2017-00217521-CU-FR

Kylee Yoder vs. Mark E. Haynes

Nature of Proceeding: Hearing on Demurrer to the 1st Amended Complaint

Filed By: Lewis, Erick D.

Defendants Mark E. Haynes and Folsom Hall Investors, Inc. d/b/a/Keller Williams Realty – Folsom’s Demurrer to the First Amended Complaint is ruled on as follows:

Plaintiff alleges claims against her real estate agent and broker as well as the seller arising out of her purchase of a home that she alleges had many undisclosed defects. Plaintiff sues both the seller of the house and moving defendants (agent/broker). She sues moving defendants for fraud, intentional nondisclosure, constructive fraud arising from a fiduciary duty, and breach of contract.

Defendants’ demurrer challenges the 2nd cause of action for fraud, the 5th cause of action for Intentional Non-disclosure, the 6th cause of action for Constructive Fraud, and the 7th cause of action for Breach of Contract.

On November 17, 2017, the court sustained the demurrer to the Complaint as to the causes of action for Fraud, Intentional Non-disclosure and Constructive Fraud.

The court ruled that plaintiff had not alleged the elements of fraud with respect to the statements plaintiff relied on in her opposition to support the fraud claims: (1)”you have spent all the cash that you need to spend already”; (2) “the energy efficient loan is part of the loan process but an easy add on”; (3) the seller’s counter-offer was “pretty fair” and (4) “the seller is fixing a lot of the items on the list”
and had “fixed some of it already.”

The FAC relies only on the first three alleged misreprsentations, having removed the representation that “the seller is fixing a lot of the items on the list” and had “fixed some of it already.”

When examining the sufficiency of a complaint against a general demurrer, the Court treats as true only the material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125. Further any cause of action for fraud or deceit must be alleged in full, factually and specifically. Committee on Children’s Television, Inc. v. General Foods Corp. (”Committee on Children’s Television, Inc.”) (1983) 35 Cal. 3d 197, 216.

2nd cause of action Fraud: Overruled.

The Court finds that the FAC has adequately alleged the elements of fraud, i.e. that the statements were false when made, and that defendants knew that the statements were false when made in order to induce plaintiff into consummating the sale of the property. Whether in fact the statements were knowingly false when made is a question of fact that cannot be resolved on a demurrer. Moreover, the alleged statements are not merely statements of “opinion” as argued by defendants. Plaintiff is

not required to plead additional evidentiary facts to support the element of intent to deceive. Her allegations support the inference that defendants’ wish for the sale to be consummated was the reason why the material facts were misrepresented to plaintiff’s detriment.

The elements of fraud are (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages. West v. JPMorgan Chase Bank, N.A.
(2013) 214 Cal.App.4th 780, 792, (quoting Lazar v. Superior Court (1996) 12 Cal.4th 631, 638. When pleading a claim for fraud, each and every element must be alleged, “and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” Stansfield v Starkey (1990) 220 Cal.App.3d 59, 73; Cadlo v Owens-Illinois, lnc.

(2004) 125 Cal.App.4th 513,519 (stating that “[e]ach element in a cause of action for fraud or negligent misrepresentation must be factually and specifically alleged”). To satisfy the particularity requirement, the plaintiff must plead facts which “show how, when, where, to whom, and by what means the

representations were tendered.” Stansfield, supra, 220 Cal.App.3d at p. 74; see also Lazar v Superior Court (1996) 14 Cal.4th 631, 645. Also, when asserting a fraud claim against an entity, plaintiff must “‘allege the names of the persons who made the allegedly fraudulent misrepresentation, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.'” Lazar, supra, 12 Cal.4th at p. 645 (quoting Tarmann v State Farm Mut Auto Ins Co (1991) 2 Cal.App.4th 153, 157)

5th cause of action for Intentional Non-Disclosure and 6th cause of action for Constructive Fraud: Overruled.

The elements of constructive fraud are (1) fiduciary relationship (2) nondisclosure (3) intent to deceive (3) reliance, and (4) resulting injury. See, Yomtan v. Equifax, Inc. (1980) 111 Cal.App.3d 498.

Like an action for actual fraud, constructive fraud must be pleaded with specificity. Schauer v Mandarin Gems of Calif. (2005) 125 Cal.App.4th 949, 961. Constructive fraud requires the existence of a fiduciary relationship and does not require actual fraud but may consist of non-disclosure. Intentional non-disclosure also requires a fiduciary relationship. Moving defendants do not challenge the allegation of fiduciary duty, but contend, as with the fraud cause of action, plaintiff has failed to allege specific facts that were not disclosed to her with the intent that she go forward with the purchase of the house. The Court finds that the amendments made to these causes of action in the FAC have cured the defects that the Court found in the Complaint.

7th cause of action Breach of Contract: See ruling on the motion to strike.

Answer to be filed on or before March 26, 2018.