Hoffman v. 162 North Wolfe ( 2014 )

Filed 7/15/14 Modified and certified for partial publication 8/13/14 (modification and order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
STEVEN HOFFMAN et al., H038643
(Santa Clara County
Cross-Complainants and Appellants, Super. Ct. No. 110CV172328)
v.
162 NORTH WOLFE LLC, et al.,
Cross-Defendants and Respondents.
This case involves a dispute between the owners of adjacent commercial property
located in Sunnyvale at 170 North Wolfe Road (170 Wolfe, or 170 Wolfe property) and
162 North Wolfe Road (162 Wolfe, or 162 Wolfe property). In March 2010, appellants
Steven Hoffman (Hoffman) and Swee Lin Hoffman (collectively, the Hoffmans),
purchased the 170 Wolfe property. After close of escrow, the owner of the 162 Wolfe
property, respondent 162 North Wolfe LLC (162 LLC), claimed a landscape easement
and prescriptive easement rights of ingress and egress over 170 Wolfe.
162 LLC sued to quiet title. The Hoffmans cross-complained, alleging (among
other things) that 162 LLC and its members had defrauded them by falsely advising that
they had no claims or interest with respect to the 170 Wolfe property. The Hoffmans
alleged two fraud claims—concealment/suppression of facts, and intentional
misrepresentation. The fraud claims were based upon an alleged conversation
approximately eight months before close of escrow between Hoffman and Jonathon
Owens, one of 162 LLC’s members. In response to Hoffman’s complaint that vehicles
servicing the 162 Wolfe property were crossing over onto 170 Wolfe, Owens said he
“would take care of it.” After this alleged conversation and for eight months before
escrow closed, the vehicles servicing 162 Wolfe continued to cross onto 170 Wolfe. The
Hoffmans observed these occurrences. But they neither raised the issue with the then-
owner of 170 Wolfe, nor complained to 162 LLC.
162 LLC successfully moved for summary adjudication of the Hoffmans’ two
fraud claims. The parties later settled their remaining claims, and a judgment was entered
with the Hoffmans’ reserving their challenge to the propriety of the summary
adjudication order. The Hoffmans appealed, arguing that there were triable issues of
material fact as to both the concealment/suppression of facts and intentional
misrepresentation claims.
We conclude there was no error. The concealment/suppression of facts claim fails
because of the absence of evidence supporting all of the requisite elements of that claim.
Two elements of the claim not present were (1) a duty on the part of 162 LLC to disclose
that it claimed prescriptive easement rights; and (2) the Hoffmans’ justifiable reliance on
the facts as they understood them without such disclosure (i.e., their understanding that
there were no adverse claims against the 170 Wolfe property by the owners of the
adjacent property). The intentional misrepresentation claim likewise fails because of the
absence of evidence that the Hoffmans justifiably relied on 162 LLC’s alleged implicit
representation that it did not claim any easement rights over the 170 Wolfe property. We
will therefore affirm the judgment.
FACTUAL BACKGROUND
162 LLC, whose members are Jonathon Owens and Thomas Haverstock, is the
owner of the 162 Wolfe property. Owens and Haverstock are both patent attorneys, and
are partners of Haverstock & Owens, LLP (Law Firm), which is a tenant in the building
located on 162 Wolfe. That building is next door to the building on 170 Wolfe.
2
At some time prior to June 2009, Owens and Haverstock had two conversations
with Dean Chestnut, a real estate broker representing the then-owner of 170 Wolfe.
Chestnut inquired about Owens’s and Haverstock’s potential interest in purchasing
170 Wolfe. After they received information about the asking price, Owens and
Haverstock both indicated to Chestnut that they were not interested in purchasing
170 Wolfe. Chestnut never told the Hoffmans about his conversations with Owens and
Haverstock, and neither Owens nor Haverstock ever had any contractual, transactional, or
fiduciary relationship with Chestnut.
Hoffman is and has been a licensed real estate broker since 1994. He had in the
past owned a residential real estate brokerage firm, CompuRealty, as well as a medical
software company, Quicksilver Systems. The Hoffmans also own BackProject, Inc.
(BackProject), a company that manufactures medical exercise devices intended to
provide relief for back and neck pain; Hoffman is the chief executive officer of
BackProject. The Hoffmans own real estate in addition to their residence, namely, a
four-unit apartment building, and a townhouse or condominium.
The Hoffmans entered into a contract to purchase 170 Wolfe on April 29, 2009.
Approximately two months later (on or about June 26, 2009), BackProject became a
tenant in the building located at 170 Wolfe. The Hoffmans closed escrow on their
purchase of 170 Wolfe on March 5, 2010.
Shortly after BackProject became a tenant at 170 Wolfe, Hoffman introduced
himself to Owens and complained to him that the Law Firm’s employees were parking in
spaces in front of 170 Wolfe. Owens indicated that the Law Firm employees would cease
parking there.1
1
As indicated in their summary adjudication motion, 162 LLC is not claiming
easement rights over the parking area in front of 170 Wolfe.
3
Hoffman had a second conversation with Owens—the one central to the
Hoffmans’ fraud claims—that occurred “a couple of weeks” after the first conversation.
The second conversation occurred in mid- to late-July 2009, nearly eight months before
the Hoffmans closed escrow. Hoffman had observed various 162 Wolfe service
vehicles—United Parcel Service, Federal Express, DHL, Costco, a shredding company,
and a water delivery service—using 170 Wolfe. He had also observed the Law Firm’s
employees backing out of parking spaces and crossing over onto 170 Wolfe. Hoffman
testified in deposition that as a result of these observations, he spoke with Owens: “Q.
Specifically, what did you say to Mr. Owens? [¶] A. I do not want your vehicles
crossing the property line. I would appreciate it if you could take care of that. [¶] Q.
And what did he say to you in this purported conversation? [¶] A. At this time, ‘No
problem. We’ll take care of it.’ [¶] Q. When you said ‘your vehicles,’ did you tell him
what you meant by that? [¶] A. Yes. [¶] Q. What did you tell him? [¶] A. ‘Your
vehicles that service your building and your employees.’ ”2 Hoffman testified he had
requested that the vehicles not cross over the property line because he did not want
Owens to “get used to this.”
At the time of these two conversations in mid-2009, Owens believed, based upon
long-standing use, that 162 LLC held by prescriptive easement a “right to drive through
the paved area” between the two properties. He did not mention this prescriptive
2
Owens denied this conversation occurred and indicated that he had no
conversation with Hoffman concerning the use of any portion of 170 Wolfe for ingress
and egress by 162 Wolfe service vehicles or vehicles of Law Firm employees.
Haverstock had no knowledge of any such conversation between Hoffman and Owens.
For purposes of reviewing the summary adjudication order, we assume the conversation
alleged by Hoffman took place. (Mann v. Cracchiolo (1985) 38 Cal. 3d 18, 35 [moving
party’s affidavits on summary judgment are strictly construed, and opposing party’s
affidavits are liberally construed; doubts in resolution of motion should result in its
denial]; see also Troyk v. Farmers Group, Inc. (2009) 171 Cal. App. 4th 1305, 1322.)
4
easement right in his conversations with Hoffman because he is “not a real property
attorney.”
Both before BackProject’s occupancy and during its occupancy of 170 Wolfe,
there were instances––before the Hoffmans closed escrow––in which the area in which
162 LLC claims a prescriptive easement was temporarily, partially obstructed by vehicles
or pallets. 162 LLC did not complain about these temporary obstructions. Additionally,
at no time did 162 LLC repair or maintain the disputed area involved in the prescriptive
easement, offer to do so, or pay taxes on the area.
After the second conversation between Hoffman and Owens and up to the time
escrow closed in March 2010, the Hoffmans continued to observe vehicles that were not
servicing 170 Wolfe travel over that property. For Hoffman, this was a “common
occurrence.” Hoffman did not complain to BackProject’s landlord (i.e., the then-owner
of 170 Wolfe) about these vehicles’ traveling over 170 Wolfe. And the Hoffmans
presented no evidence that they spoke to Owens or Haverstock about this issue after
Hoffman’s second conversation with Owens in July 2009. In his declaration filed in
opposition to the summary adjudication motion, Hoffman indicated: “Although my wife
and I [after Hoffman’s July 2009 conversation with Owens] occasionally observed
vehicles from 162 N. Wolfe Rd[.] crossing the property line to 170 N. Wolfe Rd., there
were many other issues that we were dealing with and I thought that this particular
problem would be taken care of as I had discussed with Jonathan Owens.”
Shortly after escrow closed in March 2010, Hoffman met with Owens and
Haverstock. Hoffman said that despite his prior requests, vehicles from 162 Wolfe were
still crossing over onto 170 Wolfe and he did not want it to continue. Owens responded
with words to the effect of “ ‘Oh, I thought we took care of this already.’ ” Neither
Owens nor Haverstock mentioned anything about 162 LLC claiming prescriptive
easement rights over the 170 Wolfe property. Two months later, the Hoffmans became
5
aware for the first time of 162 LLC’s claim to a prescriptive easement over 170 Wolfe
when they received a May 5, 2010 letter written by 162 LLC’s counsel.
PROCEDURAL BACKGROUND
I. The Complaint
On May 18, 2010, 162 LLC filed a complaint against the Hoffmans and all
persons claiming any interest adverse to 162 LLC’s title. It thereafter, in December
2010, filed a first amended complaint (Complaint) alleging two causes of action to quiet
title and for injunctive relief.
162 LLC alleged in the Complaint3 that since January 19, 2001, it has owned the
162 Wolfe property with a 9300 square foot commercial building located thereon. Since
2002, the Law Firm has occupied the 162 Wolfe building as a tenant. The Hoffmans are
the owners of the 170 Wolfe property adjacent to 162 Wolfe, and they own a business,
BackProject, operating out of a building located on 170 Wolfe. There is a paved alley or
driveway (the driveway), approximately 43 feet wide at its narrowest point, running
between the two buildings.
Since its acquisition of the 162 Wolfe property in 2001, 162 LLC has “openly,
notoriously, and continuously without permission used this paved driveway . . . including
the portion on [the Hoffmans’] property, for ingress and egress[,] for access for
remodeling/construction, vehicles, parking, commercial use, delivery vehicles[,] and to
allow garbage to be picked up at the rear of their building.” 162 LLC alleged that it owns
a prescriptive easement for ingress and egress burdening 170 Wolfe. 162 LLC also owns
a landscape easement involving a triangle of land abutting North Wolfe Road, based upon
162 LLC’s having maintained at its expense since 2002 in an open, notorious and hostile
3
In order to avoid redundancy in this paragraph and the following paragraph, we
will sometimes dispense with the phrase “162 LLC alleged” in describing the allegations
of the Complaint.
6
manner the landscape and upkeep of the area. “In the last six weeks,[4] [the Hoffmans]
have wrongfully and illegally made efforts to stop and infringe upon [162 LLC’s] use of
the driveway and landscape triangle and its prescriptive easements therein.”
162 LLC sought to quiet title in its prescriptive easements for the driveway and
landscaping areas. It also sought an injunction prohibiting the Hoffmans from continuing
to interfere with 162 LLC’s use of the driveway and landscape areas consistently with
those easements.
II. The Cross-Complaint
On or about July 2, 2010, the Hoffmans filed a cross-complaint. In their amended
cross-complaint filed October 27, 2010 (Cross-Complaint), the Hoffmans named
162 LLC, the Law Firm, Haverstock, Owens, Marie Crowninshield, and Elaine Gallus as
cross-defendants (collectively, cross-defendants). The Hoffmans alleged four causes of
action for (1) declaratory relief and to quiet title against all cross-defendants; (2) fraud
(concealment/suppression of facts) against 162 LLC, Haverstock and Owens;5 (3) fraud
(intentional misrepresentation) against 162 LLC, Haverstock, and Owens; and
(4) nuisance/trespass against all cross-defendants.6
4
The reference date of the commencement of the Hoffmans’ alleged acts of
interference is uncertain. Both the original complaint and the amended Complaint (filed
December 10, 2010) contain the phrase “[i]n the last six weeks.” We surmise that
162 LLC is alleging in the amended Complaint that the Hoffmans’ alleged interference
occurred within six weeks prior to May 18, 2010, when the original complaint was filed.
5
The Hoffmans indicate in the captions to the second and third causes of action
for fraud (concealment/suppression and intentional misrepresentation) that those claims
are alleged against Haverstock and Owens only. But because the Hoffmans allege in
those claims that Owens was acting on his own behalf, and on behalf of Haverstock and
162 LLC, it is apparent that they intended to allege those causes of action against 162
LLC as well as against its individual members, Haverstock and Owens.
6
The summary adjudication motion concerned only the second and third causes of
action of the Cross-Complaint; therefore, the allegations of the first and fourth causes of
action are not detailed here. The record also reflects that the court overruled a demurrer
7
In the second cause of action, the Hoffmans alleged7 that Owens met with
Hoffman in mid-2009, when Hoffman was a tenant at 170 Wolfe. Hoffman said that he
was purchasing 170 Wolfe, “and that he did not want vehicles of [162 LLC or the Law
Firm], or vehicles of the employees of those entities and/or vehicles servicing these
entities crossing over the property line separating” 170 Wolfe and 162 Wolfe. Owens
and Hoffman had had a prior conversation that Law Firm employees had been parking
their cars on 170 Wolfe; Owens had said “he would take steps to see to it that this no
longer occurred.” In the later conversation, Owens told Hoffman that “he would see to it
that the vehicles [about which Hoffman complained] would no longer cross over the
[162-170 Wolfe] property line.” Neither Owens nor Haverstock—nor anyone affiliated
with 162 LLC or the Law Firm—ever advised the Hoffmans before they purchased the
170 Wolfe property in March 2010 that any of them claimed a prescriptive easement over
170 Wolfe. Additionally, neither Owens nor Haverstock told the real estate broker
marketing 170 Wolfe prior to the Hoffmans’ purchase that there was a claim of easement
rights over 170 Wolfe, notwithstanding that Owens and Haverstock had been offered the
chance to purchase it. Owens and Haverstock thus “repeatedly failed to reveal and
suppressed the fact that they claimed to own and hold prescriptive easement rights over
[170 Wolfe].” The Hoffmans alleged that they were ignorant of the true facts, were
justified in proceeding as they did, and were damaged as a result of the concealment and
suppression of facts.
In the third cause of action for intentional misrepresentation, the Hoffmans
incorporated by reference each allegation made in the second cause of action. They
filed by 162 LLC, the Law Firm, Haverstock, and Owens as to the second and third
causes of action of the Cross-Complaint.
7
In order to avoid redundancy in this paragraph and the following paragraph, we
will sometimes dispense with the phrase “the Hoffmans alleged” in describing the
allegations of the Cross-Complaint.
8
alleged that 162 LLC, Haverstock and Owens “implicitly represented” to Hoffman that
they did not claim any rights in 170 Wolfe by indicating that “steps would be taken to see
to it that vehicles of cross-defendants, their employees and those providing services to
them would not cross over the [162-170 Wolfe] property line.” The representation was
made with knowledge of its falsity, and was intended to induce the Hoffmans to proceed
as they did. The Hoffmans justifiably relied on the representation to their damage.
III. The Summary Adjudication Motion
In August 2011, 162 LLC, the Law Firm, Haverstock, and Owens filed a motion
for summary adjudication as to the second and third causes of action of the Cross-
Complaint.8 The Hoffmans opposed the motion. The court granted summary
adjudication on December 1, 2011, concluding that there were no triable issues of
material fact as to the second or third causes of action alleged in the Cross-Complaint. It
reasoned that the moving parties “had no duty to disclose the existence of the claimed
easement [because] there was no relationship between [them] and [the Hoffmans].” The
court also concluded that the evidence showed that the Hoffmans did not justifiably rely
upon Owens’s statement to Hoffman that he would “take care of it” in reference to
vehicles entering the claimed easement area, and that this statement was “too vague to be
enforced.”
A judgment was entered on June 22, 2012, after a settlement of the remaining
claims of the Complaint and Cross-Complaint. The Hoffmans filed a timely appeal.
8
The moving parties indicated that it was unclear whether the second and third
causes of action were also directed against 162 LLC and the Law Firm, because the
caption for both causes of action specifically indicated they were directed against
Haverstock and Owens. (See fn. 5, ante.) Because of that lack of clarity, the two entity
cross-defendants joined in the summary adjudication motion.
9
DISCUSSION
I. Summary Judgment and Standard of Review
“The purpose of the law of summary judgment is to provide courts with a
mechanism to cut through the parties’ pleadings in order to determine whether, despite
their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal. 4th 826, 843 (Aguilar).) As such, the summary judgment
statute, Code of Civil Procedure section 437c,9 “provides a particularly suitable means to
test the sufficiency of the plaintiff’s prima facie case and/or of the defendant’s [defense].”
(Caldwell v. Paramount Unified School Dist. (1995) 41 Cal. App. 4th 189, 203
(Caldwell).) A summary judgment motion must demonstrate that “material facts” are
undisputed. (§ 437c, subd. (b)(1).) “The materiality of a disputed fact is measured by the
pleadings.” (Conroy v. Regents of University of California (2009) 45 Cal. 4th 1244, 1250;
see also Metromedia, Inc. v. City of San Diego (1980) 26 Cal. 3d 848, 885, revd. on other
grounds Metromedia, Inc. v. City of San Diego (1981) 453 U.S. 490.)
“A motion for summary adjudication shall be granted only if it completely
disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of
duty.” (§ 437c, subd. (f)(1).) Like summary judgment, the moving party’s burden on
summary adjudication is to establish evidentiary facts sufficient to prove or disprove the
elements of a claim or defense. (§ 437c, subds. (c), (f).)
The moving party “bears the burden of persuasion that there is no triable issue of
material fact and that he [or she] is entitled to judgment as a matter of law.” (Aguilar,
supra, 25 Cal.4th at p. 850, fn. omitted.) A defendant moving for summary judgment
must “ ‘show[ ] that one or more elements of the cause of action . . . cannot be
9
All further statutory references are to the Code of Civil Procedure unless
otherwise specified.
10
established’ by the plaintiff.” (Id. at p. 853, quoting § 437c, subd. (o)(2).) A defendant
meets its burden by presenting affirmative evidence that negates an essential element of
the plaintiff’s claim. (Guz v. Bechtel National, Inc. (2000) 24 Cal. 4th 317, 334 (Guz).)
Alternatively, a defendant meets its burden by submitting evidence “that the plaintiff
does not possess, and cannot reasonably obtain, needed evidence” supporting an essential
element of its claim. (Aguilar, at p. 855.)
The standard of review a court of appeal applies to a grant of summary
adjudication is the same as that applied to a grant of summary judgment. (Certain
Underwriters at Lloyd’s of London v. Superior Court (2001) 24 Cal. 4th 945, 972.) Since
both summary judgment and summary adjudication motions involve pure questions of
law, we review independently the granting of summary judgment or summary
adjudication of a claim to ascertain whether there is a triable issue of material fact
justifying the reinstatement of the action. (Wiener v. Southcoast Childcare Centers, Inc.
(2004) 32 Cal. 4th 1138, 1142; Chavez v. Carpenter (2001) 91 Cal. App. 4th 1433, 1438
(Chavez).) In doing so, we “consider[] all of the evidence the parties offered in
connection with the motion (except that which the court properly excluded) and the
uncontradicted inferences the evidence reasonably supports. [Citation.]” (Merrill v.
Navegar, Inc. (2001) 26 Cal. 4th 465, 476.)
In our independent review of the granting of summary judgment or summary
adjudication, we conduct the same three-step procedure employed by the trial court.
First, “we identify the issues framed by the pleadings because the court’s sole function on
a motion for summary judgment is to determine whether there is a ‘triable issue as to any
material fact’ (§ 437c, subd. (c)), and to be ‘material’ a fact must relate to some claim or
defense in issue under the pleadings. [Citation.]” (Zavala v. Arce (1997)
58 Cal. App. 4th 915, 926.) Second, we examine the motion to determine whether it
establishes facts justifying judgment in the moving party’s favor. (Chavez, supra,
91 Cal.App.4th at p. 1438.) Third, we scrutinize the opposition—assuming movant has
11
met its initial burden—to “decide whether the opposing party has demonstrated the
existence of a triable, material fact issue [to defeat summary judgment or summary
adjudication]. [Citation.]” (Ibid.; see also Burroughs v. Precision Airmotive Corp.
(2000) 78 Cal. App. 4th 681, 688.) Since the moving party here is the defendant, our de
novo review tests whether defendant has “show[n] that the plaintiff cannot establish at
least one element of the cause of action.” (Aguilar, supra, 25 Cal.4th at p. 853.) We
need not defer to the trial court and are not bound by the reasons in its summary
judgment ruling; we review the ruling of the trial court, not its rationale. (Kids’ Universe
v. In2Labs (2002) 95 Cal. App. 4th 870, 878.)
II. Fraud (Concealment/Suppression of Fact) Claim
Because “the pleadings set the boundaries of the issues to be resolved at summary
judgment” (Oakland Raiders v. National Football League (2005) 131 Cal. App. 4th 621,
648), we first review the nature of the second cause of action of the Cross-Complaint at
issue, i.e., fraud based upon concealment or suppression of fact. The Hoffmans’ second
cause of action is based upon 162 LLC’s10 failure to disclose its claim of a prescriptive
easement over the 170 Wolfe property. They allege that 162 LLC—in failing to disclose
this matter either to Hoffman when he spoke to Owens, or when the seller’s real estate
broker asked Owens and Haverstock whether they were interested in buying 170 Wolfe—
“repeatedly failed to reveal and suppressed the fact that [it] claimed to own and hold
prescriptive easement rights over [170 Wolfe].” The Hoffmans claim that they were
ignorant of the true facts, justifiably relied on 162 LLC’s failure to disclose its
10
When we refer to the fraud allegations against 162 LLC and to the arguments of
162 LLC in support of the summary adjudication motion, we are including all moving
parties in that shorthand reference, namely, 162 LLC, the Law Firm, Owens, and
Haverstock, who are collectively the respondents in this appeal. As noted (see fns. 5 and
8, ante), although there is ambiguity in the Cross-Complaint as to which cross-defendants
were charged with fraud, all four parties moved successfully for summary adjudication.
12
prescriptive easement claim, and were damaged as a result of the concealment and
suppression of facts.
As with all fraud claims, the necessary elements of a concealment/suppression
claim consist of “ ‘(1) misrepresentation (false representation, concealment, or
nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce
reliance); (4) justifiable reliance; and (5) resulting damage.’ [Citations.]” (Alliance
Mortgage Co. v. Rothwell (1995) 10 Cal. 4th 1226, 1239 (Alliance Mortgage); see also
Boschma v. Home Loan Center, Inc. (2011) 198 Cal. App. 4th 230, 248 (Boschma).)
“Active concealment or suppression of facts by a nonfiduciary ‘is the equivalent of a
false representation, i.e., actual fraud.’ [Citation.]” (Vega v. Jones, Day, Reavis & Pogue
(2004) 121 Cal. App. 4th 282, 291 (Vega).) A fraud claim based upon the suppression or
concealment of a material fact must involve a defendant who had a legal duty to disclose
the fact. (Civ. Code, § 1710, subd. (3) [a deceit includes “[t]he suppression of a fact, by
one who is bound to disclose it, or who gives information of other facts which are likely
to mislead for want of communication of that fact”]; see also Judicial Council of Cal.
Civ. Jury Instns. (2013) CACI No. 1901.)
162 LLC made several arguments below—reiterated on appeal—supporting its
claim that summary adjudication of the second cause of action for concealment or
suppression of fact was proper. We deem two of them—the absence of a relationship
between 162 LLC and the Hoffmans, and the absence of justifiable reliance—to be
dispositive.
A. No Relationship Between the Parties
162 LLC reiterates on appeal its argument below that summary adjudication of the
second cause of action is proper because of the absence of a relationship between the
parties. It contends that because it had no “fiduciary or other transactional relationship
with the Hoffmans which would give rise to a duty to disclose material facts known to
one party and not the other,” it had no duty to disclose to the Hoffmans that it claimed
13
easement rights over the 170 Wolfe property. 162 LLC contends that therefore, as a
matter of law, any alleged concealment of these claimed rights was not actionable.
As noted, under Civil Code section 1710, subdivision (3), fraud may consist of a
suppression of a material fact in circumstances under which the defendant has a legal
duty of disclosure. (See Lingsch v. Savage (1963) 213 Cal. App. 2d 729, 735 [“the person
charged with the concealment or nondisclosure of certain facts” must be found to be
“under a legal duty to disclose them”].) As explained by the Fourth District Court of
Appeal, Division One, “There are ‘four circumstances in which nondisclosure or
concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary
relationship with the plaintiff; (2) when the defendant had exclusive knowledge of
material facts not known to the plaintiff; (3) when the defendant actively conceals a
material fact from the plaintiff; and (4) when the defendant makes partial representations
but also suppresses some material facts. [Citation.]’ [Citation.]” (LiMandri v. Judkins
(1997) 52 Cal. App. 4th 326, 336 (LiMandri).) As the court in LiMandri explained further,
other than the first instance, in which there must be a fiduciary relationship between the
parties, “the other three circumstances in which nondisclosure may be actionable
presupposes the existence of some other relationship between the plaintiff and defendant
in which a duty to disclose can arise. . . . ‘[W]here material facts are known to one party
and not to the other, failure to disclose them is not actionable fraud unless there is some
relationship between the parties which gives rise to a duty to disclose such known facts.’
[Citation.]” (Id. at pp. 336-337, original italics, quoting BAJI No. 12.36 (8th ed. 1994).)
A relationship between the parties is present if there is “some sort of transaction between
the parties. [Citations.] Thus, a duty to disclose may arise from the relationship between
seller and buyer, employer and prospective employee, doctor and patient, or parties
entering into any kind of contractual agreement.” (LiMandri, at p. 337 original italics,
citing Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal. 3d 285, 294; see also
Use Note to CACI No. 1901 [indicating that for concealment claim not based upon
14
fiduciary relationship, “if the defendant asserts that there was no relationship based on a
transaction giving rise to a duty to disclose, then the jury should also be instructed to
determine whether the requisite relationship existed”].)11
Thus, several cases have rejected fraud claims founded on nondisclosure where
there was an absence of a relationship between the plaintiff and the defendant. For
instance, in LiMandri, supra, 52 Cal. App. 4th 326, the plaintiff was an attorney
representing multiple plaintiffs (including Mr. and Mrs. Deddah [the Deddahs]) in
environmental litigation. (Id. at p. 334.) LiMandri in separate litigation sued Judkins, an
attorney for a lender (Security Trust Company [Security]) that had made a loan to the
Deddahs secured by their expectancy interest in the environmental litigation. (Ibid.)
11
The Restatement Second of Torts similarly requires that the duty of disclosure
be based upon a relationship (i.e., business transaction) between the parties. “(1) One
who fails to disclose to another a fact that he knows may justifiably induce the other to
act or refrain from acting in a business transaction is subject to the same liability to the
other as though he had represented the nonexistence of the matter that he has failed to
disclose, if, but only if, he is under a duty to the other to exercise reasonable care to
disclose the matter in question. [¶] (2) One party to a business transaction is under a
duty to exercise reasonable care to disclose to the other before the transaction is
consummated, [¶] (a) matters known to him that the other is entitled to know because of a
fiduciary or other similar relation of trust and confidence between them; and [¶]
(b) matters known to him that he knows to be necessary to prevent his partial or
ambiguous statement of the facts from being misleading; and [¶] (c) subsequently
acquires information that he knows will make untrue or misleading a previous
representation that when made was true or believed to be so; and [¶] (d) the falsity of a
representation not made with the expectation that it would be acted upon, if he
subsequently learns that the other is about to act in reliance upon it in a transaction with
him; and [¶] (e) facts basic to the transaction, if he knows that the other is about to enter
into it under a mistake as to them, and that the other, because of the relationship between
them, the customs of the trade or other objective circumstances, would reasonably expect
a disclosure of those facts.” (Rest.2d Torts, § 551, italics added.) Section 551 of the
Restatement (Second) of Torts has been cited with approval and relied upon by several
California courts. (See, e.g., Petersen v. Securities Settlement Corp. (1991) 226
Cal. App. 3d 1445, 1457; Westrick v. State Farm Insurance (1982) 137 Cal. App. 3d 685,
692, fn. 3; Wells v. John Hancock Mut. Life Ins. Co. (1978) 85 Cal. App. 3d 66, 72, fn. 8.)
15
After Judkins had spoken with LiMandri, had advised him that Security had made a loan
to the Deddahs, and had asked LiMandri about the status of the environmental litigation
and its settlement value, Judkins (unbeknownst to LiMandri) filed a notice of lien on
behalf of Security as to any proceeds obtained by the Deddahs in the case. (Ibid.) After
the environmental litigation was settled, the Deddahs’ share was deposited with the court
in a separate interpleader action that caused LiMandri to incur fees and costs, and delayed
his receipt of any earned fees. (Id. at p. 335.) LiMandri sued Judkins for fraud, alleging
that in their conversation, he had fraudulently concealed that (1) Security had been
granted a lien against the Deddahs’ interest in the environmental litigation; (2) Security
was claiming superior lien rights; (3) Judkins had prepared a notice of lien bearing
LiMandri’s name and state bar number and intended to file it; and (4) Judkins was taking
steps to interfere with LiMandri’s contractual fee relationship with the Deddahs. (Id. at
p. 336.) The court in LiMandri held that the plaintiff had failed to state a claim for
fraudulent concealment because there was no relationship or transaction between
LiMandri and Judkins that imposed upon Judkins a duty to disclose the specifics of
Security’s lien rights. (Id. at p. 337.)
Similarly, in Wilkins v. National Broadcasting Co., Inc. (1999) 71 Cal. App. 4th
1066, 1072-1073 (Wilkins), the plaintiffs, representatives of “a pay-per-call provider,”
sued a television network and two of its producers for secretly videotaping a purported
business meeting at a restaurant after portions of the videotape were aired in a program
entitled “ ‘Hardcore Hustle.’ ” Included among the plaintiffs’ claims was a fraud claim
based upon nondisclosure of the fact that they were the subject of an investigation by
journalists involving hidden cameras, when the plaintiffs believed they were meeting
with potential investors. (Id. at p. 1082.) The appellate court, relying in part on
LiMandri, supra, 52 Cal. App. 4th 326, concluded that summary adjudication of that fraud
claim was proper, because the plaintiffs “have presented no evidence that they and [the
producers] shared the requisite relationship which would impose upon the NBC Dateline
16
producers a duty to disclose the use of hidden cameras. [Citations.]” (Wilkins, at p.
1083; see also Deteresa v. American Broadcasting Companies, Inc. (9th Cir.1997) 121
F.3d 460, 467 (Deteresa) [fraud claim by flight attendant who was secretly audiotaped
and videotaped during interview by television producer concerning 1994 flight in which
O.J. Simpson was passenger was not viable; there was no relationship between her and
the defendants as required under LiMandri]; Kovich v. Paseo Del Mar Homeowners’
Assn. (1996) 41 Cal. App. 4th 863, 866-867 (Kovich) [homeowners’ association not liable
for nondisclosure to townhome buyer of existence of construction defects and related
litigation, where association was not seller, party to contract, or held any relationship to
buyer].)
The Hoffmans argue that “there was a relationship between the parties arising out
of their mutual interest in the 170 [Wolfe] Property. At the time of Respondents’
nondisclosure, the Hoffmans were tenants in possession of the 170 [Wolfe] Property and
[were] in the process of purchasing it. 162 LLC . . . claimed easement rights in the
170 Wolfe] Property.” Contrary to this assertion, there is no evidence in the record that
162 LLC or its members had any relationship with the Hoffmans. 162 LLC, Owens, and
Haverstock were not parties in any way to the transaction involving the Hoffmans and the
sellers of the 170 Wolfe property. Thus, the Hoffmans—like the plaintiffs in LiMandri,
supra, 52 Cal. App. 4th 326, Wilkins, supra, 71 Cal. App. 4th 1066, Deteresa, supra,
121 F.3d 460, and Kovich, supra, 41 Cal. App. 4th 863—were not involved in a
transaction with the parties they claim defrauded them. Indeed, the Hoffmans’
connection with 162 LLC, Owens, and Haverstock is significantly more attenuated than
the respective links between the plaintiffs and the defendants in LiMandri, Wilkins,
Deteresa, and Kovich. Although the Hoffmans (through their business) were tenants at
170 Wolfe and they were in contract to buy that property while 162 LLC claimed
easement rights over it, these are not circumstances that constitute a transactional
relationship between the parties giving rise to a duty of disclosure under LiMandri, supra,
17
52 Cal.App.4th at pages 336 to 337. (See, e.g., Kovich, supra, 41 Cal.App.4th at pp. 866-
867.)12
In support of their position that a duty of disclosure existed here, the Hoffmans
cite Vega, supra, 121 Cal. App. 4th 282. There, a law firm (Jones, Day, Reavis & Pogue
[Jones Day]) that represented the acquiring company in a merger transaction was sued for
fraud by a shareholder of Monsterbook.com., the acquired company. (Id. at p. 287.) The
plaintiff “alleged [Jones Day] concealed so-called toxic terms of a third party financing
transaction, and thus defrauded him into exchanging his valuable stock in the acquired
company for ‘toxic’ stock in the acquiring company.” (Ibid.) Jones Day prepared a
disclosure schedule detailing the toxic terms of the financing transaction, but did not send
the disclosure (or any other documents identifying the toxic nature of the financing) to
Monsterbook.com, the plaintiff, or their attorneys. (Id. at p. 288.) Instead, Jones Day
told Monsterbook.com’s attorneys that “the transaction was ‘standard’ and ‘nothing
unusual,’ . . . [Jones Day] provid[ed] a different, sanitized version of the disclosure [to
Monsterbook.com’s attorneys].” (Id. at p. 290.)
Jones Day’s demurrer to the plaintiff’s complaint was sustained without leave to
amend on various grounds, including nonliability for the nondisclosure because the law
firm had no duty to disclose. (Vega, supra, 121 Cal.App.4th at p. 289.) The appellate
12
As part of their concealment/suppression of facts claim, the Hoffmans allege
that Owens and Haverstock failed to disclose to Dean Chestnut, the seller’s broker, 162
LLC’s claimed easement rights when they spoke with Chestnut about their potential
purchase of 170 Wolfe. The Hoffmans reiterate that factual assertion in their appellate
briefs. They make no legal argument, however, as to the theory upon which such
nondisclosure to Chestnut is actionable fraud. 162 LLC had no relationship with
Chestnut and owed no duty to him upon which a claim for nondisclosure/suppression of
facts may be based. We conclude that 162 LLC’s failure to disclose its claimed easement
rights to Chestnut—particularly where there was no inquiry at all about that subject or
even concerning 162 Wolfe service vehicles entering onto the 170 Wolfe property—was
not actionable by the Hoffmans.
18
court reversed, concluding, among other things, that the plaintiff had adequately pleaded
a claim for “ ‘active concealment or suppression of facts.’ ” (Ibid., fn. omitted.)
Rejecting Jones Day’s contention that, as counsel for the adverse party to the merger, it
had no duty to disclose the toxic terms of the financing transaction, the court observed
that Jones Day “specifically undertook to disclose the transaction and, having done so, is
not at liberty to conceal a material term.” (Ibid.) The court explained further: “Jones
Day’s invocation of the principle that fraud based on nondisclosure requires an
‘independent duty of disclosure’ is erroneous. In some but not all circumstances, an
independent duty to disclose is required; active concealment may exist where a party
‘[w]hile under no duty to speak, nevertheless does so, but does not speak honestly or
makes misleading statements or suppresses facts which materially qualify those stated.’
[Citations.] Providing a disclosure schedule which deliberately omitted material facts
seems clearly to fit this category.” (Id. at p. 294, fn. omitted.)
Vega is distinguishable. Aside from the procedural differences between the
cases—disposition at the pleading stage in Vega as contrasted with summary adjudication
here—there was, in Vega, a relationship between the parties based upon a transaction (a
merger). The plaintiff was a party to that merger, and Jones Day, in representing the
acquiring company, played a substantial role in the transaction. We view the
circumstances of the alleged nondisclosure in Vega as being significantly different from
those here. In Vega, Jones Day actively communicated on the subject financing
transaction in which it allegedly suppressed material information. Here, 162 LLC was
not asked whether it claimed an interest in the 170 Wolfe property, and Owens’s alleged
statement that “we’ll take care of it” cannot be reasonably construed as speaking about
162 LLC’s claimed interest in the transaction relating to the 170 Wolfe property. Vega is
not controlling.
The Hoffmans also rely on Pavicich v. Santucci (2000) 85 Cal. App. 4th 382
(Pavicich) in support of their position. In Pavicich, the plaintiff was persuaded to invest
19
as a limited partner in a struggling brew pub project. (Id. at p. 386.) The project had a
checkered history: a prior joint venture had been dissolved; a settlement agreement and
release had been executed; and, at a later date, the former joint venturers no longer
involved in the project had asserted that the release had been procured by fraud. (Id. at
pp. 385-386.) In the negotiations leading up to his investment, the plaintiff asked two of
the people remaining in the project (Keller and Wallace) and Santucci (the attorney for
some of the parties to the transaction) whether there were circumstances surrounding the
early days of the joint venture of which he should be made aware. (Id. at p. 386.) Keller
and Santucci told the plaintiff that “there had been ‘negotiations’ with ‘two Los Gatos
businessmen’ which had not been fruitful.” (Ibid.) Santucci also advised the plaintiff
that these “ ‘two businessmen’ had signed a legally binding release to avoid any future
problems or claims.” (Ibid.) Santucci did not disclose that the two businessmen had later
asserted that the release had been procured by fraud and that they had threatened
litigation. (Ibid.)
This court in Pavicich concluded that the plaintiff stated a viable cause of action
against Santucci for conspiring with Keller to defraud the plaintiff, reasoning that the
case could not be decided in Santucci’s favor under a theory that he had no duty of
disclosure to the plaintiff. (Pavicich, supra, 85 Cal.App.4th at p. 398.) Rather, since
Santucci had spoken on the subject of the two prior investors and had indicated to the
plaintiff that the releases they had signed would prevent future problems with the project,
the attorney was bound by “the principle that ‘where one does speak he must speak the
whole truth to the end that he does not conceal any facts which materially qualify those
stated. [Citation.] One who is asked for or volunteers information must be truthful, and
the telling of a half-truth calculated to deceive is fraud.’ [Citations.]” (Ibid.)13
13
The main issue addressed by this court in Pavicich was whether Civil Code
section 1714.10—requiring that actions against attorneys for civil conspiracy be
instituted only where the court has entered an order in advance permitting the claim based
20
Pavicich, like Vega, is distinguishable. In Pavicich, there was a relationship based
upon a business transaction between the plaintiff and the defendant: The plaintiff was the
potential investor in a limited partnership and the defendant was the attorney representing
the limited partnership and its general partner that were seeking the plaintiff’s
investment. Pavicich is thus similar to Vega, and dissimilar to this case. Here, there was
no transaction-based relationship between the Hoffmans and 162 LLC. Furthermore, the
factual basis for the nondisclosure claim in Pavicich is nothing like the one here. In
Pavicich, the plaintiff specifically asked about the early stages of the project; the
defendant gave specific information in reply, including making reference to a release, but
failed to disclose highly material information concerning that release (i.e., that its legality
was being challenged by the former investors). (Pavicich, supra, 85 Cal.App.4th at
p. 386.) Here, no such direct inquiry was made by Hoffman and no affirmative response
on the subject of a claimed interest in 170 Wolfe was provided by 162 LLC.14
The Hoffmans also rely on Jones v. ConocoPhilips Co. (2011) 198 Cal. App. 4th
1187 (Jones). In Jones, the appellate court concluded that at the pleading stage, the
plaintiffs (family members of a deceased worker exposed to toxic chemicals) had alleged
sufficient facts to support a claim of fraudulent concealment against chemical
manufacturers. Specifically, they alleged that the defendants alone were aware of their
products’ toxicity, it was a fact not available to the decedent, and the defendants
concealed that fact. (Id. at pp. 1199-1200.) A manufacturer’s nondisclosure to the public
upon a finding that it is reasonably probable the plaintiff will prevail—applied to bar the
plaintiff’s claims. (Pavicich, supra, 85 Cal.App.4th at pp. 390-398.)
14
This is not a case, for example, where the Hoffmans made a specific inquiry,
such as, “Do you know if anyone is claiming an adverse interest in the 170 Wolfe
property?” and 162 LLC responded by stating that its predecessor in title had made no
such claim, without revealing that 162 LLC had in fact asserted an adverse claim. Such
circumstances—which are far removed from those here—would present a case more
closely aligned to the facts in Pavicich.
21
of the toxic nature of its products where the toxicity is known to the manufacturer but not
to others is a very different circumstance from a landowner’s knowledge that it possesses
prescriptive easement rights. Jones cannot be used to extend liability for concealment
under the facts presented here.15
In considering a fraudulent concealment claim, “we begin with the threshold
questions of duty. [Citation.]” (Bank of America Corp. v. Superior Court (2011)
198 Cal. App. 4th 862, 871.) Based upon the absence of a relationship between the
Hoffmans and 162 LLC, we conclude that there was no triable issue of material fact as to
the second cause of action of the Cross-Complaint for fraudulent
concealment/suppression of facts. (See LiMandri, supra, 52 Cal.App.4th at pp. 336-337.)
Summary adjudication of that claim was properly granted.
15
In addition, the Hoffmans cite Intrieri v. Superior Court (2004) 117
Cal. App. 4th 72 (Intrieri). Intrieri concerned various claims brought by the husband and
son of a patient with Alzheimer’s disease against a nursing home after the patient was
injured and ultimately died after an unprovoked attack by a non-Alzheimer’s patient who
had entered the supposedly secure Alzheimer’s unit. (Id. at pp. 75-77.) This court
concluded that summary adjudication of the claims for willful misconduct/elder abuse,
fraud, and negligent misrepresentation was improper. (Id. at p. 87.) As to the fraud
claim, we held that there was a triable issue of material fact concerning the potential
falsity of affirmative representations made by the admissions director to the decedent’s
son as to the secure nature of the Alzheimer’s unit. (Id. at pp. 86-87.) In addressing the
parties’ arguments, we identified in dictum, quoting from Cicone v. URS Corp. (1986)
183 Cal. App. 4th 194, 201, “the well-established principle that ‘[a]lthough a duty to
disclose a material fact normally arises only where there exists a confidential relation
between the parties or other special circumstances require disclosure, where one does
speak he must speak the whole truth to the end that he does not conceal any facts which
materially qualify those stated. [Citation.] . . .” (Intrieri, at p. 86.) Significantly, the
fraud claim in Intrieri was based upon alleged affirmative misrepresentations of fact (see
id. at pp. 77, 86); the plaintiffs did not allege a concealment/suppression claim. Intrieri
does not assist the Hoffmans in their argument that summary adjudication of the second
cause of action was improper.
22
B. No Justifiable Reliance
In its moving papers below, 162 LLC argued that summary adjudication of the
Cross-Complaint’s second cause of action was proper because of the absence of
justifiable reliance by the Hoffmans. It repeats this argument on appeal.16 162 LLC
contends that “the Hoffmans did not justifiably rely on the promise to ‘take care of it’
because it is undisputed that after the purported promise was made, employee and service
vehicles of [162 LLC] continued to travel in the claimed easement area,” and the
Hoffmans observed these occurrences. (Original underscoring.) We conclude that, even
had the Hoffmans established a relationship with 162 LLC that would furnish a basis for
liability for fraudulent nondisclosure or concealment—an issue which we have resolved
adversely to the Hoffmans as discussed, ante—the Hoffmans’ claim is not viable because
of an absence of justifiable reliance.
A plaintiff establishes reliance “when the misrepresentation or nondisclosure was
an immediate cause of the plaintiff’s conduct which altered his or her legal relations, and
when without such misrepresentation or nondisclosure he or she would not, in all
reasonable probability, have entered into the contract or other transaction. [Citations.]”
(Alliance Mortgage, supra, 10 Cal.4th at p. 1239.) “Reliance can be proved in a
fraudulent omission case by establishing that ‘had the omitted information been
disclosed, [the plaintiff] would have been aware of it and behaved differently.’
[Citation.]” (Boschma, supra, 198 Cal.App.4th at p. 250, quoting Mirkin v. Wasserman
(1993) 5 Cal. 4th 1082, 1093.)
16
In its appellate brief in support of its claim that there is an absence of justifiable
reliance by the Hoffmans, respondents cite a depublished decision (Le Francois v. Goel
(2004) 119 Cal. App. 4th 425, 433, 14 Cal. Rptr. 3d 321, review granted Sept. 15, 2004,
S126630, reversed, Le Francois v. Goel (2005) 35 Cal. 4th 1094), in violation of rule
8.115(a) of the California Rules of Court. (See Hankins v. El Torito Restaurants, Inc.
(1998) 63 Cal. App. 4th 510, 518.) We will disregard this improperly cited authority.
(Cal. Rules of Court, rule 8.115(a).)
23
Although a plaintiff’s negligence in failing to discover the falsity of the statement
or the suppressed information is not a defense to fraud (Alliance Mortgage, supra, 10
Cal.4th at pp. 1239-1240), a plaintiff’s particular knowledge and experience should be
considered in determining whether the reliance upon the misrepresentation or
nondisclosure was justified. (Id. at p. 1240; see also Seeger v. Odell (1941) 18 Cal. 2d
409, 414: “If the conduct of the plaintiff in the light of his own intelligence and
information was manifestly unreasonable . . . he will be denied a recovery.”) Thus, for
example, where a woman, who was an attorney, signed a release of liability before
sustaining injuries from a horseback riding lesson, and later claimed that she had relied
on the defendant’s statement that the release was “ ‘meaningless,’ ” she was held under
the circumstances to have not justifiably relied on that statement. (Guido v. Koopman
(1991) 1 Cal. App. 4th 837, 843-844 (Guido); see also Kahn v. Lischner (1954)
128 Cal. App. 2d 480, 489 [seller did not justifiably rely on buyer’s statement estimating
land’s value, given, among other things, fact that seller was professional of significant
intelligence].)
Generally, the question of whether reliance is justifiable is one of fact. (Alliance
Mortgage, supra, 10 Cal.4th at p. 1239; see also Gray v. Don Miller & Associates, Inc.
(1984) 35 Cal. 3d 498, 503.) But the issue “may be decided as a matter of law if
reasonable minds can come to only one conclusion based on the facts.” (Guido, supra,
1 Cal.App.4th at p. 843; see also Hadland v. NN Investors Life Ins. Co. (1994)
24 Cal. App. 4th 1578, 1586.) Thus, in such instances where the absence of justifiable
reliance is one of law, summary judgment or summary adjudication is an appropriate
vehicle. (See, e.g., Dore v. Arnold Worldwide, Inc. (2006) 39 Cal. 4th 384, 393-394
(Dore); Hinesley v. Oakshade Town Center (2005) 135 Cal. App. 4th 289, 300-303
(Hinesley); Camp v. Jeffer, Mangels, Butler & Marmaro (1995) 35 Cal. App. 4th 620, 639-
640 (Camp).)
24
Hinesley, supra, 135 Cal. App. 4th 289, a case that involved a fraud claim by a
commercial tenant of a shopping center, is instructive. There, the plaintiff tenant alleged
that the landlord’s agent made representations to the effect that three chain businesses
would be occupying the shopping center by the end of 1998; the plaintiff alleged that he
was induced by these representations to enter into the lease in July 1998. (Id. at p. 292.)
Two of the tenants never leased space in the center; the third did, but not until December
2000. (Id. at p. 292, fn. 1.) The plaintiff’s lease included a provision (paragraph 25.33)
that the landlord had made no representations, and the tenant had not relied upon any
representations, regarding the identities of any specific tenants that would occupy the
shopping center. (Id. at p. 297.) The plaintiff, who was represented by counsel in the
lease negotiations, testified that he was certain he had read that provision of the lease.
(Id. at pp. 297-298.) Had the three proposed tenants occupied space in the center, their
aggregate space would have constituted approximately five percent of the total leasable
space. (Id. at p. 298.) And it was undisputed that the plaintiff never asked the landlord
about the contractual status of the three proposed tenants or indicated that his decision to
enter into the lease was based upon the proposed tenants’ occupancy of the center. (Ibid.)
The appellate court concluded that summary judgment of the fraud claim was
properly granted because the plaintiff as a matter of law had not justifiably relied on the
landlord’s alleged representations. (Hinesley, supra, 135 Cal.App.4th at pp. 300-303.)
The court reasoned: “In the complete absence of any actions taken to question, clarify, or
confirm the contractual status of the three cotenants, to notify his attorney of the
representations or to modify paragraph 25.33, Hinesley could not justifiably rely on his
understanding of the representations and gestures made by [the landlord’s agent].” (Id. at
p. 303.)
Here, the Hoffmans’ nondisclosure/concealment claim is based upon a single July
2009 conversation between Owens and Hoffman. In that conversation, Hoffman—after
observing various vehicles servicing 162 Wolfe and vehicles of the Law Firm’s
25
employees encroaching onto 170 Wolfe—told Owens, “I do not want your vehicles
crossing the property line. I would appreciate it if you could take care of that.” Owens
responded, “ ‘No problem. We’ll take care of it.’ ” It is undisputed that after this alleged
conversation, both of the Hoffmans continued to observe vehicles from 162 Wolfe
traveling over 170 Wolfe, and that this was, at least as to Mr. Hoffman, a “common
occurrence.”17 These observations notwithstanding, the Hoffmans did not complain
about these vehicles’ traveling over 170 Wolfe to the then-owner of 170 Wolfe. Nor did
the Hoffmans make a complaint to 162 LLC or its members.
Owens’s statement that “we’ll take care of it”—in response to Hoffman’s
complaint about vehicles traveling onto 170 Wolfe—was arguably insufficient, of itself,
for the Hoffmans to have justifiably relied upon an understanding that 162 LLC had no
claimed easement rights over 170 Wolfe. We will assume, however, that this ambiguous
statement was, in the abstract, sufficient for such justifiable reliance, in light of the
substance of the Hoffman-Owens conversation and their prior conversation about cars
owned by Law Firm employees parking in front of 170 Wolfe. But any such reliance,
under the circumstances here, was unreasonable. Hoffman was an experienced real estate
agent who had owned several businesses and owned several pieces of real property; his
17
In his deposition, in response to the question of whether it was “a common
occurrence” that he observed vehicles, after July 2009, traveling onto 170 Wolfe that did
not belong on that property, Hoffman testified “[t]hat would be a reasonable way of
characterizing it, yes.” He also indicated in his deposition that his wife would
“occasionally” report to him that she had observed vehicles crossing onto 170 Wolfe that
did not belong on that property. Hoffman declared (over a year later) in opposition to the
motion that he and his wife “occasionally observed vehicles from 162 N. Wolfe Rd
crossing the property line to 170 N. Wolfe Rd.” But the court may properly disregard his
declaration, to the extent it contradicts his prior sworn deposition testimony indicating
that such observation by him was a “common occurrence.” (See Archdale v. American
Intern. Specialty Lines Ins. (2007) 154 Cal. App. 4th 449, 473, citing D’Amico v. Board of
Medical Examiners (1974) 11 Cal. 3d 1, 22 [court should disregard summary judgment
opponent’s “self-serving declarations [that] contradict credible discovery admissions and
purport to impeach that party’s own prior sworn testimony”].)
26
experience and sophistication are relevant factors in determining the Hoffmans’
justifiable reliance. (See, e.g., Guido, supra, 1 Cal.App.4th at pp. 843-844; Kahn v.
Lischner, supra, 128 Cal.App.2d at p. 489.) His failure to make further inquiry or
complaint about the trespassing vehicles was unreasonable, notwithstanding his
explanation that “there were many other issues that [the Hoffmans] were dealing with and
[he] thought that this particular problem would be taken care of.”
The Hoffmans—analogous to the plaintiff-tenant in Hinesley, supra,
135 Cal. App. 4th 289, who was faced with a lease term that directly contradicted his
claimed reliance upon the landlord’s representations—observed vehicle trespasses for
eight months, contradicting Owens’s “we’ll take care of it” statement that they claim led
them to believe that 162 LLC claimed no interest in the 170 Wolfe property. And like the
plaintiff in Hinesley, the Hoffmans never told anyone at 162 LLC that their decision to
buy the 170 Wolfe property was based upon an understanding (from Owens’s ambiguous
statement) that 162 LLC made no claim against 170 Wolfe. Under the circumstances, the
Hoffmans’ reliance was not justifiable as a matter of law. (See, e.g., Matthews v. Kincaid
(Alaska 1987) 746 P.2d 470, 472 [four-plex buyer’s fraud claim against seller based on
nondisclosure of absence of off-street parking not maintainable due to absence of
justifiable reliance; lack of off-street parking was fact that would be obvious to buyer
making ordinary inspection and inquiry].) Thus, even assuming there was a legal duty of
disclosure on the part of 162 LLC due to the existence of a relationship with the
Hoffmans, summary adjudication of the second cause of action was appropriate because
of the failure of the Hoffmans to present evidence of justifiable reliance. (See, e.g., Dore,
supra, 39 Cal.4th at pp. 393-394; Camp, supra, 35 Cal.App.4th at pp. 639-640.)
II. Third Cause of Action for Fraud (Intentional Misrepresentation)
The Hoffmans alleged in the third cause of action, captioned as a claim for
“Intentional Misrepresentation,” that Owens “implicitly represented” to Hoffman that 162
LLC did not claim any rights in the 170 Wolfe property. (Emphasis omitted.) They
27
argued below that Owens’s statement, in response to Hoffman’s complaint about vehicles
servicing 162 Wolfe traveling on the 170 Wolfe property, that he’d “take care of it,” was
“actionable as an implicit misrepresentation.” The Hoffmans contended that it was not
required under the law that a misrepresentation, to constitute actionable fraud, be explicit;
it “may be implied by or inferred from the circumstances.” The Hoffmans also urged that
Wolfe’s “take care of it” statement was actionable as a false promise as well. They
reiterate these positions on appeal.
An intentional misrepresentation is “[t]he suggestion, as a fact, of that which is not
true, by one who does not believe it to be true.” (Civ. Code, § 1710, subd. (1).) “A
misrepresentation need not be oral; it may be implied by conduct. [Citations.]” (Thrifty-
Tel, Inc. v. Bezenek (1996) 46 Cal. App. 4th 1559, 1567 [computer hacking resulting in
unauthorized use of telephone access codes to make long distance phone calls constituted
implied misrepresentation by hackers as to their identity]; see also Universal By-
Products, Inc. v. City of Modesto (1974) 43 Cal. App. 3d 145, 151.) A false promise is
“[a] promise, made without any intention of performing it.” (Civ. Code, § 1710, subd.
(4).)
The court below concluded that the alleged implied misrepresentation that “we’ll
take care of it” in reference to trespassing vehicles was “too vague to be enforced.” (Cf.
Conrad v. Bank of America (1996) 45 Cal. App. 4th 133, 156 [borrower’s vague testimony
of lender’s statement “ ‘no problem’ ” concerning future loan applications, and that
lender “agreed to process the loan application and said he would comply” insufficient to
establish false promise to make loan].) Even assuming the statement satisfied the
element of making an implied misrepresentation of fact or a false promise to support the
fraud cause of action alleged, like the concealment/suppression of facts claim, the
Hoffmans’ misrepresentation claim fails because the record shows no justifiable reliance.
As noted, ante, for approximately eight months after Owens’s “we’ll take care of
it” statement, the Hoffmans observed vehicles from 162 Wolfe continuing to travel over
28
170 Wolfe. As to Mr. Hoffman, this was a “common occurrence.” Notwithstanding
these continuous trespasses, as well as Hoffman’s sophistication as a real estate broker,
property owner, and business owner (see Guido, supra, 1 Cal.App.4th at pp. 843-844),
the Hoffmans did not complain about this activity to the then-owner of 170 Wolfe or to
162 LLC or its members. Their reliance was unreasonable as a matter of law and
summary adjudication of the third cause of action on this ground was proper. (See Dore,
supra, 39 Cal.4th at pp. 393-394.)18
18
162 LLC makes a number of additional arguments in support of its contention
that summary adjudication of the second and third causes of action was proper. These
arguments include (1) Haverstock was not liable for fraud since he had no conversations
with the Hoffmans relative to vehicles servicing 162 Wolfe using the 170 Wolfe
property; (2) both claims had no merit because there was no evidence of fraudulent
intent; (3) both claims had no merit because there was no evidence of actual reliance; and
(4) Owens’s statement that “we’ll take care of it” was too vague and equivocal to support
a claim for false promise. Because we have determined that the court properly granted
summary adjudication of the second and third causes of action because of the absence of
justifiable reliance and that the second cause of action for fraudulent concealment/
suppression fails because 162 LLC had no duty of disclosure, we need not address
162 LLC’s additional summary adjudication arguments. (See Smith v. St. Jude Medical,
Inc. (2013) 217 Cal. App. 4th 313, 316, fn. 3; Jones v. County of Los Angeles (2002)
99 Cal. App. 4th 1039, 1044.)
29
DISPOSITION
The judgment is affirmed.
Márquez, J.
WE CONCUR:
Bamattre-Manoukian, Acting P.J.
Grover, J.
30
Filed 8/13/14
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
STEVEN HOFFMAN et al., H038643
(Santa Clara County
Cross-complainants and Appellants, Super. Ct. No. 110CV172328)
v.
ORDER MODIFYING OPINION
162 NORTH WOLFE LLC et al., AND DENYING REHEARING
Cross-defendants and Respondents.
NO CHANGE IN JUDGMENT
THE COURT:
It is ordered that the opinion filed herein on July 15, 2014, be modified as follows:
1. On page 2, first sentence of the first full paragraph, after “162 LLC” add the
following: “and related parties”
2. On page 3, line 1 of footnote 1 the word “their” is changed to “the”
3. On page 5, at the end of the second full paragraph (after “Jonathan Owens.”)
add the following: “While escrow was pending, Hoffman did not receive any
information—from conversations with his real estate agent and his land
consultant, from his review of the preliminary title report, or from any other
source—that there was a claimed easement over 170 Wolfe. Chestnut, the
seller’s broker, was unaware of any claimed easement over the 170 Wolfe
property.”
4. On page 9, line 4 of footnote 8, after the first sentence delete “(See fn. 5,
ante.)”
5. On page 12, lines 4 and 5 of footnote 10, after “As noted” delete “(see fns. 5
and 8, ante),” and replace with “(see fn. 8, ante),”
6. On page 18, lines 1 and 2, after “866-867.)” and before the footnote insert:
“We reject the Hoffmans’ contention that because they were potential buyers
in a pending sale of 170 Wolfe while LLC claimed undisclosed easement rights
over that property, there was a relationship between the parties triggering a
duty of disclosure on the part of 162 LLC.”
7. On page 22, first full paragraph, first sentence, the word “questions” is
changed to “question”
8. On page 23, line 5 of the second paragraph, after “1239” and before the period
add the following: “; see also CACI No. 1907 (2013 ed.) [reliance shown if
misrepresentation, concealment or false promise “substantially influenced”
plaintiff and he or she “would probably not have” acted absent it]”
9. On page 24, line 1 of the first paragraph, before “Although” add the following:
“After establishing actual reliance, the plaintiff must show that the reliance was
reasonable by showing that (1) the matter was material in the sense that a
reasonable person would find it important in determining how he or she would
act (Charpentier v. Los Angeles Rams Football Co. (1999) 75 Cal. App. 4th 301,
3130); and (2) it was reasonable for the plaintiff to have relied on the
misrepresentation. (Blankenheim v. E. F. Hutton & Co. (1990) 217 Cal. App. 3d
1463, 1475; see also CACI No. 1908 (2013 ed.).)”
10. On page 24, line 5 of the first paragraph, after “also” add the following:
“CACI No. 1908 (2013 ed.).)”
11. On page 24, lines 5 and 6 of the first paragraph, delete: “Seeger v. Odell
(1941) 18 Cal. 2d 409, 414:”
2
12. On page 24, line 7 of the first paragraph, after “ ‘ . . .recovery.’ ” delete “)” and
add the following: “(Seeger v. Odell (1941) 18 Cal. 2d 409, 414.)”
13. On page 24, line 5 of the second paragraph, after “also” add the following:
“California Public Employees’ Retirement System v. Moody’s Investors
Service, Inc. (2014) 226 Cal. App. 4th 643, 672 (Moody’s Investors);”
14. On page 26, first full paragraph, after the second sentence insert a new
paragraph beginning with the sentence “But any such reliance . . .”
15. On page 27, line 3 of the first partial paragraph, after “489” and before the
period add the following: “; cf. Moody’s Investors, supra, 226 Cal.App.4th at
p. 673 [notwithstanding sophistication of plaintiff state public pension fund, its
reliance on defendants’ erroneous ratings of investments not unreasonable as
matter of law; investments “existed in a ‘shroud of secrecy’ and very few
persons . . . were privy to [the investments’] composition”]”
16. On page 27, line 6 of the first partial paragraph, after “ ‘ . . . taken care of.’ ”
add the following: “Moreover, we conclude that the Hoffmans’ reliance was
unjustified as a matter of law, despite evidence they believe to be favorable to
their position on this issue, such as (1) 162 LLC’s having asserted no easement
claim while escrow was pending; (2) 162 LLC’s having never made a
complaint when the Hoffmans’ vehicles and pallets occasionally and
temporarily obstructed the easement area while escrow was pending; (3) the
absence of anything in the record disclosing prescriptive easement rights over
170 Wolfe; and (4) the Hoffmans’ having not been informed of the easement at
any time during their conversations and investigation while escrow was
pending.”
There is no change in the judgment.
3
The petition for rehearing filed on behalf of appellants Steven A. Hoffman and
Swee Lin Hoffman is denied.
Dated:_________________________ _______________________________
Márquez, J.
_______________________________
Bamattre-Manoukian, Acting P.J.
_______________________________
Grover, J.
4
Filed 8/13/14
CERTIFIED FOR PARTIAL PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
STEVEN HOFFMAN et al., H038643
(Santa Clara County
Cross-complainants and Appellants, Super. Ct. No. 110CV172328)
v.
ORDER CERTIFYING OPINION
162 NORTH WOLFE LLC et al., FOR PARTIAL PUBLICATION
Cross-defendants and Respondents.
BY THE COURT:
Pursuant to California Rules of Court, rule 8.1105, it is hereby ordered that the
appellate opinion filed herein on July 15, 2014, as modified by order of this date, is
certified for publication in the Official Reports, except for the following sections:
PROCEDURAL BACKGROUND, sections I and II; and DISCUSSION, section I.
Dated:_________________________ _______________________________
Márquez, J.
_______________________________
Bamattre-Manoukian, Acting P.J.
_______________________________
Grover, J.
Trial Court: Santa Clara County Superior Court
Trial Judge: Honorable Derek Woodhouse
Attorneys for Cross-complainants and D. D. Hughmanick
Appellants: Martin D. Dioli
TERRA LAW LLP
Attorneys for Cross-defendants and Mark B. Fredkin
Respondents: Anthony Marsh
Linda M. Macleod
MORGAN, FRANICH, FREDKIN &
MARSH
2