2012-00133220-CU-BC

Felipe Monroy vs. Verdeo Capital Group Inc

Nature of Proceeding:    Hearing on Demurrer (County of Sacramento)

Filed By:   O’Dea, Mark P.

***  Judge Cadei discloses that his wife, Toni J. Moore, is the Executive Director
of the First 5 Sacramento Commission, an entity which is part of the County of
Sacramento.  First 5 California and 58 First 5 County Commissions were created
by statewide voter initiative passed in 1998.  First 5 is separately funded out of
special tobacco tax proceeds and is directed to support programs for children.
As such the Commission is not dependent on the general funds of Sacramento
County for its operations.  The Board of Supervisors of Sacramento County
does review and approve its yearly budgets and long-term plans.  ***

Defendants County of Sacramento and the Sacramento Regional County Sanitation
District’s (collectively “County”) demurrer to complaint is SUSTAINED with leave to
amend, as follows.

Although the notice of demurrer provided notice of the Court’s tentative ruling system
as required by Local Rule 1.06(D), the notice does not comply with that rule.  Moving
counsel is directed to review the Local Rules, effective 1/1/2013.

This action arises out of plaintiffs’ January 2010 purchase of a single family home in
Carmichael which was advertised as a remodeled property.  Plaintiffs allege that there
are numerous defects in the home which were not disclosed or discovered and which
have caused plaintiffs to incur damages.  With respect to the County, it is alleged that
the subject property was not connected to the County’s sewer system and yet the
County collected service fees as if it were.

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County now demurs to the 6   and 7   causes of action (“COA”) for “Violation of Statute”
and “Negligence,” respectively, on the grounds that each COA fails to state facts
sufficient to constitute a valid COA against a public entity.  First, County argues that
plaintiffs failed to plead facts which establish compliance with the Government Claims
Act (“GCA”).  Second, County contends the 6th COA fails to identify any statute which
gives rise to any liability under the facts pled in the complaint.  While Government
Code §55082 is cited in Paragraph 71 of the complaint, this statute does not provide
that a public entity is liable for fees paid for sewer service which was not actually
provided; instead, §55082 merely authorizes agreements for the joint construction and
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maintenance of sewer systems.  Third, County insists the 7   COA for “Negligence” is
barred by the provisions of Government Code §815(a) and the complaint’s reference
to §835, relating to dangerous conditions of public property, is inapplicable given the
facts alleged in the complaint.

The opposition concedes the complaint fails to plead facts showing compliance with
the GCA but requests leave to amend to allege the requisite facts.  However, plaintiffs
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contend the demurrer to the 6   COA should be overruled even though the sole statute
cited is inapplicable.  The opposition also asserts that the complaint plead facts
sufficient to support liability against County on a theory of dangerous condition of
public property.

At the outset, the Court finds that plaintiffs’ concession of failing to plead compliance
with the GCA mandates sustaining the present demurrer as to both the 6th  and 7th
COA.

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The demurrer to the 6   COA must also be sustained because it fails to specify any
statute on which County may be held liable.  Given the provisions of Government
Code §815, all tort claims against a public entity are necessarily based on statute and
any plaintiff asserting tort liability against a public entity must explicitly identify the
statute on which liability is claimed to be based. (Searcy v. Hemet Unified School
District (1986) 177 Cal.App.3d 792, 802.)  Plaintiffs here concede the sole statute (i.e.,
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Gov. Code §55802) identified in the 6   COA is inapplicable and thus, the demurrer to
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the 6   COA is sustained.

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The demurrer to the 7   COA is sustained because a common law negligence claim
cannot be asserted against a public entity (Gov. Code §815) and to the extent plaintiffs
are attempting to assert a claim for dangerous condition of public property, this COA
remains deficient.  In particular, the Court notes that all statutory claims must be
pleaded with factual particularity, meaning that every fact essential to the existence of
statutory liability must be pled. (See, e.g., Lopez v. Southern Calif. Rapid Transit
District (1985) 40 Cal.3d 780, 795.)  Here, plaintiffs have failed to do this and have
failed to identify in this COA any dangerous condition of public property.  Instead, the               opposition appears to suggest that the absence of a connection between plaintiffs’
private residence and the municipal sewer system constitutes a “dangerous condition”
on which liability may be based.  However, even if the absence of a sewer connection
to plaintiffs’ home could be fairly characterized as a condition of public property rather
than private property, this condition does not under the current allegations appear to
meet Government Code §830(a)’s definition of “dangerous.”  For these reasons, the
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Court sustains the demurrer to the 7   COA as well.

Since this is the first challenge to the complaint, leave to amend is granted.  Plaintiffs
may file and serve an amended complaint no later than 12/16/2013.  Although not
required by court rule or statute, plaintiffs are directed to present a copy of this
order when the amended complaint is presented for filing.

County to respond within 10 days if the amended complaint is personally served, 15
days if served by mail.  If the response is either a demurrer or motion to strike, a copy
of the new amended complaint must be included with the moving papers.

Additionally, County shall contact any other defendant who has appeared in this action
and if any intends also to demur or move to strike, the parties shall coordinate a single
hearing date for all demurrers and/or motions to strike.

This minute order is effective immediately.  No formal order or other notice is required.
(Code Civ. Proc. §1019.5; CRC Rule 3.1312.)

Item   4     2012-00133220-CU-BC

Felipe Monroy vs. Verdeo Capital Group Inc

Nature of Proceeding:      Hearing on Demurrer (Keller Williams)

Filed By:   Pedersen, Adam L.

***  Judge Cadei discloses that his wife, Toni J. Moore, is the Executive Director
of the First 5 Sacramento Commission, an entity which is part of the County of
Sacramento.  First 5 California and 58 First 5 County Commissions were created
by statewide voter initiative passed in 1998.  First 5 is separately funded out of
special tobacco tax proceeds and is directed to support programs for children.
As such the Commission is not dependent on the general funds of Sacramento
County for its operations.  The Board of Supervisors of Sacramento County
does review and approve its yearly budgets and long-term plans.  ***

Defendants Keller Williams Realty and Shawna Bell’s (collectively “KWR”) demurrer to
complaint is OVERRULED, as follows.

Although the notice of demurrer provided notice of the Court’s tentative ruling system
as required by Local Rule 1.06(D), the notice does not comply with that rule.  Moving
counsel is directed to review the Local Rules, effective 1/1/2013.
KWR now demurs to the 3   and 4   causes of action (“COA”) for negligence and
breach of fiduciary duty on the grounds that each COA fails to state sufficient facts and
is uncertain.  Specifically, KWR argues that both COA fail because “both rely on the
alleged breach of the same nonexistent duty.” (Mov. Memo. P&A, p.6:11-12.)  KWR
maintains that under Civil Code §2079 it was obligated merely to conduct a competent
visual inspection of the property and to disclose to plaintiffs all known facts which
materially affect its desirability but that there was no duty to inspect inaccessible areas
or to search public records relating to the property. (Id., at p.6:23-p.7:1.)  Citing
Padgett v. Phariss (1997) 54 Cal.App.4th 1270 and Wilson v. Century 21 Great
Western Realty (1993) 15 Cal.App.4th 298, KWR further asserts that its fiduciary
obligations were limited by §2079 since the complaint fails to allege facts showing
KWR had knowledge of any condition which justified a further inspection or
investigation of the property. (Id., at p.7:2-13.)  In particular, KWR maintains that the
fact the property was not connected to the municipal sewer system was clearly not
discoverable upon visual inspection, was not noted in any home inspection report, and
was inconsistent with the prior owners’ (and plaintiffs’ own) payment of sewer fees
prior to (and after) the 2010 sale. (Id., at p.7:13-16.)  Similarly, KWR contends that the
“defect in ownership” alleged by plaintiffs is misguided since the complaint fails to
allege facts which give rise to a duty to ferret out either the “true ownership” of the
property or the seller’s ability to transfer title to plaintiffs. (Id., at p.7:17-26.)  With
respect to the ownership issue, KWR adds that plaintiffs have not even alleged any
damage caused by the “defect in ownership” or that their title to the property is in any
way clouded. (Id., at p.8:3-5.)

The opposition claims that both a pest inspection and a home inspection were
conducted in late January 2010 and these inspections revealed numerous issues
which were then reported to KWR but the latter then failed either to counsel plaintiffs
about the findings or to recommend a more thorough inspection prior to the close of
escrow. (Oppos., p.1:25-p.2:9.)  Plaintiffs also insist KWR completed a Visual
Inspection Disclosure until after escrow closed and KWR did not even address any of
the issues revealed by the January 2010 inspections. (Id., at p.2:10-17.)  The
opposition contends KWR’s reliance on Civil Code §2079 is misplaced because this
statute, by its own terms, merely limits a seller’s agent’s duty to a buyer whereas KWR
was plaintiffs’ own broker/agent, which gives rise to a fiduciary relationship with far
greater obligations. (Id., at p.5:3-14.)  Moreover, plaintiffs assert that neither the
Padgett nor the Wilson decision cited by KWR apply here because the facts of both of
these case are distinguishable in that the defects at issue could not have been
discovered by any visual inspection and there were no other facts were put the real
estate agent on notice of the need to investigate further. (Id., at p.5:15-p.6:2.)  On the
other hand, plaintiffs characterize this case as being about KWR’s failure to investigate
the property’s “true ownership” and its true condition; to timely obtain a completed
disclosure statement from the seller’s agent; and to timely and carefully review the
inspection reports and seller’s disclosures before providing them to plaintiffs. (Id., at
p.6:3-13.)  With respect to the ownership issue, the opposition argues that KWR
should have been alerted to the need to investigate further because there were
discrepancies between the preliminary title report and other disclosure documents. (Id
., at p.6:15-24.)  Accordingly, plaintiffs rely on Field v. Century 21 Klowden-Forness
Realty (1998) 63 Cal.App.4th 18 which held inter alia that the fiduciary duty a real
estate broker owes to its own clients is substantially more broad than the limited visual
inspection duty imposed by §2079 on a broker selling to a buyer with whom there is no
contractual or fiduciary relationship and may include a duty to inspect public records or
permits concerning title or use of the property, a duty that is expressly excluded from  §2079. (Field, at 25-26.)  Accordingly, the opposition insists this demurrer be
overruled.

KWR’s reply reiterates that its duty was limited to a competent visual inspection and
the disclosure of all material facts known and claims the complaint fails to identify a
single defect which was readily visible upon inspection. (Reply, p.2:4-14.)  KWR further
asserts that plaintiffs have failed to allege KWR was aware of any facts or defects
which would have required KWR to go beyond the limited duty set forth in Civil Code
§2079. (Id., at p.2:15-24.)

At the outset, the Court notes that Civil Code §2079 is by its own terms limited to the
duty a seller’s broker owes to a buyer.  As such, its provisions do not appear
applicable to the present case since KWR is here alleged to be plaintiff-buyers’ own
broker/agent.  To be sure, the Field v. Century 21 Klowden-Forness Realty decision
cited by plaintiff clearly states that a real estate broker’s duty to its own clients is
substantially more broad than the limited duty set out in §2079. (Field, at 25-26.)  For
this reason alone, the demurrer is overruled.

Moreover, even if KWR is correct that under Padgett v. Phariss its duty to plaintiffs to
inspect and/or investigate the property is limited to a competent visual inspection of the
areas reasonably accessible in the absence of facts alleged in the complaint which
would support a greater duty, this demurrer must be overruled to the extent that the
complaint currently includes allegations which implicate far more than the limited duty
of a visual inspection.  For example, Paragraph 54 of the complaint actually alleges
inter alia that KWR “failed to timely obtain a completed disclosure statement from
Defendants’ agent, and failed to review the reports of the inspection company, BPG
and disclosures of seller Defendants in a careful manner before providing them to
PLAINTIFFS” and that KWR “further failed to ensure that all defects noted in the WIN
report were addressed.”  These allegations against plaintiffs’ own broker/agent are
sufficient to establish the breach of a duty independent of any duty which may be
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limited by the provisions of Civil Code §2079 and thus, the demurrer to the 3   COA for
negligence must be overruled.

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Similarly, in the 4   COA for breach of fiduciary duty, plaintiffs allege that a fiduciary
obligation to act in their best interests, “to obtain any and all disclosures regarding the
property, to review said disclosures with PLAINTIFFS,…, to review the actual
conditions of the property stated in reports provided and to disclose and discuss with
PLAINTIFFS the results of such an inquiry as to the physical condition of the
property.” (Compl., ¶59.)  Plaintiffs then plead in Paragraph 60 that “Defendants
breached their fiduciary duty by failing to obtain timely disclosures from the
Defendants’ selling agents, failing to review said disclosures with PLAINTIFFS, or
otherwise properly advising PLAINTIFFS about the property’s conditions and that
certain additional inspections should be completed in order to preserve the integrity of
the property…”  The Court holds that these allegations relating to KWR’s fiduciary
obligations to plaintiffs separate and apart from the limited duty referenced in Civil
Code §2079 are sufficient to support the fiduciary duty claim and therefore, the
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demurrer to the 4   COA must also be overruled.

Demurring defendants Keller Williams Realty and Shawna Bell to serve and file their
answer to complaint within 15 days.

This minute order is effective immediately.