Opinion
B222566
09-01-2011
MARK BURKETT et al., Plaintiffs and Appellants, v. DOLORES CAFFARO et al., Defendants and Respondents.
Law Offices of Andrew A. Kurz and Andrew A. Kurz for Plaintiffs and Appellants. Law Offices of Jacob N. Segura and Jacob N. Segura for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC375088)
APPEAL from a judgment of the Superior Court of Los Angeles County. Mark V. Mooney, Judge. Affirmed.
Law Offices of Andrew A. Kurz and Andrew A. Kurz for Plaintiffs and Appellants.
Law Offices of Jacob N. Segura and Jacob N. Segura for Defendants and Respondents.
In July 2004, plaintiffs and appellants Mark Burkett and Piero Capobianco purchased a residential property in Los Angeles, California from defendant and respondent Dolores Caffaro. In July 2007, appellants sued defendants and respondents Dolores Caffaro and Michael Hockett for fraudulent concealment, intentional misrepresentation, and negligent misrepresentation in connection with the sale of the property. Summary judgment was granted in favor of respondents. Because we agree that appellants failed to establish a triable issue of material fact, we affirm.
Caffaro's former husband Hockett, never owned any interest in the Property and was not a party to the sale of the Property. Appellants alleged that he conspired with Caffaro to defraud appellants. When we refer to "respondents" we include Hockett.
FACTS
In April 2004, respondent Caffaro entered into an agreement to sell property located on Hollyridge in Los Angeles, California (Property). The potential buyer obtained a home inspection report from Advanced Building Inspections, Inc. (Advanced Report), which among other things showed the presence of moisture intrusion on the property. The purchase contract was cancelled, after which Caffaro had extensive mold remediation work done on the Property.
In May 2004, appellants and Caffaro agreed on a purchase price of $1,489,000 for the Property. On June 9, 2004, Caffaro provided a written Real Estate Transfer Disclosure Statement (TDS). On page two, section B of the TDS, Caffaro checked the boxes indicating that she was aware of "significant defects/malfunctions" in the "Interior walls" and "Ceilings." In the space provided to explain why those boxes were checked, she wrote "see attached." On page three of the TDS, among the items listed by Caffaro's agent were "cracked tiles in kitchen floor," "cracked tiles in stairway," and "crack in plaster in corner of house in front." Appellants' agent noted "exterior plaster cracks," and "cracks/settling between driveway & garage/house."
The documents attached to the TDS consisted of: (1) the Advanced Report; (2) a microbial assessment report; (3) an estimate and invoice for mold remediation work; (4) a plumbing inspection report; (5) a contract for drywall patching and paint repair work related to the mold remediation; and (6) a microbial clearance assessment reflecting completion of the mold remediation process.
The Advanced Report used a coding system to identify safety concerns (SC), where corrections were recommended (CR), and where further evaluation was needed (FE). In the "Introductory Notes" section it stated: "[NOTE] We are not soil or geotechnical engineers and cannot render an opinion regarding soil stability or potential soil movement. If desired, a qualified specialists [sic]in the appropriate trade should be consulted on these matters. This building is on a hillside. We are not soil or geotechnical engineers . . . qualified licensed specialists should be consulted of these matters." In a section entitled "Grading/Drainage/Landscaping Condition" it stated: "(FE) Evidence of fill/slope settlement. We recommend further evaluation and corrections by a specialist in the appropriate trade." The report listed cracks in the driveway and settlement was observed. Cracks in the patio and walkways, retaining walls, and exterior stucco were also noted.
Appellants retained LaRocca Inspections Services, Inc. to inspect the property and prepare a report (LaRocca Report) on the Property. Page 38 of the LaRocca Report under the heading "Grounds" states: "This inspection is not intended to address or include any geological conditions or site stability information. For information concerning these conditions, a geo-technical engineer should be consulted." On Page 39, under the heading "Drainage" it states: "Note, Due to the hillside nature of the house, it is advisable to have a Geo-Technical expert fully examine the site and make any recommendation concerning erosion and drainage." The LaRocca Report also noted that "the walkways are cracked and slightly settled" and observed "larger cracks on the outside walls that need patching."
On June 9, 2004, appellant Mark Burkett's father, Robert Burkett, a licensed structural engineer, conducted a two-hour inspection of the Property. He observed cracking in the driveway and retaining walls but saw nothing that concerned him about the structure of the Property. He also observed cracks in the patio, the kitchen marble floor, and a crack that had been repaired and caulked on an outside stairway leading to the backyard. After completing his inspection of the property, Robert Burkett did not recommend that appellants have any further soils or geotechnical testing performed to determine the site stability of the Property.
Mark Burkett read the Advanced Report to see if it contained "anything major" when he returned to Seattle after the June 9, 2004 inspection. He compared both reports and noted that the Advanced Report was more detailed in its listing of problems on the Property than the LaRocca Report.
Several years prior to selling the Property to appellants, Caffaro had hired a contractor to remodel the kitchen. The contractor repaired a crack caused by the installation of a French patio door. Caffaro applied paint to some of the walls and columns in the patio ballroom but did not do any repairs that constituted caulking.
Appellants indicated on the "Inspection Satisfaction/Waiver" form that they had performed "Geologic/Seismic/Soils/Drainage/Engineers Inspection" of the Property, and on July 14, 2004, after a final inspection, escrow closed. In November 2004, appellants moved into the Property and discovered cracks in the interior drywall and exterior stucco.
On July 31, 2007, appellants filed their complaint against respondents. On November 21, 2008 they filed the operative second amended complaint (SAC), upon which summary judgment was granted. Appellants alleged causes of action for fraudulent concealment, intentional misrepresentation, and negligent misrepresentation. On July 2, 2009, respondents moved for summary judgment. The motion was based in part on the contentions that appellants were aware of the relevant conditions on the Property prior to the close of escrow because respondents made full disclosure, and appellants could not establish the essential element of reliance on any alleged misrepresentation or concealment of material facts.
Respondents' sales agents were also named as defendants, but they were subsequently dismissed leaving Caffaro and Hockett as the remaining defendants.
The trial court found that respondents fully disclosed all material facts to appellants, that appellants presented no evidence that respondents concealed or misrepresented any material facts, and that respondents negated the element of reliance. The court subsequently granted respondents' motion for attorney fees and costs. These appeals followed.
DISCUSSION
I. The Issues Framed by the Pleadings
A. The Complaint Appellants' first cause of action for fraudulent concealment is based on allegations that respondents concealed the fact that the Property had "experienced significant cracking of interior drywall and exterior plaster, as well as the separation of joints and distortion of door and window frames, all of which were indicative of settlement problems;" that respondents had a duty to disclose to appellants the existence of these conditions and other latent defects of which they had or should have had knowledge; and appellants suffered damages as a result of respondents' failure to disclose.
The elements of a cause of action for fraudulent concealment are: "(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. [Citation.]" (Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612-613.)
The elements of intentional misrepresentation are: (1) an assertion by the defendant of a material fact; (2) the representation is false; (3) the defendant knew the representation was false; (4) the defendant intended the plaintiff to rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was damaged; and (7) the plaintiff's reliance was a substantial factor in causing the damage. (Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486, 1498 & fn. 4, citing CACI No. 1900.) Appellants' cause of action for intentional misrepresentation alleged that respondents provided a TDS which represented that the Property "was in good condition, except for 'some' cracked tiles" and other "insignificant conditions"; that respondents knew these representations were false and misleading and knew that appellants would rely on these representations in deciding to purchase the Property; appellants justifiably relied on the misrepresentations and would not have purchased the Property if they had known the representations were false; as a result, appellants suffered damages.
Appellants' cause of action for negligent misrepresentation is based on the same allegations, with the exception of the element of knowledge. Rather than alleging that respondents knew the representations were false, appellants alleged that respondents "made these representations with no reasonable ground for believing them to be true," and with the intent to induce appellants to purchase the Property "for an amount grossly in excess of the actual value" of the Property. A cause of action for negligent misrepresentation requires proof of (1) the defendant's representation of a material fact; (2) the representation was false; (3) the defendant made the representation without reasonable grounds for believing it to be true; (4) the defendant made the representation with the intent to induce the plaintiff to rely on it; (5) the plaintiff was unaware that the representation was false but acted in justifiable reliance on its truth; and (6) the plaintiff suffered damage as a result. (See Bynum v. Brand (1990) 219 Cal.App.3d 926, 940.)
B. Respondents' Summary Judgment Motion
Respondents moved for summary judgment on the grounds that undisputed evidence established that respondents fully disclosed all material defects and conditions known to them at the time of the sale, before appellants closed escrow on the Property, that appellants independently confirmed the existence of the defects and conditions at the Property that had been disclosed by respondents through their own inspections of the Property, and that they completed the purchase of the Property with full knowledge of all material facts.
Respondents' motion was supported by the deposition testimony of appellants Burkett and Capobianco, respondent Caffaro, and Robert Burkett. Also included were Robert Burkett's notes from his inspection of the Property and the Advanced and LaRocca reports, the purchase agreement and various waivers and releases signed by appellants. Respondents submitted declarations from Caffaro and Hockett stating that they did not make any misrepresentations or conceal any defects in the Property. Tom DeSpain, owner of Advanced Building Inspections Inc. submitted a declaration stating that he conducted a home inspection of the Property and prepared the Advanced Report for a potential buyer prior to appellants' involvement. He stated that his report highlighted a number of problems with the Property and "any person who read my report would know that it was imperative that they have additional experts come to this home and inspect the property for soil movement, water intrusion, doors that had shifted allowing water to enter from ground level, etc." John LaRocca, owner of LaRocca Inspections, who inspected the Property at the request of appellants and authored the LaRocca Report, submitted a declaration in which he stated that his report contained "clear and unambiguous warnings that the buyer of the property should obtain an inspection of the slope and soils present at this hillside property before the close of the inspection period."
C. Appellants' Opposition
Appellants opposed the summary judgment motion, arguing that there were material facts that respondents did not disclose, and that respondents failed to present any evidence to show they complied with the disclosure requirements. In support of these contentions, appellants submitted Robert Burkett's declaration stating that approximately one year after the close of escrow he observed cracks in the interior wallboard and exterior stucco. He had not observed these in his inspection prior to the close of escrow because he believed they were concealed by caulk and paint. Also submitted was a declaration from Barry Barman, a chemical engineer, who stated that cracks in the interior and exterior had been repaired using caulk and paint.
D. The Trial Court's Ruling
The court ruled on the motion orally. The court found that appellants presented no evidence that respondents had any actual knowledge of any material facts regarding patching or repairs to the Property which they misrepresented or concealed from appellants. The court found that even if respondents had knowledge of settlement or soil issues and concealed it, the failure to disclose was not material because appellants "were already informed through the La Rocca inspection and the Advanced Building inspection, that there was this problem, this issue regarding soils, that there was evidence of slope settlement, that the Advanced inspection did report cracking of the retaining walls, cracking to the exterior stucco walls, other evidence of earth movement." The court noted that "rather than getting the geotechnical expert that both La Rocca and Advance[d] had recommended, plaintiffs decided to go with another individual [appellant Mark Burkett's father, Robert Burkett] to do a visual inspection of the house; doesn't mean that defendants have engaged in any intentional misrepresentation or concealment." The court found that any additional information that would lead appellants "to the same conclusion, that geotechnical inspections should be [per]formed, isn't material. They already had all that information that this should have been done, and they chose not to do it."
E. Appellants' Contentions on Appeal
Appellants contend that the trial court erred in granting summary judgment because respondents did not demonstrate that appellants were unable to establish at least one element of each cause of action. Specifically, appellants contend that there is a triable issue of material fact as to whether respondents concealed any soils or settlement issues on the Property; repaired the cracks in the interior and exterior walls, and concealed the true condition of the Property from appellants because they were not put on notice of these facts by the TDS or the home inspection reports. Appellants contend that the court abused its discretion in accepting respondents' uncontroverted testimony that they had no personal knowledge of any prior repairs. Appellants further contend that respondents' knowledge and failure to disclose these facts is material and impacted their decision to purchase the Property. Lastly, appellants separately appealed the postjudgment contractual attorney fees award to respondent Caffaro and the statutory costs award to respondents, and contend that the reversal of the judgment in favor of respondents must result in the reversal of the award of fees and costs.
This is an incorrect statement of the burden the moving party bears on a summary judgment motion.
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II. Standard of Review
We review the court's ruling on the motion for summary judgment de novo. (Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal.App.4th 807, 819.) In doing so we "apply the same rules and standards that govern a trial court's determination of a motion for summary judgment. [Citation.]" (Distefano v. Forester (2001) 85 Cal.App.4th 1249, 1258.) Summary judgment should be granted if "all the papers submitted show that there is no triable issue of material fact and . . . the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).)
To satisfy this burden, a moving defendant is not required to "conclusively negate an element of the plaintiff's cause of action. . . . All that the defendant need do is to 'show[] that one or more elements of the cause of action . . . cannot be established' by the plaintiff. [Citation.]" (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853, fn. omitted.) Once this defendant's burden is met, the "burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists . . . ." (Code Civ. Proc., § 437c, subd. (p)(2).) In opposing the motion, "[t]he plaintiff . . . may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists . . . ." (Ibid.)
"Summary judgment will be upheld when, viewed in such a light, the evidentiary submissions conclusively negate a necessary element of plaintiff's cause of action, or show that under no hypothesis is there a material issue of fact requiring the process of a trial, thus defendant is entitled to judgment as a matter of law. [Citation.]" (Thompson Sacramento City Unified School Dist. (2003) 107 Cal.App.4th 1352, 1360-1361.)
III. Summary Judgment Was Properly Granted
A. Respondents Complied with the Duty to Disclose
Appellants contend that there is a triable issue of fact as to whether respondents fully disclosed soil or settlement issues, or repairs related thereto on the Property.
A seller of residential property not only bears a statutory duty of disclosure (Civ. Code, § 1102 et seq.), he or she also bears a common law duty of disclosure "'where the seller knows of facts materially affecting the value or desirability of the property . . . and also knows that such facts are not known to, or within the reach of the diligent attention and observation of the buyer . . . .' [Citations.]" (Shapiro v. Sutherland (1998) 64 Cal.App.4th 1534, 1544.)
Respondents disclosed on page two of the TDS that there were significant defects in the interior walls and ceilings of the Property, and agents for both appellants and respondents noted on the TDS the presence of multiple cracks in the floors, stairways and exterior of the property, as well as settling between the driveway and the garage/house. To further explain the significant defects that respondents checked on the TDS, they attached and incorporated therein by reference a copy of the Advanced Report prepared two months earlier for a buyer of the Property who cancelled the sale transaction. The Advanced Report listed multiple indicators of the existence of a soil settlement problem including tile cracks, stucco cracks, and cracked and leaning retaining walls. The Advanced Report specifically recommended that a geotechnical expert be consulted because there was evidence of "fill/slope settlement" on the Property.
We do not agree with appellants' characterization of these disclosures as "incomplete, confusing and contradictory" and insufficient to put appellants on notice of defects. Respondents directed appellants to the Advanced Report attached to the TDS which disclosed the defects and recommended an independent inspection. Prior to the close of escrow, appellants had actual knowledge of cracks and settlement on the Property from their own expert, from their own home inspection report (LaRocca Report) and from the previous buyer's inspection report (Advanced Report). Furthermore, it is undisputed that appellant Burkett reviewed the Advanced Report prior to the close of escrow and observed that it listed more problems with the Property than the LaRocca Report which appellants themselves commissioned. The burden to investigate the extent or cause of the soil settlement problem on the Property shifted to appellants who had a duty to exercise reasonable care to protect themselves as to those facts which were known, or could have been observed regarding the Property. (Civ. Code, § 2079.5.)
We also reject appellants' contention that respondents failed to provide "additional facts" regarding the cracking of drywall and stucco or repairs that would have put them on notice of a soil settlement issue. The trial court correctly determined that the undisputed evidence established that respondents' disclosures were sufficient to give appellants actual knowledge that there were soil and slope settlement issues at the Property. Respondents denied any knowledge of any purported repairs and appellants presented no admissible evidence to the contrary. The Barman and Robert Burkett declarations asserted that repairs were done at some point in time but do not claim that respondents performed the repairs or had any knowledge thereof.
Previous cases have addressed the issue of "additional facts" and held that their disclosure serves only to elaborate on the already basic disclosed defect or condition. (See Pagano v. Krohn (1997) 60 Cal.App.4th 1, 9 [affirming summary judgment in favor of the seller on homeowners association suit against developer after several units suffered water intrusion and seller had disclosed the existence of the lawsuit and that units other than hers had suffered water damage, reasoning that the buyers were informed of the essential facts concerning water intrusion in the development and any additional facts serve only as elaboration]; Calemine v. Samuelson (2009) 171 Cal.App.4th 153 [citing Pagano, buyers sued alleging incomplete disclosure of water intrusion, after seller of a condominium disclosed that the building had had past instances of water intrusion but did not disclose that the homeowner's association had brought lawsuits against the builder and the contractor that made the repairs; this Court affirmed the finding seller had properly disclosed past instances of water intrusion and that the type and scope of repairs made fell within the category of elaboration, but reversed for failure to disclose the existence of lawsuits].)
Similarly here, appellants were apprised in multiple ways of the soil settlement problem on the Property and were urged to obtain an inspection by a specialist in that area. It was their decision to choose a structural engineer rather than a geotechnical expert. Even if further information existed and was known to respondents it fell within the category of "elaboration" which the Pagano court determined is beyond a seller's duty of disclosure.
Relying on Code of Civil Procedure section 437c, subdivision (e), appellants argue that summary judgment should have been denied because the court should not have accepted respondents' uncontroverted declarations because appellants cannot reasonably be expected to controvert declarations as to facts exclusively within respondents' knowledge or control. Appellants are mistaken. Although summary judgment "may be denied in the discretion of the court" if the only proof of a material fact "is an affidavit or declaration made by an individual who was the sole witness to that fact" (Code Civ. Proc., § 437c, subd. (e)), under the circumstances of this case, the trial court did not abuse its discretion by declining to invoke that provision. Appellants presented no evidence that respondents prevented them from conducting soil and geotechnical testing of the Property prior to the close of escrow. (See Estate of Housley (1997) 56 Cal.App.4th 342, 359-360, fn. 13 [Code Civ. Proc., § 437c, subd. (e) "effectively provides that the questionable credibility of declarations submitted in support of a summary judgment motion cannot provide a basis for denying the motion when it otherwise should be granted"].)
Accordingly, respondents disclosed the known defects in the Property. All defects were either obvious or could have been examined more carefully with the proper inspection.
B. Element of Reliance Negated
Appellants contend that disclosure of the "soils issue" was a material fact that impacted their decision to purchase the Property and if they "had known about the possibility of soils issues, they either would not have consummated the sale or they would have at the very least hired a geotechnical expert."
Actual reliance is an essential element of a cause of action for fraud or negligent misrepresentation. (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1088-1089 & fn. 2.) A misrepresentation, concealment or nondisclosure is material if it induced a detrimental change of position. (Okun v. Morton (1988) 203 Cal.App.3d 805, 828.) Here, appellants must show that they actually relied on respondents' misrepresentations or nondisclosures and suffered damages as a result. (In re Tobacco II Cases (2009) 46 Cal.4th 298, 326.)
The element of actual reliance depends on whether the alleged nondisclosures or misrepresentations by respondents caused appellants to take some action, or refrain from taking action, as a result of which appellants suffered an injury. Appellants alleged in their complaint that they made their decision to purchase the Property in reliance on respondents' representations that the Property was generally in good condition.
But the undisputed facts presented in support of the summary judgment motion indicated that appellants did not rely on respondents' alleged misrepresentations or nondisclosures. Rather, they were in possession of a home inspection report (Advanced Report) prepared for a previous buyer who cancelled escrow. The Advanced Report specifically noted evidence of soil settlement and recommended the intervention of a specialist. Appellants hired their own home inspectors and obtained the LaRocca Report which confirmed the need for a geotechnical expert because the Property was located on a hill and there could be issues related to erosion and drainage. Both reports also noted the presence of cracks and settlement in the walkways and driveway, and cracks in the retaining walls and exterior stucco. Appellant Burkett compared both reports and observed that the Advanced Report was more detailed in its listing of problems that the LaRocca Report. Appellants did not hire a qualified geotechnical expert or conduct any testing of the soil at the Property as recommended by both reports. Appellants asked Robert Burkett, a structural engineer, to conduct an inspection of the Property. After completing his inspection, Robert Burkett did not recommend any soil or geotechnical testing to determine if the Property was stable. Prior to close of escrow appellants signed a waiver indicating that they had performed "Geologic/Seismic/Soils/Drainage/Engineers Inspection." Thus, as the trial court found, appellants relied on the inspection performed by Robert Burkett rather than a geotechnical expert recommended by the Advanced and LaRocca reports.
By presenting evidence negating the element of actual reliance, respondents satisfied their initial burden as the party moving for summary judgment, and the burden shifted to appellants to "set forth the specific facts showing that a triable issue of material fact exists" as to their actual reliance. (Code Civ. Proc., § 437c, subd. (p)(2).)
In opposition to the motion, appellants filed a declaration from appellant Mark Burkett in which he stated that had he known repairs had been performed he would have "either backed out of the purchase or retained a geotechnical expert to evaluate the structure in the soils [sic]." Appellants also filed a declaration from Robert Burkett who stated that had he been informed of repairs performed "[he] would have recommended a geotechnical review of the property prior to purchase" or that his son "terminate the purchase."
Appellants' declarations must be viewed in light of the information that was available through the Advanced and LaRocca reports advising the need for geotechnical inspection, and the defects that were visibly apparent to appellants and their inspector, Robert Burkett. Thus, any additional disclosures by respondents that would lead appellants to the same conclusion, that a geotechnical inspection was needed, are not material. Generally, materiality is a question of fact for the jury, "'unless the "fact misrepresented is so obviously unimportant that the jury could not reasonably find that a reasonable man would have been influenced by it."'" (Persson v. Smart Inventions, Inc., (2005) 125 Cal.App.4th 1141, 1163, fn. omitted, quoting Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 977.)
As there was no evidence that would allow a reasonable trier of fact to find that appellants' reliance on respondents' alleged misrepresentation or nondisclosures was justified, the question of justifiable reliance was properly resolved in summary judgment. (Guido v. Koopman (1991) 1 Cal.App.4th 837, 843.) Respondents here are entitled to summary judgment as a matter of law. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.)
C. The Trial Court's Award of Attorney Fees and Costs is Affirmed
Appellant contends that reversal of the judgment must as a matter of law result in the reversal of the award of attorney fees and costs but makes no argument that the trial court abused its discretion in finding the awards were reasonable. "When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived. [Citations.]" (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)
DISPOSITION
The trial court's judgment granting the motion for summary judgment and award of attorney fees and costs is affirmed. Respondents are to recover their costs on appeal. NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
DOI TODD, J. We concur:
BOREN, P. J.
CHAVEZ, J.