Case Name: Hubert G. Hoenck v. Kristina Hoenck, et al.

Case No.: 1-13-CV-245469

Defendants Karen Nelson (“Nelson”), Katrina Hernandez (“Hernandez”) and Intero Real Estate Services, Inc. (“Intero”) demur to the third amended complaint (“TAC”) filed by plaintiff Hubert G. Hoenck (“Plaintiff”).  Defendant Richard Freeman (“Freedman”) joins Nelson, Hernandez and Intero’s demurrer.

On February 25, 2014, Plaintiff filed the TAC asserting claims for (1) quiet title, (2) unjust enrichment and restitution, (3) conversion and (4) negligence.  According to the allegations contained therein, Plaintiff owns a mobile home on real property located at 9480 Murray Avenue in Gilroy (the “Property”), which was formerly owned by his daughter, defendant Kristina Hoenck (“Kristina”).  (TAC at ¶¶ 2-3.)  On May 11, 2011, Kristina sold the Property and the Victorian home built thereon to defendants Bahman Mehdizadeh and Monica Mehdizadeh (the “Medizadehs”).  (Id. at ¶ 3.)  Plaintiff asserts that he did not sign any agreement to sell the mobile home as part of the sale of the Property and seeks its removal.  (Id. at ¶¶11-12.)  Freedman, Hernandez and Nelsen, all employed by Intero, were involved with the sale of the Property as the listing and buyers’ agents.  (Id. at ¶¶5-6.)

On March 18, 2014, Hernandez, Nelsen and Intero filed the demurrer to fourth cause of action in the TAC on the ground of failure to state facts sufficient to constitute a cause of action.  (See Code Civ. Proc., § 430.10, subd. (e).)

Plaintiff’s fourth cause of action alleges that Freedman, Hernandez, Nelsen and Intero (collectively, “Defendants”) owed him a duty of care as real estate agents/brokers and breached the duty by “participating in the unlawful sale to Defendants Mehdizadeh of the Mobile Home on the Subject Property.”  (TAC at ¶ 26.)  More specifically, Plaintiff alleges that Defendants acted negligently by “failing to determine legal ownership of the mobile prior to initiating acquisition of the mobile home on behalf of [the Mehdizadehs] within the real estate property sales transaction.”  (Id. at ¶ 27.)  The defendants assert that no claim for negligence has or can be stated because none of them owed Plaintiff a duty of care as a matter of law.  They insist this is the case because Plaintiff has not identified any regulatory statute which imposes a duty on them and he cannot allege that they owed him a duty based on agency principles.

“California cases recognize a fundamental duty on the part of a realtor to deal honestly and fairly with all parties in the same transaction. [Citations.]”  (Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 25, 42.)  “There  is little question that a real estate broker owes a duty of care to third persons on the transaction, where the broker does not have privity with, or fiduciary duties to, such third person.”  (Id., citing 2 Miller & Starr, Cal. Real Estate (2d ed. 1989) § 3.27, p. 157.)  The extent of this duty is determined by “weighing a number of factors, including the extent the transaction was intended to affect the third party, the foreseeability of harm, the degree of certainty the third party suffered injury, the moral blame attached to the broker’s conduct, and the policy of preventing future harm. [Citations.]”  (Id.)  Whether a legal duty exists is a question of law for the court.  (Id. at 41.)

Balancing the foregoing factors, the Court concludes that Defendants did not owe a duty of care to Plaintiff as a matter of law. Critically, there are no allegations that Defendants had any reason to suspect that Plaintiff was the owner, rather than a mere tenant, of the mobile home located on his daughter’s property, and thus no reason to investigate the mobile home’s ownership.  This lack of knowledge renders Krug, supra, the case chiefly relied on by Plaintiff in his opposition, factually distinguishable from the circumstances at bar.

Moreover, requiring real estate agents such as Defendants to affirmatively investigate the ownership of personal property, or else face liability from unknown third parties, would be a substantial burden and would extend the agent’s liability far beyond any culpability they may have.

Consequently, Defendants’ demurrer to the fourth cause of action on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.