Case Name: ROIC STV, LLC v. Armando Siqueiros, et al.

Case No.: 1-14-CV-263201

Motion by Cross-Defendant ROIC STV, LLC, for Summary Judgment

On April 3, 2014, plaintiff ROIC STV, LLC (“ROIC”) filed a complaint for unlawful detainer against defendant Armando Siqueiros (“Siqueiros”), seeking to recover possession of premises located at 7112 Santa Teresa Boulevard in San Jose pursuant to the lease agreement but commonly known as 7114 Santa Teresa Boulevard in San Jose (“Property”).

On May 2, 2014, ROIC filed a first amended complaint (“FAC”) against Siquerios, asserting causes of action for breach of contract and common counts.

On June 23, 2014, Siqueiros filed an answer to the FAC and also filed a cross-complaint against ROIC, asserting causes of action for rescission and fraud. The cross-complaint alleges that Siqueiros and ROIC entered into a written lease agreement for the Property on or about November 12, 2012. (Cross-Complaint, ¶7.) The Property is part of the Santa Teresa Shopping Center. (Id.) The lease provided for a three-year term with an option to extend for one additional three-year term. (Cross-Complaint, ¶8.) The parties agreed on minimum annual rent of $33,600, or $2,800 per month, for the first two years of the lease. (Id.) Pursuant to section 5.11, the lease is triple-net, meaning that Siqueiros is responsible for a pro-rata share of all taxes, impositions, insurance premiums, operating charges, maintenance charges, security costs, common area expenses, and other charges as additional rent. (Cross-Complaint, ¶9.) Siqueiros had been a tenant at the shopping center for a number of years. (Cross-Complaint, ¶10.)

Prior to entering into the lease, ROIC hired a commercial brokerage firm named PrimeCommercial Incorporated (“PCI”) to negotiate the lease on ROIC’s behalf. (Cross-Complaint, ¶11.) Gregory Pache of PCI was an authorized agent of ROIC in negotiating a lease with Siqueiros. (Id.) During October 2012, Pache fraudulently represented to Siqueiros that the triple-net charges for the lease would be $0.55 per square foot for the initial lease term when, in fact, the triple-net charges for the lease would be $0.87 per square foot for the initial lease term. (Cross-Complaint, ¶¶12 – 13.) Siqueiros would not have entered into the lease had he known the truth. (Cross-Complaint, ¶14.) Siqueiros only discovered the triple-net charges were $0.87 per square foot after executing the lease and after ROIC began billing at the rate of $0.87 per square foot. (Cross-Complaint, ¶15.) As a result of the fraudulent misrepresentation, Siqueiros was forced to vacate the Property. (Cross-Complaint, ¶17.)

On July 24, 2014, ROIC filed an answer to Siqueiros’s cross-complaint.

On November 26, 2014, ROIC filed the motion now before the court: a motion for summary judgment of Siqueiros’s cross-complaint.

DISCUSSION

In opposition to the motion for summary judgment, Siqueiros requests judicial notice of the cross-complaint. Evidence Code section 452, subdivision (d) states that the court may take judicial notice of “[r]ecords of any court of this state.” This section of the statute has been interpreted to mean that the trial court may take judicial notice of the existence of the court’s own records. Evidence Code section 452 and 453 permit the trial court to “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.” (People v. Woodell (1998) 17 Cal.4th 448, 455.) Accordingly, Siqueiros’s request for judicial notice is GRANTED, but only insofar as the court takes judicial notice of the existence of the cross-complaint, not necessarily the truth of any matters asserted therein.

“Rescission is not a cause of action; it is a remedy.” (Nakash v. Superior Court (1987) 196 Cal.App.3d 59, 70.) “The traditional equitable action to have the rescission of a contract adjudged was recognized in former Civil Code 3406. [However,] the equitable action was abolished in 1961, and the remedy is now a legal action for restitution based on a completed unilateral rescission.” (4 Witkin, California Procedure (4th ed. 1997) §502, p. 590 – 591.) “The following need to be alleged in an action for restitution after completed unilateral rescission: (1) the contract or other contractual instrument; (2) the grounds for rescission; (3) if the ground is breach of contract, plaintiff’s own performance.” (4 Witkin, California Procedure (4th ed. 1997) §503, p. 591; emphasis added; see also Runyan v. Pacific Air Industries, Inc. (1970) 2 Cal.3d 304.) Here, the alleged ground for rescission is fraud which, under Civil Code section 1689, subdivision (b)(1), is one of the enumerated grounds for rescission.

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638; see also CACI, No. 1900.)

In moving for summary judgment, ROIC contends, contrary to the allegations of the cross-complaint, that Pache was not ROIC’s agent, but rather Pache was acting as Siqueiros’s agent when the alleged misrepresentations were made. Under the theory of respondeat superior, a principal is vicariously liable for an agent’s torts committed within the scope of agency. (See CACI, No. 3700 citing Perez v. Van Groningen & Sons, Inc. (1986) 41 Cal.3d 962, 967.) ROIC’s position is that Pache was not its agent and, consequently, ROIC is not liable for any misrepresentations Pache allegedly made.

In support of its motion, ROIC proffers the following facts: Siqueiros was a commercial tenant at the Santa Teresa Village Shopping Center since February 11, 2004 under its previous owner, Santa Teresa Village LLC. (See Separate Statement of Undisputed Material Facts in Support of Cross-Defendant ROIC STV, LLC’s Motion for Summary Judgment (“ROIC UMF”), Fact No. 2.) ROIC purchased the shopping center from Santa Teresa Village, LLC and escrow closed on November 8, 2012. (See ROIC UMF, Fact No. 3.) Siqueiros then became a tenant of ROIC in a different retail space under the subject lease in this action. (See ROIC UMF, Fact No. 4.)

Santa Teresa Village, LLC previously had a listing agreement with PCI to negotiate leases for the shopping center. (See ROIC UMF, Fact No. 5.) When ROIC purchased the shopping center, no listing agreement existed between ROIC and PCI. (See ROIC UMF, Fact No. 6.) A real estate agent and not a broker, Pache was a leasing agent employed by PCI. (See ROIC UMF, Fact No. 7.)

On October 18, 2012, Pache sent a letter of intent to ROIC proposing terms for lease of the subject Property. (See ROIC UMF, Fact No. 8.) Pache sent the letter “on behalf of” Siqueiros to ROIC’s director of leasing, Steve Erhard. (See ROIC UMF, Fact Nos. 9 – 10.) The letter of intent stated triple-net expenses were estimated at $0.55 per square foot for 2012. (See ROIC UMF, Fact No. 11.) On November 12, 2012, Siqueiros and ROIC entered into the subject lease. (See ROIC UMF, Fact No. 12.) On November 20, 2012, after execution of the subject lease, ROIC signed a commission agreement with PCI agreeing to pay commissions for procuring the subject lease. (See ROIC UMF, Fact No. 16.)

“An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.” (Civ. Code, §2295.) “Agency may be implied based on conduct and circumstances. [Citation.] … ‘The existence of an agency relationship is usually a question of fact, unless the evidence is susceptible of but a single inference.’ [Citation.] Because the existence of agency is generally a question of fact, it logically follows that agency must be established with evidence.” (Zimmerman v. Superior Court (2013) 220 Cal.App.4th 389, 401; see also CACI, No. 3705.)

In opposition, Siqueiros proffers evidence which presents a triable issue of material fact. Specifically, Siqueiros submits the deposition testimony of Pache wherein Pache testified as follows:

Q: … You heard from Mr. Erhard before you met Armando Siqueiros; is that correct?
A: To my recollection, yes.
Q: Okay. All right.
So Mr. Erhard contacted you, said that he had a tenant that he was trying to negotiate a renewal with, and that would have been Mr. Siqueiros, and that he needed some additional assistance from somebody other than the person that he was using. Is that accurate?
A: I don’t know exactly what he mentioned to me as far as if he was looking to renew or not.
Again, my recollection is that he had a tenant that was looking to possibly leave the center or possibly relocate to the front of the center for better visibility. That’s—
Q: Okay. And then this was a phone conversation with Steve Erhard; is that correct?
A: I believe so.

(See Cross-Complainant’s Separate Statement of Undisputed Material Facts in Opposition to Cross-Defendant ROIC STV, LLC’s Motion for Summary Judgment (“Siqueiros UMF”), Fact Nos. 5 – 6.)

In moving for summary judgment, ROIC contends that Pache entered into an agency relationship with Siqueiros prior to entering into any relationship with ROIC and that it is the first and earliest agency relationship which prevails. The evidence cited above presents a triable issue of material fact with regard to whether and when Pache entered into an agency relationship with ROIC.

Consequently, ROIC’s motion for summary judgment is DENIED.