially breached their obligations under the Listing Agreement by, among other things: failing to make an adequate and competent investigation of the actual fair market value of the Chase home; advising Mr. Chase not to use the MLS listing service; failing to competently and prudently evaluate and apply the available information, including an entirely comparable sale of a neighboring property for more than $8.5 million, combined with the fact that bona fide offers had been received at or near the already unreasonably reduced $6.5 million asking price, in giving their supposedly expert advice to Mr. Chase relating to the fair market value of the Chase home; advising Mr. Chase to accept the price of $5.5 million and then to reduce that price by $100,000 to complete that sale, advising him without proper or competent analysis that he was unlikely ever to obtain a higher price; failing to properly market the Chase home through available multiple listing service value-determining mechanisms, and instead, persuading Mr. Chase to forego that customary value-determining mechanism; and failing to fully, fairly and competently advise Mr. Chase that it was highlypossible, if not likely, that a higher price for the Chase home could be obtained by further marketing efforts.

42. Mr. Chase has performed all conditions, covenants, and promises required on his part to be performed in accordance with the terms and conditions of the Listing agreement, except to the extent that such performance has been prevented or excused by the wrongful acts of Hilton & Hyland and Williams and Romito.

43. Mr. Chase would not have accepted the $5.5 million offer for the Chase home, and would not have then reduced that price to $5.4 million, but for the advice and urging of Williams and Romito that he do so, and their omission to advise him that he had a reasonable prospect toachieve a higher price by further marketing efforts.

44. As a direct, proximate and foreseeable consequence of the breach of contract by Hilton & Hyland and Williams and Romito, Mr. Chase has suffered actual damages…” (Complaint, ¶¶ 21 and 40-44).

While a breach of contract action can be based upon unjustified failure to perform a material promise or covenant in the agreement (e.g. Sterling v. Gregory (1906) 149 Cal. 117), a review of the Listing Agreement indicates that the defendants did not expressly agree to “exercise reasonable care, skill, knowledge and prudence in the performance of their duties under that Agreement;” rather, paragraph 8 of the listing agreement indicates that broker defendants agreed to “exercise reasonable effort and due diligence to achieve the purposes of the agreement.” The parties’ “Residential Listing Agreement” (Id., Exhibit “A”) reflects that the purpose of the agreement was to list the subject property at $6.5 million and that the property was to be sold off market, with no MLS and no sign placed on the property. No advertising or marketing materials were to be distributed to the public or brokers without the sellers’ prior written approval. Paragraph 8 of Exhibit “A”, entitled BROKER’S AND SELLER’S DUTIES, states that the “[s]eller is responsible for determining at what price to list and sell the Property.”

The court is not aware of any authority that implies an unstated covenant or contractual duty claimed in the complaint.

The allegations sound in professional negligence, not breach of contract. Defendant point out, “[t]hat the demurrer does not challenge the negligence cause of action has nothing to do with the sufficiency of Plaintiff’s contract claims. As to the breach of contract action, the conduct of the broker can only be viewed in light of the express terms of the written listing agreement. General professional negligence, on the other hand, may consider other areas…” (Reply, 4:12-15).

2. 2nd COA: A Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing has not be adequately stated. Demurrer is sustained with leave to amend.

’”Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” (Rest.2d Contracts, § 205.)…’” Carma Developers (Cal), Inc. v. Marathon Development California, Inc. (1992) 2 C.4th 342, 371.

However, “[f]f the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 C.A.3d 1371

P’s 2nd COA is nothing more than a restatement of his failed 1st COA.

3. 3rd COA: A Cause of Action for Breach of Fiduciary Duty has not be adequately stated. Demurrer is sustained with leave to amend.

“The elements of a cause of action for breach of fiduciary duty are: 1) the existence of a fiduciary duty; 2) a breach of the fiduciary duty; and 3) resulting damage. (City of Atascadero v. Merill, Lynch, Pierce, Fenner & Smith, Inc. (1999) 68 C.A.4th 445, 483).” Pellegrini v. Weiss (2008) 165 C.A.4th 515, 524.

”’Real estate brokers are subject to two sets of duties: those imposed by regulatory statutes, and those arising from the general law of agency. [Citation.]’ (Carleton v. Tortosa [(1993)] 14 C.A.4th [745,] at p. 755). If a statutory duty is not alleged, then a plaintiff may seek to derive the defendant’s duty from the general law of agency, i.e., from the agreement between the principal and agent. ‘”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.” [Citations.]’ (Carleton v. Tortosa, supra, 14 C.A.4th at p. 755).” Padgett v. Phariss (1997) 54 C.A.4th 1270, 1279-1280.

Plaintiff has alleged that Defendants breached their fiduciary duty by “urg[ing] and persuad[ing] Mr. Chase to accept the offered price of $5.5 million” and “by urging and persuading Mr. Chase to reduce the selling price by $100,000, to $5.4 million.” (Complaint, ¶51). Neither of these actions breached any duty owed to Plaintiff at the time the Residential Listing Agreement was signed. By the Listing Agreement contract, the parties limited the extent of the duties owed by Defendants to Plaintiff with respect to the determination as to the listing and sale price. Whether or not Defendants’ conduct breached any duty cannot be determined by hindsight. As Plaintiff has not alleged that the $7.7 million buyer was known to Defendants at the time he agreed to accept the $5.4 million purchase price, Plaintiffs have not adequately plead a breach of fiduciary duty.

4. 5th & 6th COAs: Cause of Action for Constructive Fraud and Fraud (Respectively) have not been adequately stated. Therefore the demurrer is sustained with leave to amend.

“The elements of actual fraud, whether as the basis of the remedy in contract or tort, have been stated as follows: There must be (1) a false representation or concealment of a material fact (or, in some cases, an opinion) susceptible of knowledge, (2) made with knowledge of its falsity or without sufficient knowledge on the subject to warrant a representation, (3) with the intent to induce the person to whom it is made to act upon it; and this person must (4) act in reliance upon the representation (5) to his or her damage.” 1 Witkin, Summary 10th (2005) Contracts, § 286, p. 315 (emphasis theirs).

“’”Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.”’ (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 C.A.3d 104, 109; Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 C.3d 197, 216-217; Stansfield v. Starkey (1990) 220 C.A.3d 59, 73).” Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 C.A.4th 153, 157.

“The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Archuleta v. Grand Lodge etc. of Machinists (1968) 262 C.A.2d 202, 208–209; Gautier v. General Telephone Co. (1965) 234 C.A.2d 302, 308; Mason v. Drug, Inc. (1939) 31 C.A.2d 697, 703; Sanders v. Ford Motor Co. (1979) 96 C.A.3d Supp. 43, 46; see Grossman & Van Alstyne, California Practice (2d ed. 1976) § 984, pp. 111–114.).” Id.

Plaintiff has not pled these causes of action with the required specificity. There is no allegation that the home could have sold at the time it did for more than the sales price, that there was a buyer willing to pay more than the sales price known to defendants who concealed same from Plaintiff or other necessary detailed facts. The allegations are conclusory and general, and as such the demurrer must be sustained.

5. 7th COA: A Cause of Action for Elder Financial Abuse has not been adequately stated; as such the demurrer is sustained with leave to amend.

Welfare & Institutions Code § 15610.30 states, in pertinent part, as follows:

“(a) ‘Financial abuse’ of an elder or dependent adult occurs when a
person or entity does any of the following:
(1) Takes, secretes, appropriates, obtains, or retains real or personal
property of an elder or dependent adult for a wrongful use or with
intent to defraud, or both.
(2) Assists in taking, secreting, appropriating, obtaining, or retaining
real or personal property of an elder or dependent adult for a wrongful
use or with intent to defraud, or both.
(3) Takes, secretes, appropriates, obtains, or retains, or assists in
taking, secreting, appropriating, obtaining, or retaining, real or personal
property of an elder or dependent adult by undue influence, as defined
in Section 15610.70.
(b) A person or entity shall be deemed to have taken, secreted,
appropriated, obtained, or retained property for a wrongful use if, among
other things, the person or entity takes, secretes, appropriates, obtains,
or retains the property and the person or entity knew or should have
known that this conduct is likely to be harmful to the elder or dependent
adult…”

“The elements of a cause of action under the Elder Abuse and Dependent Adults Act, section 15600 et seq. (hereinafter the Elder Abuse Act) are statutory, and reflect the Legislature’s intent to provide enhanced remedies to encourage private, civil enforcement of laws against elder abuse and neglect.” Intrieri v. Superior Court (2004) 117 C.A.4th 72, 82.

“To obtain enhanced remedies under the Elder Abuse Act, ‘a plaintiff must demonstrate by clear and convincing evidence that defendant is guilty of something more than mere negligence; he or she must show reckless, oppressive, fraudulent, or malicious conduct.’ (Delaney v. Baker (1999) 20 C.4th 23, 31).” Id. at 83. Plaintiff has not adequately pled this cause of action with other than general conclusions which are insufficient.