18-CIV-04407 DESHUN YANG, ET AL. VS. BGSM, INC., ET AL.

DESHUN YANG BGSM, INC.
ANDREW STEINFELD

DEFENDANT BGSM, INC. DBA KW PENINSULA ESTATES’ MOTION TO STRIKE PORTIONS OF PLAINTIFFS’ COMPLAINT TENTATIVE RULING:

Defendant BGSM’s demurrer to Plaintiffs’ complaint is SUSTAINED with leave to amend.

Plaintiffs’ causes of action against BGSM for violation of the CLRA are barred by the plain language of the CLRA, which provides that “The provisions of this title shall not apply to any transaction which provides for . . . the sale of a lot or parcel of real property . . . ” Cal. Civ. Code § 1754; see also McKell v. Washington Mut., Inc., 142 Cal. App. 4th 1457, 1488, 49 Cal. Rptr. 3d 227, 253 (2006). Plaintiffs’ assertion that their contract with KWP is “ancillary to” the real property transaction is unpersuasive.

With respect to Plaintiffs’ claims of fraud against BGSM, those causes of action are based on Defendant Yu’s alleged forgery and his conduct in requesting a $20,000 check to be made out to Westco National and Loans. Under the heading of “respondeat superior,” Plaintiffs’ complaint alleges that Defendant BGSM ratified Defendant Yu’s conduct:

A principal is responsible for the negligence of his agent in the transaction of the business of the agency. See Civil Code § 2338. A principal is responsible for the intentional wrongs committed by his agent while the agent is engaged in his service if he ratifies them. See Civil Code § 2339. On information and belief, Defendant [KWP] ratified the intentional wrongs committed by Defendant YU as set forth above.

(Complaint, ¶ 75) Plaintiffs’ complaint, however, alleges no facts indicating that BGSM knew of Defendant Yu’s conduct at the time or subsequently approved his conduct. Rather, Plaintiffs’ complaint indicates that BGSM did not have knowledge of Defendant Yu’s conduct until November, several months after their offer to purchase the subject property was submitted. BGSM’s retention of Defendant Yu does not support a finding of ratification. Egan v. Mut. of Omaha Ins. Co., 24 Cal. 3d 809, 834, 620 P.2d 141 (1979). Further, Plaintiffs’ complaint does not allege any nexus between Defendant Yu’s conduct – with respect to the alleged forgery or the request for a $20,000 check – and BGSM’s business activity. Likewise, Plaintiffs’ opposition to BGSM’s demurrer contains no argument relating to the nexus required to support a theory of respondeat superior.

Generally, the determination of whether an employee has acted within the scope of employment is a question of fact. But it becomes a question of law when “‘the facts are undisputed and no conflicting inferences are possible.’” Lisa M. v. Henry Mayo Newhall Memorial Hospital, supra, 12 Cal.4th at p. 299, 48 Cal.Rptr.2d 510, 907 P.2d 358. Based on the undisputed facts in the present case, the court finds Defendant Yu’s conduct is not a “generally foreseeable consequence” of BGSM’s business activity. Defendant Yu’s conduct is “so unusual or startling” that it would be unfair to include the loss resulting from it among other costs of BGSM’s business. Inter Mountain Mortg., Inc. v. Sulimen, 78 Cal. App. 4th 1434, 1441, 93 Cal. Rptr. 2d 790, 794–95 (2000). As a result, the court concludes as a matter of law that Plaintiffs’ complaint fails to establish the required nexus between Defendant Yu’s actions and his employment with BGSM. Accordingly, Plaintiffs’ complaint fails to state facts sufficient to support the causes of action for fraud against BGSM. Plaintiffs are granted leave to amend the complaint to allege facts demonstrating ratification by BGSM or that Defendant Yu’s alleged misconduct occurred within the scope of employment for purposes of respondeat superior liability, to the extent such facts exist.

Defendant’s motion to strike is MOOT in light of the holding above.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, counsel for Defendant shall prepare a written order consistent with the Court’s ruling for the Court’s signature, pursuant to California Rules of Court, Rule 3.1312, and provide written notice of the ruling to all parties who have appeared in the action, as required by law and the California Rules of Court.