Opinion
E065779
09-13-2017
SREENIVASA NAKKA et al., Cross-complainants and Appellants, v. ROBERT SUNDBACK et al., Cross-defendants and Respondents.
John L. Dodd & Associates, John L. Dodd, and Benjamin Ekenes; Law Offices of Edward W. Hess, Jr. and Edward W. Hess, Jr., for Cross-complainants and Appellants. RELAW, Jennifer Felten, and Timothy S. Camarena for Cross-defendants and Respondents Robert Sundback and Nichole Watson. Gordon & Rees, Calvin E. Davis, Gary A. Collis, and Aaron P. Rudin for Cross-defendants and Respondents Coldwell Banker Residential Real Estate, LLC and Coldwell Banker Real Estate, LLC. Chandler Law Firm, Robert C. Chandler, Carla R. Kralovic, Floyd F. Fishell, and Christopher L. Nelson for Cross-defendant and Respondent Kivett Realtors, Inc.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. MCC1400196) OPINION APPEAL from the Superior Court of Riverside County. Gloria Trask, Judge. Affirmed. John L. Dodd & Associates, John L. Dodd, and Benjamin Ekenes; Law Offices of Edward W. Hess, Jr. and Edward W. Hess, Jr., for Cross-complainants and Appellants. RELAW, Jennifer Felten, and Timothy S. Camarena for Cross-defendants and Respondents Robert Sundback and Nichole Watson. Gordon & Rees, Calvin E. Davis, Gary A. Collis, and Aaron P. Rudin for Cross-defendants and Respondents Coldwell Banker Residential Real Estate, LLC and Coldwell Banker Real Estate, LLC. Chandler Law Firm, Robert C. Chandler, Carla R. Kralovic, Floyd F. Fishell, and Christopher L. Nelson for Cross-defendant and Respondent Kivett Realtors, Inc.
This action arises out of a heart-rending accident in which a child was severely injured after crawling through a doggie door and nearly drowning in a swimming pool at his new house.
Robert Sundback and Nichole Watson (collectively the Sundbacks) were former owners of the house; they installed the doggie door. They then sold the house to Sreenivasa Nakka and Hemalatha Nakka (collectively the Nakkas). Finally, the Nakkas rented the house to the child's family. Thus, when the child and his siblings sued the Nakkas, the Nakkas cross-complained against the Sundbacks (and others who were allegedly vicariously liable).
The trial court sustained demurrers to the cross-complaint without leave to amend. It ruled that the Sundbacks could not be liable, either for creating a dangerous condition or for failing to disclose a dangerous condition, because the dangerous condition was "patent." The Nakkas appeal.
Although the parties and the trial court all framed the issue in terms of whether the dangerous condition was "latent" or "patent," we find it preferable to look at it in terms of whether the Sundbacks knew or had reason to know that the Nakkas would not discover the dangerous condition. We will conclude that the trial court properly sustained the demurrer without leave to amend because the Nakkas failed to allege — and evidently could not allege — this necessary element.
I
PROCEDURAL BACKGROUND
In 2014, the plaintiffs (Liam Berry, Savanna Fisher, Brandon Berry, Jr., Christian Fisher, and Sebastian Fisher) filed this action against the Nakkas. The operative complaint asserted causes of action for premises liability, intentional tort, and general negligence. It alleged that:
On February 11, 2012, Liam Berry crawled through a "wall opening" at his house, fell into a backyard swimming pool, and suffered a "catastrophic immersion injury." The other plaintiffs were Liam's siblings; they suffered emotional distress from perceiving his injury. The Nakkas owned the house and had rented it to Liam's family. The wall opening and the pool access violated the applicable municipal code. The Nakkas knowingly permitted this dangerous condition to exist and refused requests to repair it.
The Nakkas filed a cross-complaint against the Sundbacks and also against Coldwell Banker Residential Real Estate LLC, Coldwell Banker Real Estate LLC (collectively Coldwell), and Kivett Realtors, Inc. (Kivett). (We will refer to Coldwell and Kivett collectively as the Realtors.) The cross-complaint, as subsequently amended, asserted causes of action for implied indemnity against all cross-defendants; fraud against the Sundbacks; and negligence against Robert Sundback and the Realtors. We will summarize the allegations of the operative cross-complaint in part II, post.
Cross-defendants filed demurrers to the operative cross-complaint. They argued, among other things, that they had no duty to disclose the dangerous condition because it was "patent." They also argued that the Nakkas had not adequately alleged that Robert was the Nakkas' agent.
By stipulation, the demurrers were set for hearing on the same date; the Nakkas filed a consolidated opposition. After hearing argument, the trial court sustained the demurrers without leave to amend. It entered one judgment in favor of Kivett, another judgment in favor of the Sundbacks, and another judgment in favor of Coldwell Banker. The Nakkas filed a timely notice of appeal from all three judgments.
II
FACTUAL BACKGROUND
According to the cross-complaint, the Nakkas became acquainted with Robert "through a course of real estate transactions and dealing." "Over this course of dealings Robert . . . assumed and acted in the role of an advisor to [the Nakkas] with respect to investing in real estate."
At all relevant times, Robert was an agent of the Realtors and was acting within the course and scope of that agency. Robert and the Realtors all represented to the Nakkas that Robert was skilled and knowledgeable as a real estate sales agent and real estate investment advisor.
The Sundbacks owned a house in Hemet. They negligently authorized the installation of a doggie door. The doggie door was illegal and defective; it created a dangerous condition.
Kivett claims that the doggie door was illegal due solely to the lack of a building permit. We find no support for this claim in the record. The plaintiffs alleged that the doggie door failed to comply with "Hemet Municipal Codes pertaining to unsafe conditions."
According to the Nakkas, the operative cross-complaint also alleged that "[c]ross-defendants designed, manufactured, marketed, distributed and sold the doggie door." Actually, it alleged that "[c]ross-defendants Roes 1-10 designed, manufactured, marketed, distributed and sold the doggie door." (Italics added.) It did not make any similar allegation as to the Sundbacks or the Realtors.
In 2010, the Sundbacks sold the house to the Nakkas. They failed to disclose both the existence of the doggie door and its unlawful and dangerous nature. The Nakkas did not inspect the house before purchasing it, and the Sundbacks knew this.
Initially, Nichole continued to occupy the house as the Nakkas' tenant. In 2012, however, she moved out, and the Nakkas rented the house to the plaintiffs. Robert prepared the written lease agreement. Once again, he failed to disclose the existence of the doggie door to the Nakkas or to the plaintiffs.
The plaintiffs took possession of the house just 10 days before the accident. Until the accident occurred, the Nakkas were unaware of the doggie door. Moreover, until the plaintiffs filed this action, the Nakkas were unaware that the doggie door was illegal.
A reasonable real estate sales agent and real estate investment advisor would have disclosed the existence of the doggie door to the Nakkas and would have advised them not to buy or to rent out the house as long as the doggie door was creating a dangerous condition.
III
THE CROSS-COMPLAINT FAILED TO ALLEGE FACTS SHOWING A DUTY
The Nakkas contend that they adequately alleged that cross-defendants had a duty to disclose the dangerous condition.
A. General Legal Principles.
A demurrer should be sustained when "[t]he pleading does not state facts sufficient to constitute a cause of action." (Code Civ. Proc., § 430.10, subd. (e).)
"'Our standard of review of an order sustaining a demurrer is well settled. We independently review the ruling on demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of action. [Citation.] In doing so, we "give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] . . ." [Citation.]' [Citation.] 'We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters of which judicial notice has been taken. [Citations.] We liberally construe the pleading with a view to substantial justice between the parties. [Citations.]' [Citation.]" (Van Audenhove v. Perry (2017) 11 Cal.App.5th 915, 918-919.)
As a general rule, a defendant has no duty to disclose, except under four circumstances: (1) the parties are in a fiduciary relationship; (2) the defendant makes representations but does not disclose facts that materially qualify the facts disclosed or that render the disclosure likely to mislead; (3) the defendant actively conceals the facts from the plaintiff; or (4) the facts are known or accessible only to the defendant, and the defendant knows they are not known to or reasonably discoverable by the plaintiff. (Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294; Los Angeles Memorial Coliseum Commission v. Insomniac, Inc. (2015) 233 Cal.App.4th 803, 831.) This case involves the first and fourth exceptions.
The Nakkas assert that Robert had a double duty of disclosure — one arising out of his status as a previous owner of the property, and one arising out of his status as a real estate agent. We will discuss these in turn.
B. Previous Ownership.
First, the Nakkas rely on Robert's status as a previous owner of the property. This argument also applies to Nichole. It is less clear how it could apply to the Realtors; indeed, the Nakkas indicate that they are raising it solely as to the Sundbacks.
California follows section 352 of the Restatement (Second) of Torts (Preston v. Goldman (1986) 42 Cal.3d 108, 114, 117-126; Lewis v. Chevron U.S.A., Inc. (2004) 119 Cal.App.4th 690, 695-700), which provides: "Except as stated in § 353, a vendor of land is not subject to liability for physical harm caused to his vendee or others while upon the land after the vendee has taken possession by any dangerous condition . . . which existed at the time that the vendee took possession." This is true even if the vendor created the dangerous condition. (Preston v. Goldman, supra, 42 Cal.3d at p. 117.) The rationale behind this rule is that the vendor "ha[s] no ability to inspect the [property], test it, or to warn [persons] coming on the property about [it]. [The vendor] could not obtain insurance for property it did not own, or take precautions to prevent injuries after it had given up ownership and the ability to control the property." (Lewis v. Chevron U.S.A., Inc., supra, 119 Cal.App.4th at p. 697.)
However, California also follows section 353(1) of the Restatement (Second) of Torts (Lorenzen-Hughes v. MacElhenny, Levy & Co. (1994) 24 Cal.App.4th 1684, 1689; Lewis v. Chevron U.S.A., Inc., supra, 119 Cal.App.4th at p. 698), which provides:
"A vendor of land who conceals or fails to disclose to his vendee any condition . . . which involves unreasonable risk to persons on the land, is subject to liability to the vendee and others upon the land with the consent of the vendee or his subvendee for physical harm caused by the condition after the vendee has taken possession, if
"(a) the vendee does not know or have reason to know of the condition or the risk involved, and
"(b) the vendor knows or has reason to know of the condition, and realizes or should realize the risk involved, and has reason to believe that the vendee will not discover the condition or realize the risk."
The Nakkas characterize the rule of section 353(1) of the Second Restatement as an exception for a "latent" defect. However, it does not necessarily apply to any latent defect; for example, it does not apply to "latent defects in the property which the transferor did not know about, and had no reason to believe existed." (Lorenzen-Hughes v. MacElhenny, Levy & Co., supra, 24 Cal.App.4th at p. 1685.) Moreover, both sides proceed to discuss cases dealing with whether a construction defect is latent or patent for a different purpose — the statute of limitations for a construction defect (Code Civ. Proc., § 337.1). (E.g., Delon Hampton & Associates, Chartered v. Superior Court (2014) 227 Cal.App.4th 250, 254-257.) However, it has been held that this is not the appropriate standard for purposes of a former owner's duty of disclosure. (Lewis v. Chevron U.S.A., Inc., supra, 119 Cal.App.4th at p. 697.) We therefore focus instead on the language of the Restatement.
On its face, the cross-complaint shows that, unless the Restatement exception applies, the Sundbacks, as vendors of the land, are not subject to liability for any dangerous condition on the land. Moreover, the Nakkas have not pleaded any facts that would bring them under the Restatement exception.
For one thing, while the cross-complaint alleges that the Nakkas did not know of the dangerous condition, it fails to allege that they did not have reason to know of the dangerous condition. It merely alleges that they did not inspect the house before they purchased it, and that Nichole continued to occupy the house after they purchased it. But did they inspect the house after they purchased it? Did they inspect it after Nichole moved out but before the plaintiffs moved in? If not, why not? What facts make their inaction reasonable? The cross-complaint is silent on these matters.
Even more important, the cross-complaint does not allege that the Sundbacks had any reason to know that the Nakkas would not discover the dangerous condition. It alleges only that the Sundbacks knew that the Nakkas did not inspect the house before purchasing it. Once again, however, they could have inspected the house after purchasing it. Even assuming the Nakkas never inspected the house at all — not even before renting it out to a family with at least five children — how were the Sundbacks supposed to know that they would not?
The cross-complaint does allege that the Sundbacks were "obligated" to disclose the dangerous condition. However, this is a mere legal conclusion, unsupported by any alleged facts; thus, we are not required to accept it. (Yhudai v. IMPAC Funding Corporation (2016) 1 Cal.App.5th 1252, 1257.)
The Nakkas complain that the trial court erroneously decided, based on speculation rather than on the pleaded facts, that the dangerous condition of the doggie door was apparent. We need not decide this issue. As mentioned, we review the trial court's ruling de novo. In our view, the problem with the cross-complaint is that it failed to allege facts showing that the Nakkas did not have reason to know of the dangerous condition. Thus, even assuming that the trial court erroneously concluded that the Nakkas did have reason to know of the dangerous condition, it properly sustained the demurrer.
C. Real Estate Agency.
Second, the Nakkas rely on Robert's status as a real estate agent. The Realtors are allegedly liable for his actions in this capacity on a respondeat superior theory.
The Nakkas cite Civil Code section 2079. Subdivision (a) of that section imposes certain duties of disclosure on "a real estate broker or salesperson, . . . if that broker has a written contract with the seller to find or obtain a buyer or is a broker who acts in cooperation with that broker to find and obtain a buyer."
Here, Robert was not within this definition. In the first transaction, when he sold the house to the Nakkas, he did not have a written contract with the seller — he was the seller. In the second transaction, when the Nakkas leased the house to the plaintiffs, there is no allegation that Robert had a written contract with the Nakkas; moreover, this transaction was a lease, not a sale. Thus, Civil Code section 2079 did not apply.
In any event, a broker's duty under Civil Code section 2079 runs solely to prospective purchasers. For example, this section is not a basis for holding the broker liable for personal injuries to a purchaser's child. (Coldwell Banker Residential Brokerage Co., Inc. v. Superior Court (2004) 117 Cal.App.4th 158, 165.) Thus, even if it applied to Robert, it would not make him liable to indemnify the Nakkas for the plaintiffs' injuries.
The Nakkas also cite cases imposing a duty of disclosure on a real estate agent who is acting as such for a seller or a lessor. (Merrill v. Buck (1962) 58 Cal.2d 552, 562; Hall v. Aurora Loan Services LLC (2013) 215 Cal.App.4th 1134, 1140; Lingsch v. Savage (1963) 213 Cal.App.2d 729, 737; Rattray v. Scudder (1946) 28 Cal.2d 214, 223.) However, while Robert was a real estate agent — i.e., he was licensed as such — he was not acting as a real estate agent — i.e., he did not do anything that he would need a real estate license to do. (See generally Bus. & Prof. Code, §§ 10130, 10131, 10131.1, 10131.2, 10131.3, 10131.4, 10131.6, 10132.) Again, in the first transaction, he was acting on his own behalf. In the second transaction, there is no allegation that the Nakkas agreed to compensate him for finding a lessee; all he allegedly did was draft the lease.
We therefore conclude that the cross-complaint failed to allege that cross-defendants had a duty arising out of Robert's status as real estate agent.
IV
OPPORTUNITY TO AMEND
The Nakkas contend that they are entitled to an opportunity to amend.
Even when a demurrer is well-taken, "[i]t is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. [Citations.]" (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2017) ¶ 7:129.1.) "The burden is on the plaintiff, however, to demonstrate the manner in which the complaint might be amended. [Citation.]" (Hendy v. Losse (1991) 54 Cal.3d 723, 742.)
In opposition to the demurrers, the Nakkas requested leave to amend; however, they did not specify how they would amend. Thus, at the hearing, the trial court asked how they could amend. Counsel for the Nakkas responded:
"Well, my client has told me that when she did the inspection of the property, she didn't even see the - the doggy door; that she thinks it was possible, just in her brief inspection, that it was actually concealed behind some furniture.
"And this is something that was known to the real estate agent [i.e., Robert]; that his client just did a look-around like this and bought this property on his — on his recommendation that it was a good investment."
Later, he added: "[M]y client indicated to me that she believes that this — this door, this opening, was concealed from — from her viewpoint as she went through the house. She got - Understand, she went through a house that was being lived in and furnished. And she believes that there [was] either a table or a couch or something along those lines that actually obscured her ability to even see this thing much less to recognize on a brief inspection what it was and how it might allow a child to access the pool."
Preliminarily, we note that this proposed amendment contradicted the operative complaint, which alleged that the Nakkas did not inspect the house before purchasing it. Under the so-called sham pleading doctrine, a plaintiff cannot avoid a demurrer simply by contradicting the allegations of earlier pleadings without explanation. (Larson v. UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336, 343.) Thus, even if the Nakkas were to add this allegation, the trial court could ignore it and sustain a demurrer anyway.
In any event, the proposed amendment would not save the cross-complaint. We may assume, without deciding, that it would be a sufficient allegation that the Nakkas had no reason to know of the dangerous condition. However, there would still be no allegation that the Sundbacks had reason to believe that the Nakkas would not discover the condition. Even assuming that Robert knew that the Nakkas "just did a look-around," there is no claim that he had any way of knowing that the doggie door would be hidden by furniture. There is likewise no claim that he somehow knew that the Nakkas would not discover the doggie door in the future while they still owned the house.
The Nakkas make the blanket representation that they "could have cured any other claimed defects asserted by [cross-defendants]," including the absence of any allegation that Robert was acting as real estate agent for the Nakkas. (Italics added.) Conspicuously absent from this claim are any specific facts that they would allege to cure these defects.
At oral argument, counsel for the Nakkas argued that, because we framed the duty issue, not in terms of whether the defect was latent or patent, but rather in terms of the Restatement exception, his clients should be given an opportunity to amend in light of this supposedly unanticipated legal standard. He cited Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, which held that the plaintiffs were entitled to an opportunity to amend because their "reply brief propose[d] several amendments to rectify the defect [in the complaint] that [the appellate court had] identified" and because "the deficiency was not raised prior to this appeal . . . ." (Id. at p. 572.) Unlike in Joser, however, here counsel could not specify any particular facts that his clients could allege. Indeed, he conceded that the Nakkas might or might not be able to file a suitably amended complaint.
We therefore conclude that it was not an abuse of discretion to sustain the demurrer without leave to amend.
V
DISPOSITION
The judgment is affirmed. Cross-defendants are awarded costs on appeal against the Nakkas.
NOT TO BE PUBLISHED IN OFFICAL REPORTS
RAMIREZ
P. J. We concur: McKINSTER
J. CODRINGTON
J.