Opinion
B156077.
10-15-2003
DUKE MIGLIN, Plaintiff and Appellant, v. KATHLEEN HIRSCH, Defendant and Respondent.
Haight, Brown & Bonesteel, Roy G. Weatherup and Stephen M. Caine for Plaintiff and Appellant. Law Offices of Daniel Ritkes and Daniel Ritkes; Law Offices of Abraham Resisa and Abraham Resisa for Defendant and Respondent.
Kathleen Hirsch agreed to sell a four unit apartment building in Venice, California to Duke Miglin for $915,000. After the deal failed to close, Miglin sued Hirsch for specific performance, breach of contract, fraud and negligent misrepresentation.
Following a bifurcated bench trial, the court found Miglin was not entitled to specific performance because the property actually was owned by the Kathleen R. Kafenhaus Trust (the Trust), not Hirsch individually, and Hirsch had not signed the purchase agreement as trustee. Miglin then dismissed his claim for breach of contract and proceeded to trial on his claims for fraud and negligent misrepresentation. The jury found in favor of Hirsch.
On appeal Miglin contends the trial court erred in refusing to grant a directed verdict on his claim for negligent misrepresentation and in giving the jury a general verdict form with special findings relating only to the fraud claim. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Hirsch is the sole trustee for and primary beneficiary of the Trust, which owns the property at issue in this case. In early February 1999, after several rounds of offers and counteroffers, she agreed to sell the property to Miglin for $ 915,000. She signed the form residential purchase agreement as "Kathleen R. Hirsch." The purchase agreement recited that Hirsch "warrants that [she] is the owner of this Property or has the authority to execute this Agreement."
Escrow instructions, correctly describing the owner of the property as the Trust, were sent to the parties on March 22 or 23, 1999. However, no escrow was ever opened. Hirsch became unhappy with the terms of the sale; and on April 27, 1999, her counsel sent a letter to Miglin canceling the sale.
Miglin filed suit against Hirsch for specific performance, breach of contract, fraud and negligent misrepresentation. The trial court bifurcated the trial and heard Miglins specific performance claim first. The court ultimately declined to order specific performance because the contract was uncertain as to the deadlines for opening escrow and depositing funds, Miglin had failed to timely deposit his earnest money into escrow and so had excused Hirsch from proceeding with the sale, and Hirsch could not be compelled to convey the property to Miglin because she did not hold title.
Miglin voluntarily dismissed his claim for breach of contract. The parties proceeded to trial by jury on Miglins claims for negligent misrepresentation and fraud. The jury was told that a prior phase of trial had taken place and that it should disregard any references to matters that had occurred in the first phase.
Hirsch testified she signed the sales contract as an individual and had forgotten title to the property was held by the Trust. She explained she had not read the terms of the purchase agreement before signing it and was unaware she would have to pay fees for escrow, inspections, termite repairs and other expenses. Because of those fees and because the financial difficulties that caused her to be interested in selling had abated, she decided not to go through with the sale.
Miglin testified he had relied on Hirschs representation that she could convey title and had incurred expenses, including costs for an inspection report and travel expenses for trips from his home in Chicago to California to sign documents and oversee the sale. He also testified he was damaged in the sum of $30,000 earnest money paid to West Coast Escrow.
Miglin moved for a directed verdict on his claim for negligent misrepresentation at the close of the second phase of trial, based on the courts finding in the first phase that Hirsch could not convey title, as well as her second-phase testimony that she "forgot" and "didnt remember" title was held in the name of the Trust. Miglins counsel argued those uncontradicted facts established negligence per se. He also argued Miglins testimony conclusively established reasonable reliance and damages. The court denied the motion.
The jury was instructed on "fraud by an intentional misrepresentation" (BAJI No. 12.31), "fraud by false promise" (BAJI No. 12.40) and "fraud by a negligent representation" (BAJI No. 12.45). It was also instructed on reasonable reliance and damages for all aspects of "fraud." At Hirschs request the jury was also instructed "[a] contract to sell real property by one without title will not be held fraudulent by virtue of the mere fact that the seller did not have title. The sellers obligation is merely to acquire title and convey title at the time of the closing of escrow."
Miglin requested that a general verdict form be used. However, at Hirschs request the jury was given a general verdict form with special findings, as follows:
"We, the jury in the above-entitled action, find in favor of __________________ and against ____________________.
"We, the jury in the above-entitled action, make the following special findings on the four questions submitted to us:
"Question 1: At the time of entering into the deposit receipt and purchase agreement, did defendant Kathleen Hirsch intend to sell the subject property to plaintiff Duke Miglin?
"_____ Yes _____ No
"Question 2: At the time of entering into the deposit receipt and purchase agreement, did defendant Kathleen Hirsch intend to deceive or injure plaintiff Duke Miglin into believing her promise to sell the subject property?
"_____ Yes _____ No
"Question 3: At the time of entering into the deposit receipt and purchase agreement, did defendant Kathleen [Hirsch] decide not [to] proceed with the sale of subject property because she did not own title?
"_____ Yes _____ No
"Question 4: Do you find by clear and convincing evidence that defendant Kathleen Hirsch committed fraud in the conduct upon which you base your finding of liability?
"_____ Yes _____ No."
The trial court invited counsel to explain the verdict form to the jury during closing argument. Hirschs counsel argued the jury should first answer the special findings and "these questions are going to decide how youre going to find" on liability. Miglins counsel argued the special findings pertained only to the "false promise" claim, not the alternative cause of action for negligent misrepresentation: "There just are no special questions with reference to that claim."
After several hours of deliberation, the jury sent a question to the court: "Is there a separate verdict form for the jury to use when deciding the claim of negligence? If no, how should we indicate our verdict of negligence but not false promise?" After a conference between counsel and the court, the jurys question was returned to the jury room with the following notation: "Ans: answer all questions numbered. Put in who to get judgment. If there is amount of damages insert in last blank." The jury thereafter quickly returned a general verdict in favor of Hirsch. The jury answered all four special findings in the negative. A jury poll revealed the vote was 11-to-1 in favor of Hirsch.
DISCUSSION
1. The Trial Court Did Not Err In Denying Miglins Motion for a Directed Verdict After the First Phase of Trial
We review the trial courts denial of a directed verdict under the substantial evidence standard. When the party who unsuccessfully moved for a directed verdict ultimately suffers an adverse jury verdict, the "assertion that he was `unfairly denied a directed verdict is . . . functionally equivalent to contending there was insufficient evidence to support the jury verdict against him. Only if there was no substantial evidence in support of the verdict could it have been error for the trial court earlier to have denied [the] motion for directed verdict. [Citation.]" (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630.)
The elements of negligent misrepresentation are: "(1) a misrepresentation of a past or existing material fact, (2) without reasonable grounds for believing it to be true, (3) with intent to induce anothers reliance on the fact misrepresented, (4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed, and (5) damages. [Citation.]" (Fox v. Pollack (1986) 181 Cal.App.3d 954, 962.) Miglin argues he was entitled to a directed verdict because the trial courts finding that Hirsch could not convey title, combined with Miglins and Hirschs testimony, established those elements as a matter of law. We disagree. There was ample evidence from which the jury could conclude Miglin did not reasonably rely on Hirschs representation of ownership.
Although Miglin testified he would not have proceeded with the purchase agreement and would not have incurred costs in that regard if he had known Hirsch could not convey good title, Miglin was in possession of escrow instructions that correctly identified the owner of the property as "Kathleen R. Kafenhaus, Trustee of the Kathleen R. Kafenhaus Trust dated April 11th, 1983" no later than March 22 or 23, 1999. The jury could well have determined it was unreasonable for Miglin to have relied on Hirschs initial representation of title after receiving the escrow instructions and without taking any action to clarify the issue of title. Indeed, the jury could reasonably have determined it was unreasonable for Miglin to take any action in reliance on the purchase and sale agreement until an escrow had actually been opened.[] Accordingly, the trial court properly denied the motion for a directed verdict.
Although we need not discuss it in detail, we are not impressed by Hirschs insistence that the tort of negligent misrepresentation will not lie against a seller who misrepresents his or her ownership of property in a real estate purchase and sale agreement. Such representation is not merely a promise to convey adequate title, but a false statement of a present fact. There is no reason why a negligent misrepresentation of title, like an intentional misrepresentation in that regard, should not be actionable. (See Blake v. Arp (1919) 180 Cal. 144, 147 [false representations as to title may be actionable in fraud]; Hargrove v. Henderson (1930) 108 Cal.App. 667, 680 ["an action of deceit may be maintained by a purchaser of real . . . property against his vendor for fraudulent misrepresentations of title"].)
2. There Was No Prejudicial Error With Respect to the Special Verdict Form
Miglin contends the form of the special findings, together with the courts response to the jurys question during deliberations, were so confusing as to constitute prejudicial error because the special findings referred only to the fraud claim. We review the trial courts decision to submit special interrogatories to the jury for abuse of discretion. (Mayfield v. Fidelity & Casualty Co. (1936) 16 Cal.App.2d 611, 628.) We may reverse a judgment based on instructional error only "`[w]here it seems probable that the error prejudicially affected the verdict. [Citation.] It is not enough that there may have been a `mere possibility of prejudice. [Citation.]" (Galvez v. Frields (2001) 88 Cal.App.4th 1410, 1423.)
Applying this standard, there was no prejudicial error. (Plyler v. Pacific Portland Cement Co. (1907) 152 Cal. 125, 134-135 [special findings need not address all the issues in the case].) The evidence amply supports a finding in favor of Hirsch on the claim for negligent misrepresentation. Although the verdict form and special findings were potentially confusing, both counsel explained the forms to the jury during closing arguments. Indeed, Miglins counsel specifically stated the special findings pertained only to the false promise claim, and that the jury could find in his favor on the negligent representation claim by simply returning a general verdict in favor of Miglin.
Although the jury requested clarification of the procedure for completing the verdict form, there is no indication it was actually misled by the instructions, the argument of counsel or the trial courts answer to its question. Unlike Huntingdon v. Crowley (1966) 64 Cal.2d 647, 660, cited by Miglin, in which the jurys question to the court established the jury had in fact misunderstood the instructions, the jurys question in this case indicates the jurors understood perfectly well they were required to rule on Miglins claims for both fraud and negligent misrepresentation, but had a question about how to indicate those rulings. Nor does the record indicate any confusion existed after the verdict was rendered. To the contrary, when the jury was polled, no juror indicated any confusion about the verdict, nor did Miglin object to the form of the jury poll as inadequate. (See People v. De Soto (1939) 33 Cal.App.2d 478, 481 [purpose of polling the jury is to permit jurors or parties to object to any uncertainty or ambiguity in the verdict as returned].) Finally, the 11-to-1 verdict suggests the jury did not find the case to be a particularly close one.
To be sure, the verdict form was not a model of clarity. In addition, it would have been preferable for the trial court to explain, in response to the jurys inquiry, that the general verdict related to both causes of action but the special findings related only to the cause of action for fraud. However, after a review of the entire record we are not of the opinion that it is reasonably probable a result more favorable to Miglin would have been reached if the verdict form and instructions had been different.[] (People v. Watson (1956) 46 Cal.2d 818, 836; Huntingdon v. Crowley, supra, 64 Cal.2d at p. 661.)
Miglin also argues that, in finding in favor of Hirsch in its general verdict, the jury necessarily made a different and inconsistent finding from the trial courts finding that Hirsch could not deliver good title as an individual. However, there is no indication whatsoever that the jury found or believed that Hirsch owned the property as an individual and could deliver good title. To the contrary, both Hirschs own testimony and the opening statements of both counsel informed the jury that Hirsch did not own the property as an individual. As discussed above, a much more reasonable interpretation of the general verdict is that the jury found Miglin failed to establish reasonable reliance and damages. Accordingly, if there was error in the trial courts refusal to instruct the jury as to its finding in the first phase of the trial, it was harmless. There was no inconsistency in the verdict. (See Code Civ. Proc., § 625 [where special findings conflict with general verdict, general verdict controls].)
DISPOSITION
The judgment is affirmed. Hirsch is to recover her costs on appeal. Hirschs request for attorney fees is remanded to the trial court to determine her entitlement to attorney fees on appeal and the amount, if any, of such fees.
We concur: WOODS, J. MUNOZ (AURELIO), J.