Opinion
B226931
09-15-2011
RANDALL ST. AUBYN, Plaintiff and Appellant, v. COLDWELL BANKER RESIDENTIAL BROKERAGE CO. et al., Defendants and Respondents.
Norton & Associates, Timothy L. Norton for Plaintiff and Appellant. Wilson, Elser, Moskowitz, Edelman & Dicker, Martin K. Deniston and Daniel H. Lee 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. GC041745)
APPEAL from a judgment of the Superior Court of Los Angeles County, Joseph De Vanon, Judge. Affirmed.
Norton & Associates, Timothy L. Norton for Plaintiff and Appellant.
Wilson, Elser, Moskowitz, Edelman & Dicker, Martin K. Deniston and Daniel H. Lee for Defendants and Respondents.
INTRODUCTION
Plaintiff and appellant Randall St. Aubyn appeals from a summary judgment under Code of Civil Procedure section 437(c), in favor of defendants and respondents Coldwell Banker Residential Brokerage Co., Jan Thorton, and Julie Marnell, on plaintiff's claim that defendants failed to disclose to plaintiff a geological report and the distressed conditions of the hillside slope before plaintiff purchased the subject property. Plaintiff contends that the trial court erred in granting defendants' motion for summary judgment concluding that plaintiff's lawsuit was barred by the doctrine of res judicata. We affirm.
FACTUAL BACKGROUND
Plaintiff does not contend on appeal that there is a triable issue as to any material fact.
In 2004, heavy rains triggered erosion from a hillside onto Clair Hanks' residential property (subject property) located at the base of the hillside. Hanks made a claim with the Federal Emergency Management Agency (FEMA) to clean up the hillside erosion, and had a geological report prepared that identified distressed conditions of the hillside slope.
In August 2005, Stefan Bund and Jacqueline Truong (sellers) purchased the subject property from Hanks. Defendants acted on behalf of Hanks in connection with the sale of the subject property to the sellers, and Hanks, through defendants, disclosed the FEMA claim and the geological report to the sellers.
In December, 2007, plaintiff entered into a residential purchase agreement to purchase the subject property from the sellers, and defendants acted on behalf of the sellers in connection with the sale. On December 5, 2007, plaintiff received a buyer's inspection advisory from the sellers, which plaintiff executed acknowledging that he (1) had an affirmative duty to exercise reasonable care in investigating facts that were within his diligent attention and observation; (2) had the right to investigate the property; and (3) should conduct investigation of structural and non-structural systems, and soil stability, including susceptibility to slippage, settling or movement. Plaintiff also initialed an agent visual inspection disclosure acknowledging that, "Regardless of what the Agent's Inspection reveals, or what disclosures are made by the sellers, California Law specifies that a buyer has a duty to exercise reasonable care to protect himself . . . ." Prior to plaintiff's purchase of the subject property, the sellers and defendants did not disclose to him the geological report, the FEMA claim, or the distressed conditions of the hillside slope. Immediately after escrow had closed on December 28, 2007, plaintiff noticed that the home "was regularly pelted with rocks and stones falling from the hillside."
PROCEDURAL BACKGROUND
Pursuant to the residential purchase agreement between plaintiff and the sellers, plaintiff submitted to binding arbitration his claims against the sellers that prior to his purchase of the subject property the sellers had not disclosed to him the geologic information. In plaintiff's second amended claim in arbitration, he asserted causes of action for negligence, fraud, negligent misrepresentation, and breach of contract. Plaintiff's causes of action for negligence alleged that the sellers owed plaintiff a duty "to disclose to him any information that they were aware of which might materially affect the value or desirability of the subject property . . . ." Plaintiff's causes of action for fraud and negligent misrepresentation alleged that the sellers owed plaintiff "contractual, statutory and common law disclosure duties . . . ."
Defendants refused plaintiff's request to participate in the arbitration. Thereafter, plaintiff filed a complaint against defendants alleging causes of action for negligence, fraud, and negligent misrepresentation for failing to disclose the geologic information to him before he purchased the subject property. Plaintiff's complaint was substantially identical to the plaintiff's second amended claim in arbitration. Plaintiff also filed a notice of related action stating that the arbitration proceeding against the sellers was related to the lawsuit against defendants because the arbitration dealt with the same residential purchase agreement and arose from the "same residential purchase and sale transaction" as the case before the trial court.
The sellers filed an ex parte application seeking leave to intervene in the lawsuit by filing a complaint in intervention against defendants alleging causes of action for breach of fiduciary duty and equitable indemnity. Plaintiff filed an opposition to the sellers' ex parte application contending that sellers' ex parte application is a "bad-faith tactic designed to delay, evade and avoid the arbitration process . . . ." Plaintiff's opposition included a declaration from his attorney stating that, "The failure to disclose the geological report is the primary claim in this case." The trial court granted the sellers' motion, and on its own motion stayed the lawsuit pending completion of the arbitration between plaintiff and the sellers pursuant to Code of Civil Procedure section 1281.2, subdivision (c).
The arbitration proceeded between plaintiff and the sellers. Plaintiff contended in his arbitration brief that the sellers were liable to him for their own conduct in not disclosing the geologic information to him because the sellers had a common law, statutory, and contractual duty to do so. Plaintiff argued that the sellers were jointly and severally liable with defendants if the sellers were at all at fault. In addition, plaintiff contended that "under the law of agency, the principals [the sellers] are liable in tort and responsible for the harm caused by the willful and negligent acts of their agents [defendants]. [The sellers] cannot hide behind the acts of their agents as if they are separate unrelated entities. [Fn. omitted.] [¶] . . . When the agents [did not disclose the geological report to plaintiff] they sealed their fate along with the principals. . . . The agents' nondisclosure of the report was the principals' nondisclosure."
Plaintiff continued to assert in his post-arbitration brief that the sellers were liable to him for their own conduct in not disclosing the information to him. Plaintiff contended that, "A seller is required by law to disclose what they (sic)know about the property, period, and must absolutely disclose critical information, such as the [geological report], that is not known to the buyer. Agents and brokers have the same duty. [Fn. omitted.]" And plaintiff continued to argue that "both principal and agent remain liable for their conduct and no one is exonerated."
Plaintiff also continued to assert in his post-arbitration brief that the sellers were also liable to him for the acts of defendants. Plaintiff contended that "under the law of agency, and more specifically, the doctrine of respondent superior, a principal is vicariously liable for the negligent or willful misconduct of his or her agent committed within the scope of agency or employment. [¶] Here, the existence of the agency relationship is undisputed. . . . . Thus, the principals, [the sellers], take full responsibility and liability for the acts of their agents. [Fn. omitted.] [¶] . . . The fault of the agents is the fault of the principal."
The arbitrator issued a written award in favor of the sellers on all of plaintiff's causes of action. In his findings, the arbitrator noted that "the basic issues running through all of the claims and defenses was whether [the sellers] had a duty to furnish the geological report prepared for their seller and delivered to them at the time of their purchase, and whether claimant's damage resulted from that failure or his own failure to investigate." The arbitrator concluded that even if there was a duty by the sellers to disclose the geological report to plaintiff, plaintiff did not rely reasonably on the sellers' nondisclosure of the geologic report. The arbitrator stated that it was obvious that the subject property was at the base of a 60 to 70 foot vertical hill, railroad siding had been placed against the wall of the residence as protection from rocks falling from the hill, and there was a "huge netting structure on the next door neighbor's property . . . whose only purpose was clearly to provide protection from rocks coming down off the hill." Plaintiff was given written professional advice to investigate the condition of the hillside, but plaintiff was "taken by the rural aspects of the residence," and failed to inspect obvious geological issues on the property. The arbitrator stated that plaintiff testified at the arbitration "that the existence of the hill and the canyon like atmosphere created by the hill were instrumental in his decision to purchase the residence." The arbitrator also stated that Civil Code section 2079 "requires [defendants] to conduct a visual inspection of the property. . . . Section 2079 [however] is explicit in that it does not relieve buyers from exercising reasonable care to protect themselves."
All statutory citations are to the Civil Code unless otherwise noted.
Defendants filed in the lawsuit a motion for summary judgment on the grounds that the doctrines of res judicata and collateral estoppel applied to the arbitration award which barred plaintiff's lawsuit against them. The trial court granted defendants' motion for summary judgment finding that plaintiff's lawsuit was barred by the doctrine of res judicata. The trial court stated that, "Both the arbitration and this civil action involved the same primary right invaded by the alleged negligence and fraud. The basic issue to be decided in both proceedings is whether defendant had a duty to furnish the geological report and whether plaintiff's damage resulted from that failure or his own failure to investigate. The arbitrator found . . . that a failure of a buyer to inspect the obvious is negligence that precludes justifiable reliance on the seller's disclosures or lack thereof. [Citation.] In his findings, the arbitrator specifically discussed the duty of the selling agents under . . . [s]ection 2079 and stated that such duty does not relieve the buyers from exercising reasonable care to protect themselves. The arbitrator's finding that plaintiffs negligently failed to inspect the obvious conditions of the property shall be applied to bar plaintiffs' [sic] same claim in this action. [Citations; See SARTOR V. SUPERIOR COURT (1982) 136 CAL.APP.3D 322, 328, res judicata applicable to preclude claims against an employee when a prior arbitration award found the employer not liable for plaintiff's damages.]"
DISCUSSION
A. Premature Appeal
Defendants contend that plaintiff's notice of appeal was premature and therefore invalid. "As numerous published appellate opinions have pointed out, an order granting summary judgment is not an appealable order. [Citations.] The appeal must be taken, instead, from a judgment entered on the basis of the summary judgment order. [Citations.]" (Levy v. Skywalker Sound (2003) 108 Cal.App.4th 753, 761, fn. 7; Code Civ. Proc., §§ 437c, subd. (m)(1), 904.1, subd. (a)(1).)
The minute order granting defendants' motion for summary judgment was filed on August 12, 2010. Plaintiff filed his notice of appeal on August 19, 2010, stating he is appealing from "the following judgment or order in this case, which was entered on . . . : August 13, 2010[.] [¶] Judgment after an order granting a summary judgment motion." The Judgment was filed on August 31, 2010. The notice of appeal stated that plaintiff was appealing a judgment which had not been filed at the time the notice of appeal was filed. It therefore was premature.
However, "The reviewing court may treat a notice of appeal filed after the superior court has announced its intended ruling, but before it has rendered judgment, as filed immediately after entry of judgment." (Cal. Rules of Court, rule 8.104, subd. (d)(2); Estate of Middleton (1963) 215 Cal.App.2d 324, 329 [appeal purportedly taken from minute order granting summary judgment rather than from formal judgment subsequently entered may in the court of appeal's discretion be treated as taken from the entry of judgment].) It is a "'"well-established policy, based upon the remedial character of the right of appeal, of according that right in doubtful cases 'when such can be accomplished without doing violence to applicable rules.'"'" (Rapp v. Golden Eagle Ins. Co. (1994) 24 Cal.App.4th 1167, 1172.) We exercise our discretion to deem plaintiff's notice of appeal as taken from the entry of judgment.
B. Res Judicata
Plaintiff contends that the trial court erred in granting defendants' motion for summary judgment finding that plaintiff's lawsuit was barred by the doctrine of res judicata. We disagree.
i. Standard of Review
"We review the grant of summary judgment de novo. (Szadolci v. Hollywood Park Operating Co. (1993) 14 Cal.App.4th 16, 19 .) We make 'an independent assessment of the correctness of the trial court's ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law.' (Iverson v. Muroc Unified School Dist. (1995) 32 Cal.App.4th 218, 222 .) A defendant moving for summary judgment meets its burden of showing that there is no merit to a cause of action by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).)" (Moser v. Ratinoff (2003) 105 Cal.App.4th 1211, 1216-1217.)
ii. Applicable Law
Our Supreme Court stated, "'Res judicata' describes the preclusive effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. . . . Under the doctrine of res judicata, if a plaintiff prevails in an action, the cause is merged into the judgment and may not be asserted in a subsequent lawsuit; a judgment for the defendant serves as a bar to further litigation of the same cause of action." (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896-897, fn. omitted; see also Citizens Planning Assn. v. City of Santa Barbara (2011) 191 Cal.App.4th 1541, 1549; Code Civ. Proc., § 1908, subd. (a)(2).) "Under this doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date. '"Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief."' [Citation.]" (Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 897.)
In contrast, the doctrine of "collateral estoppel, or issue preclusion, 'precludes relitigation of issues argued and decided in prior proceedings.' [Citation.]" (Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 896.) "While the term 'res judicata' has been used to encompass both claim preclusion and issue preclusion, we here use the term 'res judicata' only to refer to claim preclusion. . . . 'The doctrine of collateral estoppel is one aspect of the concept of res judicata. In modern usage, however, the two terms have distinct meanings.' [Citation.]" (Id. at pp. 896-897, fn. 7; see Garner, A Dictionary of Modern Legal Usage (1995 2d ed.) 169 ["The best way of remembering these doctrines clearly is to view collateral estoppel as a miniature of res judicata: the former applies to issues, the latter to entire claims or lawsuits"].)
Res judicata applies if (1) the judgment in the prior proceeding is final and on the merits; (2) the present proceeding is on the same cause of action as the prior proceeding; and (3) the parties in the present proceeding or parties in privity with them were parties in the prior proceeding. (In re Anthony H. (2005) 129 Cal.App.4th 495, 503; Federation of Hillside & Canyon Assns. v. City of Los Angeles (2004) 126 Cal.App.4th 1180, 1202; see Busick v. Workmen's Comp. Appeals Bd. (1972) 7 Cal.3d 967, 972; Bernhard v. Bank of America (1942) 19 Cal.2d 807, 810-811.) "The doctrine of res judicata applies not only to judicial proceedings but also to arbitration proceedings. [Citation.]" (Thibodeau v. Crum (1992) 4 Cal.App.4th 749, 755.)
For purposes of res judicata, the term "cause of action" refers neither to the legal theory asserted by a plaintiff nor to the remedy the plaintiff seeks. (Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 904; Slater v. Blackwood (1975) 15 Cal.3d 791, 795-796.) Instead, "California has consistently applied the 'primary rights' theory, under which the invasion of one primary right gives rise to a single cause of action." (Slater v. Blackwood, supra, 15 Cal.3d at p. 795.) "The primary right theory is a theory of code pleading that has long been followed in California. It provides that a 'cause of action' is comprised of a 'primary right' of the plaintiff, a corresponding 'primary duty' of the defendant, and a wrongful act by the defendant constituting a breach of that duty. [Citation.] The most salient characteristic of a primary right is that it is indivisible: the violation of a single primary right gives rise to but a single cause of action. [Citation.] . . . [¶] As far as its content is concerned, the primary right is simply the plaintiff's right to be free from the particular injury suffered. [Citation.]" (Crowley v. Katleman (1994) 8 Cal.4th 666, 681; accord, Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal.4th 623, 641; Mycogen Corp. v. Monsanto Co., supra, 28 Cal.4th at p. 904; Le Parc Community Assn. v. Workers' Comp. Appeals Bd. (2003) 110 Cal.App.4th 1161, 1170.) A particular injury might be compensable under multiple legal theories and might entitle a party to several forms of relief; nevertheless, it will give rise to only one cause of action. (Crowley v. Katleman, supra, 8 Cal.4th at pp. 681-682.)
iii. Analysis
Plaintiff contends that the primary right at issue in the arbitration and the lawsuit were not the same and, therefore, the doctrine of res judicata does not apply. Plaintiff argues that the primary rights involved in the proceedings are as follows: "The primary right possessed by the plaintiff with the sellers is the right to performance on the contract (the purchase agreement) and the right to protections afforded to buyers of real property by the sellers' statutory and common law disclosure duties. . . . [¶] The primary right possessed by the plaintiff with [defendants] is the right to protections afforded by [section] 2079 in real property sales, and to protections against the intentional breach of these obligations (fraud)." Plaintiff mischaracterizes the primary rights based upon the source of the duty, not the "right to be free from the particular injury suffered." (Crowley v. Katleman, supra, 8 Cal.4th at p. 681.)
Plaintiff did not allege a cause of action for violation of section 2079.
The primary right at issue in the arbitration and the lawsuit was the same. The arbitrator stated that a basic issue in the arbitration was the non-disclosure of the geological report, and plaintiff conceded that "the primary claim" in the lawsuit was "[t]he failure to disclose the geological report. . . ." Both defendants and the sellers allegedly failed to disclose the same information to plaintiff. The primary right involved in both proceedings was "plaintiff's right to be free from" the non-disclosure of the geological report. (Crowley v. Katleman, supra, 8 Cal.4th at p. 681.)
Plaintiff also contends the primary duty and the breach of that duty were not the same in the arbitration and the lawsuit. Plaintiff argues that "section 2079 provides the basis for a tort against defendants that is separate from that plaintiff asserted against the sellers" and, therefore, the doctrine of res judicata did not apply. The source of the duty to disclose may be different, but plaintiff does not contend that defendants, the sellers' agents, had any different or broader disclosure requirement than the sellers of the property. Plaintiff conceded in his post-arbitration brief that, "Agents and brokers have the same duty [as the sellers];" the duty to "disclose what they know about the property . . . and must absolutely disclose critical information, such as the [geological report], that is not known to the buyer." In addition, as discussed post, defendants' corresponding primary duty and breach of that duty to be litigated in the lawsuit were also involved in the arbitration proceeding because in that proceeding plaintiff and the sellers litigated the sellers' derivative liability based on defendants' duty.
Section 2079, subdivision (a) provides in pertinent part that, "It is the duty of a real estate broker or salesperson . . . to a prospective purchaser of residential real property . . . to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal . . . ."
Plaintiff contends res judicata cannot be based on the arbitration award against it because defendants were not parties to the arbitration. Plaintiff relies on Vandenberg v. Superior Court (1999) 21 Cal.4th 815, in which the court held that arbitration awards do not support collateral estoppel in favor of a third person unless there was an agreement to that effect. Plaintiff's reliance on Vandenberg, however, is misplaced. It does not bar application of res judicata to arbitration awards that eliminates the nonarbitrating party's liability for which the arbitrating party would have been derivatively liable. (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 576.)
The court in Vandenberg v. Superior Court, supra, 21 Cal.4th at p. 834 stated, "[W]e are compelled to conclude that a private arbitration award, even if judicially confirmed, can have no collateral estoppel effect in favor of third persons unless the arbitral parties agreed, in the particular case, that such a consequence should apply."
In Sartor v. Superior Court (1982) 136 Cal.App.3d 322, the homeowners filed an action against an architectural corporation and individuals alleged to be the architectural corporation's agents and employees. The lawsuit alleged that the homeowners were fraudulently induced to enter into a contract with the architectural company for services rendered in connection with the building of a house, and the house was allegedly defective. (Id. at p. 324.) The trial court stayed the action pending the completion of contractual arbitration between one of the homeowners and the architectural corporation. The arbitrator ruled that the homeowner failed to prove that he had been fraudulently induced to enter into a contract, but the architectural corporation was liable for defective gaskets in the solar collector. (Id. at p. 325.)
The trial court entered judgment confirming the arbitrator's award, and lifted the stay. The individual defendants moved for summary judgment on the grounds that the arbitration award had adjudicated all of the issues material to the individual defendants' liability, and that the doctrine of collateral estoppel prevented the homeowners from "relitigating" those issues before the trial court. (Sartor v. Superior Court, supra, 136 Cal.App.3d at p. 325.) The trial court denied the individual defendants' motion for summary judgment. (Ibid.) The court issued a writ of mandate directing the trial court to vacate its order denying summary judgment and to enter an order granting the individual defendants' motion. (Id. at p. 327.) The court held that collateral estoppel precluded the relitigation of the action, concluding that "the issues decided in the arbitration proceeding with respect to the [fraud and negligence causes of action] were identical with the ones sought to be pursued in the action against [the individual defendants]." (Id. at p 328.) The court reasoned the claims were identical because the corporation could act only through its agents. Thus, if the corporation was absolved of its derivative liability, the agents were likewise necessarily absolved. (Ibid.)
In Thibodeau v. Crum, supra, 4 Cal.App.4th 749, the plaintiff homeowners arbitrated numerous construction deficiencies with the general contractor who built their home. The arbitrator awarded the homeowners, inter alia, damages for poor workmanship, including for "[c]oncrete driveway repair." After the arbitration, radiating cracks in the driveway worsened, and the homeowners sued the subcontractor who constructed their driveway. The trial court denied the subcontractor's motion that the homeowners were estopped from pursuing their claim because the subject had been litigated in the arbitration, and entered judgment for the homeowners. The court in reversing the trial court's denial of the subcontractor's motion held that the action against the subcontractor was barred by the doctrine of res judicata, noting "the two proceedings . . . involve the same homeowner, the same home, and the same driveway." (Id. at p. 757.)
Sartor v. Superior Court, supra, 136 Cal.App.3d 322, and Thibodeau v. Crum, supra, 4 Cal.App.4th 749, "held a claim preclusion defense was available where the liability of one of the parties would be derivative only. In Sartor, the arbitration award that exonerated the principal for the acts of its employees precluded an action against the employees. In Thibodeau, the arbitration award against the general contractor precluded a subsequent action against the subcontractor who had done the work." (Richard B. LeVine, Inc. v. Higashi, supra, 131 Cal.App.4th at p. 578.)
Here, plaintiff argued in the arbitration proceeding that the sellers were liable to him, in part, because as principals they were vicariously liable for the negligent or willful misconduct of defendants as the sellers' agents. As in Sartor v. Superior Court, supra, 136 Cal.App.3d 322, and Thibodeau v. Crum, supra, 4 Cal.App.4th 749, the arbitration award here eliminates the nonarbitrating party's liability for which the arbitrating party would have been derivatively liable.
Plaintiff argues on appeal that Sartor v. Superior Court, supra, 136 Cal.App.3d 322 "is a collateral estoppel case, overruled by" Vandenberg v. Superior Court, supra, 21 Cal.4th 815. During the hearing on defendants' motion for summary judgment, plaintiff also argued that Thibodeau v. Crum, supra, 4 Cal.App.4th 749 had been overruled by Vandenberg. The Supreme Court, however, expressly suggested that Sartor and Thibodeau were still good law, stating that, "Our holding is narrowly circumscribed. Nothing in our decision imposes or implies any limitations on the strict res judicata, or 'claim preclusive,' effect of a California law private arbitration award. (See, e.g., Thibodeau v. Crum, [supra,] 4 Cal.App.4th [at pp.] 756-761 [unconfirmed award in private arbitration between homeowner and general contractor is res judicata barring homeowner's identical claim against subcontractor]; Sartor v. Superior Court [, supra,] 136 Cal.App.3d [at pp.] 327-328 [confirmed private arbitration award in favor of architectural firm is res judicata barring homeowner's identical causes of action against firm's employees].)" (Vandenberg v. Superior Court, supra, 21 Cal.4th at p. 824, fn. 2.)
Plaintiff further contends that although trial court referenced that the arbitrator's award discussed defendants' duty to disclose, indicating that defendants' duty to disclose had been litigated, defendants had not set forth in their separate statement or their moving papers that the issue of defendants' duty to disclose was before the arbitrator, and they raised that argument for the first time during oral argument on defendants' motion. Plaintiff argues that defendants "cannot interject new arguments it failed to raise in its moving papers." We disagree.
In defendants' memorandum of points and authorities in support of their motion for summary judgment, they stated that plaintiff's claims were barred because they were based in part on the law of agency, and that "[t]he issues of what duties were owed by the [s]ellers, what duties were owed by [defendants], what duties were owed to Plaintiff, and whether any of those duties were breached, are issues that were already litigated during the Arbitration." In addition, although not cited in defendants' separate statement, defendants submitted to the trial court, as part of their moving papers, the arbitrator's award in which the arbitrator discussed the duty of defendants—the sellers' agents—to disclose material facts. Defendants also submitted to the trial court plaintiff's arbitration and post-arbitration briefs that discussed defendants' duties and plaintiff's contention that the sellers were liable for defendants' alleged failure to disclose. The trial court may consider evidence omitted from the moving party's separate statement. (King v. United Parcel Service, Inc. (2007) 152 Cal.App.4th 426, 438; San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308, 315-316; Code of Civ. Proc., § 437c, subd. (c) ["the court shall consider all of the evidence set forth in the papers . . ."].) And, even if defendants' moving papers did not sufficiently mention that defendants' duty to disclose was litigated during the arbitration proceeding, plaintiff never objected to defendants' statement of it during the oral argument on defendants' motion. Plaintiff therefore forfeited the issue on appeal. (See Zubarau v. City of Palmdale (2011) 192 Cal.App.4th 289, 306.)
Plaintiff also contends that the arbitration proceeding should not bar his cause of action for fraud because of the arbitrator's legal error. Plaintiff argues that the arbitrator erred in concluding that the fraud claim was barred because plaintiff failed to inspect the geology and therefore did not rely on the nondisclosure of it. Plaintiff asserts his inability to challenge the arbitration award for an error in law makes it unfair to use that award as res judicata. But there was not an error of law.
Plaintiff does not contend that his causes of action for negligence and negligent misrepresentation should also be barred on this basis.
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Plaintiff cites Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486 (Manderville),and Storage Services v. Oosterbaan (1989) 214 Cal.App.3d 498 (Storage Services), for the proposition that "negligence on the part of a plaintiff-buyer is no defense when the misrepresentation is intentional." The cases involving the failure to investigate often rely upon the California Supreme Court's statement that "'[n]egligence on the part of the plaintiff in failing to discover the falsity of a statement is no defense when the misrepresentation was intentional rather than negligent.' (Seeger v. Odell [1941] 18 Cal.2d. [409,] 414)." (Alliance v. Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239-1240.) But the Supreme Court added, "'If the conduct of the plaintiff in the light of his own intelligence and information was manifestly unreasonable, however, he will be denied recovery.'" (Ibid.; 5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 815, p. 1177 ["If . . . the falsity of the statements should be apparent even to the plaintiff's limited intelligence, or is obvious to the senses, e.g., where a cursory glance at property shown to the plaintiff would disclose the truth, reliance is not justified."].)
An "element of intentional misrepresentation . . . is reasonable or justifiable reliance. . . ." (Manderville, supra, 146 Cal.App.4th at p. 1498.) "Whether the fraud is based on an intentional or negligent misrepresentation, or the failure to disclose a material fact, the reliance by the defrauded party on the representation or concealment is an essential element of the cause of action. The reliance must be reasonable and justified under the circumstances, except that the requirements for reliance are softened when there is an intentional fraud." (1 Miller & Starr, Cal. Real Estate (3d ed. 2000) Contracts, § 1:148, pp. 591-592 (rev. 10/2003), fns. omitted.) "[A] buyer of real property has a right to rely on the seller's representations concerning matters of fact that are unknown without making an independent investigation as to their truth, even though such an investigation would have disclosed the falsity of the representation and the buyer had the opportunity to make such an investigation." (1 Miller & Starr, Cal. Real Estate, supra, Contracts, § 1:148, p. 594 (rev. 10/2003).)
"The fact that an investigation would have revealed the falsity of the misrepresentation will not alone bar [the plaintiff's] recovery [citations]. . . ." (Seeger v. Odell, supra, 18 Cal.2d at pp. 414-415; emphasis added.) "A plaintiff who is aware of circumstances indicating that defendant's representations may be false has a duty to investigate the truth of the facts represented." (5 Witkin, Summary of Cal. Law, supra, Torts, § 813, pp. 1175-1176.)
In Bishop Creek Lodge v. Scira (1996) 46 Cal.App.4th 1721, the plaintiff filed a complaint alleging, inter alia, fraud against the sellers for not disclosing that they had settled with a party against whom they contended had violated a restrictive covenant benefiting the property purchased by plaintiff. The settlement included a stipulation that the restrictive covenant was unenforceable and the removal of a lis pendens. The matter was tried before a jury, and "[o]n the fraud cause of action, it found that [the sellers] had fraudulently concealed or suppressed a material fact . . . ." (Id. at p. 1730.) In reversing the judgment, the court stated, "[The sellers] were prepared to prove that the lis pendens gave [the plaintiff] actual knowledge that [the sellers' lawsuit] might affect title to the [the real property purchased by plaintiff]. . . . [A] jury could reasonably conclude that [the plaintiff] should have made a further inquiry or investigation into precisely how the lis pendens was cleared, and he was not justified in relying on the [sellers'] failure to disclose." (Id. at p. 1736.)
Here, plaintiff's failure to investigate was not the sole basis stated by the arbitrator for negating justifiable reliance on defendants' alleged non-disclosure, as occurred in Manderville, supra, 146 Cal.App.4th 1486 and Storage Services, supra, 214 Cal.App.3d 498. The arbitrator found that it was obvious that: (1) the subject property was at the base of a 60 to 70 foot vertical hill, (2) railroad siding had been placed against the wall of the residence as protection from rocks falling from the hill, and (3) there was a large netting structure on the next door neighbor's property to provide protection from rocks falling from the hillside. In addition, the arbitrator found that plaintiff was specifically given written professional advice to investigate the condition of the hillside, and plaintiff's decision to purchase the subject property was in large part due to the very existence of the hill.
Accordingly, the arbitrator did not legally err in finding no reasonable reliance. Thus, it was not unfair or otherwise inappropriate to use the arbitration award under the doctrine of res judicata to preclude plaintiff's claim.
DISPOSITION
The judgment is affirmed. Defendants are awarded their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
MOSK, J. We concur:
TURNER, P. J.
KRIEGLER, J.