Opinion
B228316
12-07-2011
VICTOR VARTANIAN et al., Plaintiffs and Appellants, v. PATTY JEDYNAK et al., Defendants and Respondents.
David A. Cordier for Plaintiffs and Appellants. Spile, Siegal, Leff & Goor, Richard L. Goor and Michael J.T. Wilson for Defendants and Respondents Patty Jedynak and DG Real Estate, Inc. Magdlen, Wenker & Schroth, Allan R. Schroth; O'Neill Huxtable & Abelson and Mary L. O'Neill for Defendant and Respondent Randall Wenker.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. EC049257)
APPEAL from a judgment of the Superior Court of Los Angeles County. Laura A. Matz, Judge. Affirmed.
David A. Cordier for Plaintiffs and Appellants.
Spile, Siegal, Leff & Goor, Richard L. Goor and Michael J.T. Wilson for Defendants and Respondents Patty Jedynak and DG Real Estate, Inc.
Magdlen, Wenker & Schroth, Allan R. Schroth; O'Neill Huxtable & Abelson and Mary L. O'Neill for Defendant and Respondent Randall Wenker.
INTRODUCTION
Appellants Victor and Roobina Vartanian submitted an offer to purchase a house from Randall Wenker, who was acting as trustee of the Katherine Metcalfe Trust. During the escrow period, the appellants conducted a general inspection and discovered that there was water in a crawlspace underneath the house. The inspector recommended that appellants hire a specialist to investigate the cause of the water intrusion. Although the appellants initially requested that Wenker determine the cause of the water intrusion, they later withdrew their request and agreed to purchase the house at a reduced price. Shortly after the purchase was finalized, the foundation of the home flooded. Appellants filed a complaint alleging that Wenker and his real estate agent, Patty Jedynak, intentionally misrepresented the cause of the water intrusion.
Wenker and Patty Jedynak filed motions for summary judgment arguing that the undisputed evidence demonstrated that: (1) the alleged misrepresentations were not material, and (2) appellants did not rely on any of the alleged misstatements. The trial court granted the motions for summary judgment based on the fact that appellants were aware of the water intrusion problem prior to the purchase.
On appeal, appellants argue that there is a triable issue of material fact as to whether respondents misrepresented the cause of the water intrusion and whether appellants relied on those misrepresentations when purchasing the home. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Vartanian's Purchase of the Property
In January of 2006, appellants Victor and Roobina Vartanian submitted an offer to purchase a house from Randall Wenker, who was acting as the trustee of the Kathryn Metcalf Trust. Appellants were represented in the transaction by Vahagn Stephen and Wenker was represented by Patty Jedynak, who was an affiliate of DG Real Estate.
During the escrow period, appellants hired "Home View" to conduct an inspection of the property. The inspector informed appellants that there was "'water under the crawl space.'" Victor Vartanian examined the crawlspace and saw "a lot of moisture and saturated soil." The inspector told appellants that although he could not determine the cause of the water intrusion, he believed the water might be coming from leaking pipes.
After completing the inspection, the inspector issued a report that listed the water intrusion as an "area[] of concern": "The soil in the crawlspace was saturated at the time of the inspection, particularly at the let (sic) side of the home, and standing water was visible. The source of the water could not be determined. Standing water can cause mold and structural issues, and should be drained. Home View recommends that the crawlspace be inspected by a licensed specialist." Although the appellants reviewed the report, they did not make any further inquiries as to the source of the water because they "felt the problem would be resolved" by replacing the plumbing.
The appellants received additional documents during the escrow period that referenced the water intrusion problem. A termite report indicated that there was "[e]xcessive moisture . . . in the subarea which appears to be caused by unknown source, possible seasonal condition." The report recommended that the owner "consult a licensed contractor for further inspection and recommendation." Jedynak also provided appellants an "Agent's Inspection Disclosure" form which stated that a water pump had been placed under the house following "the last big rain in 2005."
After the inspection process was completed, the Vartanians decided that they wanted Wenker to "investigate the reason for . . . the water retainage under the house and verify the cause and correct it." On January 30, 2007, Stephen sent Jedynak a letter stating that the Vartanians intended to withdraw their offer unless Wenker was able to identify and remedy the cause of the water intrusion: "Upon completion of inspection on above mentioned property, buyer has asked me to communicate his concerns. Despite the fact that property has numerous repair and code violations, buyer has only one major concern and until this issue is resolved fully, buyers' inspection contingency will remain in effect. [¶] Buyer requests from the seller to offer a permanent solution to ground saturation problem. Such solution can be reached by a licensed Geologist or a contractor written report and installing sump pumps as a short term solution is not acceptable. [¶] I sincerely hope that there will be a great effort to solve this issue otherwise buyer requests a cancellation of escrow."
On February 6, 2006, Jedynak had a conversation with Wenker regarding the status of the property. Jedynak's notes from their discussion indicate that Wenker stated that the house was "a collector of . . . water" and that he would try to "get a geologist. . . ." Wenker further stated "[we] are working on it [and] we haven't resolved it." At the bottom of her notes, Jedynak wrote that she had "relayed" the information to Stephen at 12:10 p.m.
At some point after Stephen sent Jedynak the letter discussing the Vartanians' concerns about the water intrusion, the Vartanians' lender informed them that their interest rate would go up if the purchase was not finalized by a certain date. Upon receiving this information, the Vartanians decided that, rather than waiting for Wenker to complete an investigation into the cause of the water intrusion, they would prefer to receive a price discount and "close escrow," thereby ensuring a more favorable interest rate.
On February 7, Stephen sent Jedynak a fax stating, "Buyer has sent me this letter. He has lost on interest rates and does not want to wait for seller to investigate." The accompanying letter requested that Wenker reduce the price of the home by $25,000, which would be put toward improvements intended to address the water intrusion problem. Wenker agreed to the price reduction and the Vartanians withdrew their remaining contingencies to the sale.
These improvements included installing "new plumbing, plus drainage and sewer"; replacing "existing sprinklers"; "[w]ater proof[ing] all exterior foundation walls"; "[p]lac[ing a] concrete v-notch ditch behind retaining wall"; "[i]nstall[ing a] sump pump under the crawl space"; and "[i]nstall[ing] new roof gutters to insure correct drainage."
Approximately three weeks later, appellants and Jedynak were in the backyard of the property and noticed that there was significant "standing water on the lawn." Appellants asked Jedynak why the lawn was so wet. Jedynak allegedly stated that the gardener had told her "that he left the sprinklers on for three to five days."
The escrow period closed on March 13, 2006 and appellants took possession of the property. On approximately April 1, 2006, significant rainfall occurred, which resulted in "flooding and . . . pooling of water within the crawl space area within the foundation."
Three weeks later, appellants sent Wenker a letter stating that, after the close of escrow, they discovered the house had a "very serious problem with water accumulation and flooding" which was "much more complex and expensive to fix" than they initially believed. Appellants alleged that it would cost at least $50,000 to alleviate the flooding issues and requested that Wenker "compensate [them] for the repairs."
B. The Complaint and Trial Court Proceedings
On March 13, 2009, appellants filed a complaint alleging that Wenker, Jedynak and DG Real Estate had intentionally misrepresented the cause of the water intrusion. Specifically, the complaint alleged that "[a]lthough it had been disclosed that water had been intruding into crawl space area under the home, . . . Jedynak represented that the cause of the water intrusion was due to the fact that the gardner (sic) had left the sprinklers running for a period extending over several days." The complaint further alleged that "[t]he water intrusion was due to causes other than as represented, making the condition significantly more serious than represented."
The original complaint also named Kathryn Metcalf and the Kathryn Metcalfe Trust as defendants, and included a second cause of action for negligent misrepresentation. However, in October of 2009, appellants filed a first amended complaint that did not name the Metcalf defendants. On January 15, 2010, the trial court sustained a demurrer to the negligent misrepresentation claim "without leave to amend." Appellants have not challenged that ruling. Therefore, the only claim at issue in this appeal is appellants' intentional misrepresentation claim.
In May of 2010, Jedynak and Wenker filed separate motions for summary judgment arguing that the undisputed evidence demonstrated: (1) Appellants were aware that the cause of the water intrusion was unknown and made an affirmative decision not to investigate the issue, and (2) to the extent the defendants had made any material misrepresentation, appellants had not relied on such statements when purchasing the house.
In their opposition, appellants alleged that, on February 6, 2006, Wenker informed Jedynak that the house was "a collector of water" and that Jedynak never disclosed this fact to the appellants or their agent. Appellants contended that "[t]he undisclosed information (that the home was a collector of water) was and is a material fact that required disclosure." Appellants also argued that Jedynak's statement that the water intrusion was caused by the sprinkler system was a "false representation made recklessly and without regard for their truth in order to induce action."
At the summary judgment motion hearing, the trial court questioned whether the defendants failure to disclose that the "the house is a collector of water" could be deemed a material misrepresentation given that appellants admitted they were informed of the water intrusion problem prior to the purchase: "Isn't it apparent to everybody, [the Vartanians] included, that the house is a collector of water, by virtue of the fact that there was a problem after heavy rain such as a pump had to be installed. By virtue of the fact that your own expert says it is probably the pipes. By virtue of the fact that the termite experts said there is excessive water under this house. I just don't get it." Appellants counsel maintained that the failure to disclose that the "house was a collector of water" was a material omission because it implied that the cause of the water intrusion was caused by something other than leaky pipes or the sprinklers being left on.
On August 16, 2010, the court signed an order granting the Defendants' motions for summary judgment and awarding them approximately $5,500 in costs. The Vartanians filed a timely appeal.
DISCUSSION
A. Standard of Review
"On appeal after a motion for summary judgment has been granted, we review the record de novo, considering all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained. [Citation.] Under California's traditional rules, we determine with respect to each cause of action whether the defendant seeking summary judgment has conclusively negated a necessary element of the plaintiff's case, or has demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial, such that the defendant is entitled to judgment as a matter of law. [Citations.]" (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 334-335.)
"In conducting our de novo review, we must view the evidence in a light favorable to plaintiffs, liberally construing their evidentiary submission while strictly scrutinizing defendant's showing, and resolving any evidentiary doubts or ambiguities in plaintiffs' favor." (Salas v. Department of Transportation (2011) 198 Cal.App.4th 1058, 1067.)
B. The Vartanians Have Failed to Demonstrate That There is a Triable Issue of Material Fact
The respondents' motions for summary judgment argued that the Vartanians could not succeed on their fraud claim because: (1) Appellants had failed to identify any material misrepresentation regarding the cause of the water intrusion, and (2) the evidence showed that appellants had not relied on any alleged misrepresentation when deciding to purchase the home. (Bower v. AT&T Mobility, LLC (2011) 196 Cal.App.4th 1545, 1557 [elements of fraud include, in part, "misrepresentation of a material fact (consisting of false representation, concealment or nondisclosure)" and "justifiable reliance on the misrepresentation"].)
On appeal, the Vartanians argue that they introduced evidence demonstrating that Wenker and Jedynak made two misrepresentations regarding the cause of the water intrusion. First, Jedynak allegedly failed to disclose that Wenker told her that "the house was a collector of water." Second, shortly before the close of escrow, Jedynak allegedly told the Vartanians that the water in the crawlspace was caused by a sprinkler that had been left on for three to five days. The Vartanians argue that there is a disputed issue of fact as to whether these misrepresentations were material and whether appellants justifiably relied on such misrepresentations when purchasing the house.
Generally, "[a] defendant moving for . . . judgment bears the initial burden to show that a cause of action has no merit . . . . Once the defendant meets this burden, the burden shifts to the plaintiff 'to show that a triable issue of one or more material facts exists as to that cause of action . . .,' supported by evidence of specific facts and not mere allegations of the pleadings." (Calemine v. Samuelson (2009) 171 Cal.App.4th 153, 160 (Calemine).) In this case, the Vartanians have not asserted that the defendants failed to meet their initial burden. Instead, they argue that they satisfied their own burden by showing the existence of a triable issue of material fact.
1. The defendants failure to disclose that the "the house is a collector of water" is not a material misrepresentation
The Vartanians first contend that there is a triable issue of fact as to whether Jedynak's failure to disclose that Wenker said "the house is a collector of water" was a material misrepresentation.
For the purposes of a fraud claim, nondisclosure may qualify as a material misrepresentation when a party has a duty to disclose. (See Reed v. King (1983) 145 Cal.App.3d 261, 264-265.) It is settled law in this state that the seller of real estate has a duty of disclosure: "'In the context of a real estate transaction, "[i]t is now settled in California that 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, the seller is under a duty to disclose them to the buyer. [Citations.]" [Citations.] Undisclosed facts are material if they would have a significant and measurable effect on market value. [Citation.]'" (Calemine, supra, 171 Cal.App.4th at p. 161.) This duty of disclosure extends to both the seller and his agent. (See generally Godfrey v. Steinpress (1982) 128 Cal.App.3d 154, 177.)
Our courts have clarified, however, that a "seller's duty of disclosure is limited to material facts; once the essential facts are disclosed a seller is not under a duty to provide details that would merely serve to elaborate on the disclosed facts." (Calemine, supra, 171 Cal.App.4th at p. 161.) In other words, facts are not material if they would serve "only as [an] elaboration" on facts that were within the buyer's knowledge. (Pagano v. Krohn (1997) 60 Cal.App.4th 1, 9.)
The undisputed evidence shows that the Vartanians were repeatedly told that: (1) there was significant water under the crawlspace, (2) the cause of the water intrusion was unknown, and (3) a specialist should be retained to investigate the matter further. After receiving this information, the Vartanians told Wenker that they intended to withdraw their offer unless he could "verify" and "correct" the cause of the water intrusion. However, the Vartanians later withdrew this request and elected to pursue a $25,000 price reduction after their lender warned them that their interest rate would rise if the transaction was not completed by a certain date. Wenker agreed to the price reduction and the Vartanians removed all remaining contingencies to the sale. This evidence - none of which is contested - leaves no dispute that, at the time of purchase, the Vartanians were aware that there was a water intrusion issue whose cause was unknown. Despite that information, they decided to move forward with the purchase to ensure a more favorable interest rate.
Given the evidence above, Jedynak and Wenker's failure to disclose that the "the house was a collector of water" was not a material misrepresentation. We agree with the trial court's conclusion that, if disclosed, this statement would have merely served to reiterate that (1) the house was subject to a water intrusion, and (2) the cause of the intrusion had not been determined. Because appellants were aware of those two essential facts prior to purchase, Jedynak and Wenker had no duty to disclose that the house was a "collector of water."
The Vartanians, however, argue that the undisclosed statement "is a material fact [because] it infers that the foundation area accumulates water from a source other than a leaky pipes (sic) or as a result of a single event. . . ." Even if we accept Appellants' contention that the ambiguous statement "the house is a collector of water" suggests that Wenker and Jedynak had ruled out certain possibilities as to the cause of the water intrusion, these details merely elaborate on facts that were already disclosed to the appellants; namely, that the cause of the water intrusion had not been determined and that the problem should be investigated further.
2. The Vartanians have failed to establish that there is a triable issue of fact as to whether Jedynak fraudulently misrepresented that the water intrusion was caused by the sprinkler system
The Vartanians also argue that the trial court erred in granting summary judgment because there is evidence that Jedynak intentionally misrepresented that the water intrusion was caused by the sprinkler system. In support of their oppositions to the respondents' motions for summary judgment, the Vartanians each submitted a declaration alleging that, in early March, Jedynak told them that "the saturation of the ground under the home was caused by the exterior sprinklers having been left on for an extended period of time." They contend that this allegation establishes a triable issue of fact as to whether Jedynak committed fraud.
There are several problems with this argument. First, contrary to the Vartanians' declarations, Roobina Vartanian's deposition testimony indicates that Jedynak did not state that the sprinkler system caused the saturation under the crawlspace. Roobina testified that, shortly before the close of escrow, she and her husband were standing in the backyard with Jedynak when they noticed "standing water on the lawn." Roobina further testified that when she asked Jedynak why there was "so much water on the lawn," Jedynak said "the gardener had told her that he left the sprinklers on for three to five days."
Although we must interpret the evidence in the light most favorable to the plaintiffs, a party opposing summary judgment may not create a triable issue of fact by submitting a declaration that contradicts her own prior deposition testimony. (See Shin v. Ahn (2007) 42 Cal.4th 482, 500, fn. 12 ["a party cannot create an issue of fact by a declaration which contradicts his prior discovery responses"]; Jacobs v. Fire Ins. Exchange (1995) 36 Cal.App.4th 1258, 1270 ["court[s] may disregard a declaration, prepared for purposes of summary judgment motion, which conflicts with deposition testimony of the declarant"].) Here, Roobina's testimony demonstrates that Jedynak's comments about the sprinkler system were made in reference to the cause of the standing water on the lawn, not the cause of the water intrusion problem.
Second, even if we assume Jedynak said the water intrusion in the crawlspace was caused by the sprinklers being left on, the evidence shows that the Vartanians did not rely on that statement when deciding to purchase the house. (See OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 864 (OCM) ["A plaintiff asserting fraud by misrepresentation is obliged to plead and prove actual reliance, that is, to ' "establish a complete causal relationship" between the alleged misrepresentations and the harm claimed to have resulted therefrom.' [Citations]"].) At his deposition, Victor Vartanian repeatedly testified that, although he did not know the cause of the water intrusion, he decided to purchase the house to ensure that he would receive a lower interest rate:
COUNSEL: . . . You had one major concern before close of escrow and that was to find out the source of [the water intrusion]; right?During another exchange, Victor stated that although the reason for the water intrusion had not been established, he "went ahead and . . . remove[d] all the contingencies" because "the bank said that if we don't close it within certain time, we're going to lose the loan." In a third exchange, counsel asked Victor, "Did you make the decision to close escrow and buy the house even though you didn't have a permanent solution [to the water intrusion problem] because you wanted to keep your interest rate favorable to you?"; Victor replied, "Yes. . . . I didn't want to go through the financial hardship."
VARTANIAN: Right.
COUNSEL: You didn't want to let escrow close. You didn't want to buy the house until there was a permanent solution for that problem; right?
VARTANIAN: Right. Uh-huh.
COUNSEL: Okay. That feeling, though, changed when you found out that the bank was going to lose your loan; right?
VARTANIAN: Right.
COUNSEL: All right. And that's why you ended up taking the $25,000 credit and buying the house; right?
VARTANIAN: Right.
These statements demonstrate that appellants did not rely on Jedynak's alleged statement about the cause of the water intrusion when deciding to purchase the house. "Actual reliance occurs when a misrepresentation is ' "an immediate cause of [a plaintiff's] conduct, which alters his legal relations," ' and when, absent such representation, ' "he would not, in all reasonable probability, have entered into the contract or other transaction." ' [Citations.]" (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 976.) Victor specifically admitted that the Vartanians elected to finalize the sale without determining the cause of the water intrusion because they wanted to guarantee a lower interest rate. It is therefore clear that Jedynak's subsequent statements about the sprinklers being left on had no effect on the purchasing decision.
The record suggests that Jedynak allegedly made her statement about the sprinklers in late March, which was almost a month after the Vartanians decided to remove the remaining contingencies on the purchase. Therefore, it is unclear how the Vartanians could have possibly relied on that statement when purchasing the house.
Finally, even if we assume that there are triable issues of fact as to whether Jedynak stated that the sprinkler caused the water intrusion problem and that the Vartanians actually relied on this statement, the undisputed evidence shows that their reliance was not justifiable. "'Besides actual reliance, [a] plaintiff must also show 'justifiable' reliance, i.e., circumstances were such to make it reasonable for [the] plaintiff to accept [the] defendant's statements without an independent inquiry or investigation.' [Citation.]" (OCM, supra, 157 Cal.App.4th at p. 864.) The Vartanians contend that, on or around March 3, Jedynak said the crawlspace was wet because the sprinkler had been left on for "three to five days." However, the undisputed evidence shows that, as of late January, the Vartanians knew that there was water in the crawlspace. They also knew that a pump had been put under the house in 2005 to remove prior flooding that had occurred in that area. Given that the Vartanians were aware that there was excessive water under the house in 2005, and again in late- January, they could not reasonably rely on a statement indicating that the water intrusion was caused by the sprinklers having been left on for several days in February and March.
The record indicates that escrow closed on or around March 13, 2006. The Vartanians allege that the conversation with Jedynak occurred about 10 days before the close of escrow.
In sum, even if there is a triable issue of fact as to whether Jedynak said that the water intrusion was caused by sprinklers being left on (which is belied by Roobina's own deposition testimony), the evidence conclusively demonstrates that appellants did not rely on the statement when deciding to purchase the home, nor could they have reasonably done so.
After entering judgment against the Vartanians, the trial court issued an order awarding Randall Wenker approximately $40,000 in attorneys' fees. The Vartanians' notice of appeal indicates that they appealed trial court's "judgment entered in favor of defendants" and "the order awarding attorney fees to defendant, Randall Wenker." The Vartanians' appellate briefs do not reference or include any argument pertaining to the trial court's order awarding Wenker attorneys' fees. We therefore deem their appeal from that order to be abandoned. (See Sklar v. Franchise Tax Board (1986) 185 Cal.App.3d 616, 621, fn. 5 ["Plaintiffs raise no argument in their briefs regarding their dismissed claim for declaratory relief. We therefore deem their appeal from that part of the judgment to be abandoned"]; Conner v. Dart Transportation Service (1976) 65 Cal.App.3d 320, 323 ["We treat the failure of the brief to discuss the seventh cause of action as abandoning the appeal as to it"].)
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DISPOSITION
The judgment is affirmed. Respondents are to recover their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
ZELON, J.
We concur:
PERLUSS, P. J.
WOODS, J.