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Wurtzel v. Rodin

California Court of Appeals, Second District, Fourth Division
Sep 23, 2008
No. B195659 (Cal. Ct. App. Sep. 23, 2008)

Opinion


ALAN PAUL WURTZEL, Plaintiff and Respondent, v. JASON RODIN et al., Defendants and Appellants. B195659 California Court of Appeal, Second District, Fourth Division September 23, 2008

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

APPEALS from judgments of the Superior Court of Los Angeles County No. BC325676, Michael L. Stern, Judge.

Horvitz & Levy, H. Thomas Watson, Daniel J. Gonzalez; Grimm & Scholnick and Robert M. Scholnick for Defendants and Appellants.

Chapman, Glucksman & Dean, Arthur J. Chapman, and Dominic J. Fote for Plaintiff and Respondent.

SUZUKAWA, J.

Alan Paul Wurtzel (plaintiff) filed a lawsuit against Jason Rodin, Les Rodin, Malkie Rodin, Ruchama Rodin, and The Rodin Company (collectively referred to as the defendants, and individually referred to by their first names), alleging intentional fraud, negligence, and negligent concealment. After a jury trial, judgment for plaintiff in the amount of $130,000 was entered. Plaintiff was subsequently awarded $165,604.25 in attorney fees and costs of $36,217.98. Defendants appealed from the judgment in the underlying case (case No. B195659), and later filed two separate appeals from the award of attorney fees and costs (case Nos. B197744 & B200080). The latter two appeals were consolidated under case number B197744. All appeals were ultimately consolidated under case Number B195659.

We conclude plaintiff failed to present evidence that defendants breached a duty owed to him, and judgment should have been entered for defendants. We reverse the judgment in favor of plaintiff and vacate the orders awarding him attorney fees and costs.

FACTUAL AND PROCEDURAL BACKGROUND

Defendants owned a six-unit apartment building in Northridge (the Property) which plaintiff was interested in purchasing. Plaintiff enlisted the help of a friend, Tony Azzi, who was a real estate agent with the firm Marcus & Millichap. Plaintiff agreed to buy the Property for $490,000 and executed a purchase agreement (the Purchase Agreement). Azzi signed the Purchase Agreement as agent for both buyer and seller.

The seller identified in the Purchase Agreement is Les, but the Purchase Agreement is signed by Jason. Later escrow instructions were signed by Les, Jason, Malkie, Steven, and Ruchama. The title report identifies the owners as Les, Jason, Malkie, Steven, and Ruchama.

The Purchase Agreement stated that it was plaintiff’s sole responsibility to investigate and analyze matters affecting the desirability of the transaction, including the possibility that “documents exist which affect or encumber the Property and which have not been provided or disclosed by Seller.” The Purchase Agreement also required that defendants deliver a preliminary title report (PTR) to plaintiff. Once plaintiff received the PTR, he had five days to object to any exceptions in the report and a right to terminate the Purchase Agreement.

On January 22, 2004, Jason delivered a packet of documents to Azzi’s office. That day, plaintiff went to Azzi’s office, where he signed an acknowledgment of receipt of 13 categories of documents, including the PTR. The acknowledgment stated that “buyer must personally review all documents and verify the information contained therein.”

The PTR contained notification of a publicly-recorded exception on the Property which imposed rental restrictions. Within a section entitled, “Items to Be Considered and Exceptions to Coverage . . .,” it stated: “12. Matters contained in that certain document entitled ‘Regulatory Agreement’ dated May 17, 1995, executed by and between City of Los Angeles, a municipal corporation and Charles Lawrence and Arline Lawrence, husband and wife, as joint tenants recorded June 19, 1995, Instrument No. 95-971484, of Official Records, which document, among other things, contains or provides for: terms and conditions as set forth therein. [¶] Reference is hereby made to said document for full particulars.” There were a total of 17 items listed under this section.

The document recorded as Instrument No. 95-971484 in the Los Angeles County Recorder’s Office was a regulatory agreement (Regulatory Agreement), which provided that due to damages from the 1994 Northridge earthquake, the owner of the Property was required to provide 40 percent of the rental units for low income tenants for a period of 30 years.

After the close of escrow, plaintiff discovered the existence of the Regulatory Agreement and filed this suit against defendants. Plaintiff also named the brokers (Azzi and Marcus & Millichap) and the title company in his lawsuit. He reached a settlement with the title company. Azzi and Marcus & Millichap moved for summary judgment in March 2006. The trial court granted the motion in May 2006 and plaintiff appealed. In an unpublished opinion filed August 29, 2007, we affirmed the judgment against plaintiff. (Wurtzel v. Marcus & Millichap Real Estate Investment Brokerage Company, B191607.)

During his testimony, plaintiff admitted that the “real estate business” was his primary occupation and that he had participated in 10 to 30 real estate transactions. He said that although he was “good at . . . buying buildings, redoing the buildings, and things like that,” he has difficulty reading, so he hires people or asks friends to help him.

With reference to the PTR, plaintiff testified that he and Jan Feldman had a meeting with the escrow officer to review documents and the escrow instructions. He asked the officer for a copy of the PTR, but she told him she did not have one. Instead of informing either defendants or Azzi that the PTR was missing, plaintiff merely asked the escrow officer to get him a copy and left the office. About a week later, even though he had not seen the PTR, plaintiff initialed the document releasing all contingencies to the sale. He admitted he did not review the PTR before the close of escrow, assuming that Azzi “was taking care of all of that.” Escrow closed on February 4, 2004. Plaintiff did not discover the existence of the Regulatory Agreement until May 19, 2004.

Azzi testified that he represented both plaintiff and defendants. He did not look at the packet of documents Jason delivered before plaintiff picked them up, assuming it included all of the necessary paperwork. Nor did he review the documents with plaintiff. Explaining his conduct, Azzi said, “Normally I deal with very sophisticated people like [plaintiff],” so he assumed that plaintiff did not need his help. Neither Azzi nor his staff read the PTR prior to the close of escrow. Azzi confirmed that plaintiff was given five days to review the Purchase Agreement. After that period, plaintiff affirmed, in writing, that he had reviewed all of the documents and signed off on all contingencies to the sale. Azzi did not learn about the Regulatory Agreement at any time prior to the close of escrow.

Jason stated he informed plaintiff that the Property was burdened with the Regulatory Agreement during the inspection of the Property. He handed plaintiff a document and told him, “Here are some forms for the Regulatory Agreement on the building.” Jason testified that he put together the package of documents, including the PTR, and personally delivered it to Azzi’s office. He did not remember ever talking to Azzi during the escrow period, and did not tell Azzi or anyone else in his office about the Regulatory Agreement.

Feldman testified that he had a long-term relationship with plaintiff and went with him to inspect the Property prior to its purchase. He did not see Jason hand any documents to plaintiff during the inspection, nor did he hear Jason say anything about the Regulatory Agreement.

The escrow officer testified that the PTR arrived at the beginning of the escrow process and that she had it at all times during the escrow. She did not believe that plaintiff asked her for a copy of the PTR at any time prior to the close of escrow. She testified that if he had, she would have given him one. The officer said that plaintiff called her after escrow closed and asked for a copy.

An expert witness testified that the damages to plaintiff at the time of sale were $125,000, with an additional $103,800 accruing after the sale, for a total of $228,800 in economic damages.

Defendants moved for nonsuit at the close of plaintiff’s case, and the trial court granted it only as to the cause of action for intentional fraud, leaving the causes of action for negligence and negligent misrepresentation.

The jury found that 1) Les and Jason were negligent and their negligence was a substantial factor in causing harm to plaintiff, 2) Les and Jason concealed an important fact from plaintiff which caused him harm, and 3) Les and Jason acted as agents for the other defendants. It awarded plaintiff $130,000 in economic damages.

Defendants filed motions for new trial and for judgment notwithstanding the verdict (JNOV). Both motions were denied.

CONTENTIONS ON APPEAL

Defendants contend that the motions for nonsuit and JNOV should have been granted because they had no duty to disclose the Regulatory Agreement, since the means to discover its existence were readily accessible to plaintiff. They also contend that a new trial should be granted due to instructional error.

As we conclude the motions for nonsuit and JNOV should have been granted, we do not address the allegations of instructional error.

In his brief, plaintiff abandons the theory he presented at trial. There, he argued Jason affirmatively misrepresented that there were no limitations on the Property. He implicitly concedes the evidence failed to substantiate the claim he presented to the jury that Jason uttered the misrepresentation during the inspection of the Property. He now claims that Jason “fail[ed] to bring to light the existence of the regulatory agreement,” and reneged on his promise to deliver the PTR.

DISCUSSION

In ruling on a nonsuit motion, the court accepts the evidence most favorable to the plaintiff as true and disregards the conflicting evidence. It may grant the motion if it determines there is no substantial evidence to support a judgment in the plaintiff’s favor. On appeal, we also view the evidence in a light most favorable to the plaintiff. (Castaneda v. Olsher (2007) 41 Cal.4th 1205, 1214; Cossman v. DaimlerChrysler Corp. (2003) 108 Cal.App.4th 370, 375-376.)

The two causes of action upon which the trial proceeded to the jury were negligence and negligent concealment. The elements establishing negligence are: 1) duty by the defendant to use due care; 2) breach of that duty; and 3) injury proximately caused by that breach. The existence of duty is a question of law. (United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 594; Rice v. Center Point, Inc. (2007) 154 Cal.App.4th 949, 955.)

Plaintiff labels his second cause of action as one for “negligent concealment.” An action for fraud based on concealment requires that a person intentionally conceal a fact with the intent to defraud another. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.) The trial court granted defendants’ motion for nonsuit on the allegation of intentional fraud, so it is unclear how a fraud claim based on “negligent” concealment survived. In any event, “[c]oncealment is a term of art which includes mere nondisclosure when a party has a duty to disclose. [Citations.]” (Reed v. King (1983) 145 Cal.App.3d 261, 265.)

We conclude defendants should have been granted nonsuit on both causes of action because there was insufficient evidence that they breached a duty owed to plaintiff. Even if we consider plaintiff’s new claim on appeal, which we discuss below, and assume a breach of duty under a negligence theory, the evidence failed to establish that he suffered an injury proximately caused by that breach.

We examine the scope of defendants’ duty in this case. “‘In general, a seller of real property has a duty to disclose: “where the seller knows of facts materially affecting the value or desirability of the property which are known or accessible only to him 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. . . .” [Citation.]’ (Reed v. King, supra, 145 Cal.App.3d at p. 265 [residential real estate transactions], original italics, fn. omitted.) [¶] ‘Whether information “is of sufficient materiality to affect the value or desirability of the property . . . depends on the facts of the particular case.” [Citation.] Materiality “is a question of law, and is part of the concept of right to rely or justifiable reliance.” [Citation.]’ (Reed v. King, supra, 145 Cal.App.3d at p. 265.)” (Stevenson v. Baum (1998) 65 Cal.App.4th 159, 165; Furla v. Jon Douglas Co. (1998) 65 Cal.App.4th 1069, 1077.)

We determined the duty of a broker to plaintiff, as a buyer of real property, in our previously filed opinion.

Buyers who receive a contract containing certain terms and conditions and sign the contract without taking note of those terms and conditions do so at their peril. They are presumed to have read language that is printed plainly on the face of the contract. (See Constantian v. Mercedes-Benz Co. (1936) 5 Cal.2d 631, 634.) A buyer who accepts and signs an instrument is deemed to have accepted all of its terms, and cannot avoid the impact of its terms by claiming that he or she failed to read the instrument. (See Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163.) A buyer is also deemed to be aware of conditions affecting property that are a matter of public record. (Stevenson v. Baum, supra, 65 Cal.App.4th at pp. 165-166.)

The Purchase Agreement provided that it was plaintiff’s sole responsibility to investigate and determine whether there were matters affecting the desirability of the Property. Plaintiff was also informed by the Purchase Agreement that he was required to ascertain whether documents existed which encumbered the Property. The evidence at trial was undisputed that the PTR referred to public records which would have apprised plaintiff of the existence of the Regulatory Agreement. Put simply, defendants did not breach their duty to disclose material facts.

The case of Stevenson v. Baum, supra, 65 Cal.App.4th 159, illustrates this point. There, the plaintiffs purchased a mobilehome park pursuant to a sales contract which provided that title would be free of easements other than those of record. The title report disclosed the existence of an oil company’s easement for ingress and egress. It failed to mention that the easement also provided for pipeline access. However, that fact was clearly stated in public records. (Id. at p. 161.) The plaintiffs sued, claiming, inter alia, that the defendant was guilty of fraudulent concealment. The trial court granted the defendant summary judgment.

In affirming the trial court, the appellate panel held that the defendant complied with his duty to disclose all material facts affecting the property. The recorded easement, which the plaintiffs had the responsibility to find, plainly described that it applied to underground pipelines. “By warning the [plaintiffs] in the purchase contract that they took title subject to easements of record, [the defendant] put them on notice of the above material facts, which satisfied his duty of disclosure under the express terms of the contract. Because [the defendant] did not breach that duty, the [plaintiffs] cannot state a cause of action for fraudulent nondisclosure as a matter of law. [Citation.]” (Stevenson v. Baum, supra, 65 Cal.App.4th at p. 166.) Neither can plaintiff.

On appeal, plaintiff attempts to resurrect his negligence theory by alleging defendants undertook a duty to deliver the PTR to him, a theory he did not present in the trial court. We could simply reject this argument, noting that plaintiff cannot change his theory of recovery for purposes of review on appeal. (County of Los Angeles v. Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1118.)

In any event, plaintiff’s contention fails on the merits. Attempting to get around the seller’s general duty to disclose facts solely within his or her knowledge, plaintiff asserts that by undertaking the responsibility to deliver the PTR, defendants undertook a duty to “‘speak the whole truth.’” He asserts his failure to procure the information regarding the Regulatory Agreement from public records did not absolve defendants from liability for their failure to deliver the PTR. Defendants contend there was insufficient evidence for the jury to conclude that Jason was responsible for plaintiff’s failure to receive the PTR (as opposed to Azzi or the escrow officer). Plaintiff responds that the conflict in the evidence required that the jury resolve the matter. We need not resolve the evidentiary dispute. Even if we assume plaintiff presented sufficient evidence that defendants breached their duty, he failed to establish that the breach proximately caused the injury.

Plaintiff acknowledged that he knew the PTR was missing when he reviewed the file in the escrow office. He admitted he did not advise either Azzi or defendants that the PTR was not among the documents Jason delivered to Azzi. Notwithstanding his inability to peruse the PTR, he elected to waive the contingencies and close escrow. He attempts to blame Azzi and the escrow officer for rushing the sale. He criticizes Azzi’s assistants for failing to note the missing PTR or review the documents with him prior to signing. We are not persuaded. Setting aside the fact that defendants are not responsible for the acts of Azzi, his staff, or the escrow officer, the bottom line is that plaintiff has only himself to blame for his failure to discover the existence of the Regulatory Agreement prior to the close of escrow. He was on notice that he had the responsibility to uncover any encumbrances that might affect the value of the Property. As an experienced buyer of real estate, he was aware of the importance of the PTR. Nevertheless, he chose to throw caution to the wind and close escrow without examining it. He, and he alone, must suffer the consequences of that decision.

As plaintiff failed to present evidence that defendants breached a duty or that a breach proximately caused him harm, the trial court erred by denying defendants’ motion for nonsuit.

Having concluded that plaintiff failed to present sufficient evidence to withstand a nonsuit, it goes without saying that he presented insufficient evidence to support the verdict. In their case, defendants presented only the testimony of the escrow officer, which added nothing to further plaintiff’s claim of a breach of duty. Thus, defendants’ JNOV motion should have been granted as well.

DISPOSITION

The judgment in favor of plaintiff is reversed. The orders awarding plaintiff attorney fees and costs are vacated. The orders denying defendants’ motions for nonsuit and judgment notwithstanding the verdict are vacated. The matter is remanded to the

trial court with instructions to enter judgment for defendants. Defendants are awarded their costs on appeal.

We concur: EPSTEIN, P. J. WILLHITE, J.


Summaries of

Wurtzel v. Rodin

California Court of Appeals, Second District, Fourth Division
Sep 23, 2008
No. B195659 (Cal. Ct. App. Sep. 23, 2008)
Case details for

Wurtzel v. Rodin

Case Details

Full title:ALAN PAUL WURTZEL, Plaintiff and Respondent, v. JASON RODIN et al.…

Court:California Court of Appeals, Second District, Fourth Division

Date published: Sep 23, 2008

Citations

No. B195659 (Cal. Ct. App. Sep. 23, 2008)