Hall v. Aurora Loan Services

Filed 4/26/13
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
PINDA HALL et al.,
Plaintiffs and Appellants,
A133045, A134180
v.
AURORA LOAN SERVICES LLC et al., (Contra Costa County
Super. Ct. No. C10-00053)
Defendants and Respondents.
Appellant Pinda Hall is a real estate agent who was injured while showing
prospective buyers a house for sale at 5 Greene Place, Lafayette. She and her husband
sued the owner and the listing agents for negligence, premises liability, and loss of
consortium. The trial court entered summary judgment in defendants‟ favor. We reverse.
We conclude that there are triable issues whether defendants had actual or constructive
knowledge of a concealed dangerous condition and satisfied their duty to notify Hall of it.
I.
FACTS AND
PROCEDURAL BACKGROUND
At the time Hall was injured, the house was owned by respondent Aurora Loan
Services LLC (Aurora) after having been foreclosed upon. In early May 2009, Aurora
listed the property for sale through respondents Rockcliff Realty, with Jon Wood and
Holly Sibley as the listing agents (collectively, the “listing agents”). Between the time
the property was listed and the date Hall was injured, the house was visited by scores of
real estate agents and potential buyers, perhaps more than 100.
One of the features of the house was an attic that had been converted into a “bonus
room” by a previous owner. This room was accessed by using a pull-down stairway
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ladder, which was hinged and braced with metal brackets. When raised, it folded,
retracted, and recessed into the attic‟s opening. Wood had used the stairway ladder once
to climb into the attic room before he listed the house and had not observed anything
wrong with it. Although he could not remember if he pulled down or retracted the
stairway ladder on that visit, he recalled operating it on subsequent visits without
incident.
In late May 2009, the house was inspected by a licensed contractor, Christopher
Trent, who prepared a report titled “Estimate for Repairs.” This report appears to have
been prepared to show the estimated cost of repairing a number of basic aesthetic and
safety shortcomings. Trent sent copies of the report to Wood, Sibley, and a bank loan
officer.
In the report, Trent listed more than 50 items needing repair under a heading
entitled “Health and Safety Required Repairs-Group 1.” This list commingled cosmetic
or minor items (e.g., “Minor Drywall patch and touchup paint,” “Remove and Replace
Carpet,” “Install shower head”) with health and safety items (e.g., “Mold Abatement and
Air test,” “Repair deck at edge-trip hazard,” “Install smoke detector”). One of the listed
items was “Stair-Remove and replace attic stair.” Other than the report, the listing agents
received no information or complaints about a potential defect in the stairway ladder.
Hall showed the home to two of her clients on August 1, 2009. She knew there
was an attic bonus room before she arrived, and a copy of Trent‟s report was on the
kitchen counter. When Hall and her clients came upon the stairway ladder, it was in the
down position. She visually inspected the ladder and thought it looked safe, but she was
nonetheless reluctant to climb it. She told her clients to be careful as they used the
ladder. Hall followed her clients up the ladder, but as she reached the point where she
could look into the attic, a hinge broke, the ladder failed, and she fell. The fall fractured
her right leg and injured her knees.
Hall and her husband filed a complaint that included three causes of action:
(1) general negligence; (2) premises liability; and (3) loss of consortium. They named as
defendants Aurora and the listing agents. The listing agents moved for summary
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judgment first. They argued that the undisputed facts showed they had no notice or
knowledge of a defect in the stairway ladder and were therefore entitled to judgment as a
matter of law. The trial court agreed and entered summary judgment in their favor.
Aurora then filed a separate motion for summary judgment on the same ground.
Hall and her husband made a slightly different evidentiary showing in opposing Aurora‟s
motion. Nonetheless, the trial court granted Aurora‟s motion for the same reasons it
granted the listing agents‟ motion.
Hall and her husband filed separate appeals from the two orders. In a prior order,
we deemed their appeal of the summary judgment granted in favor of Aurora timely even
though it was filed before judgment was formally entered. (See Cal. Rules of Court, rule
8.104(d)(2).) We also consolidated the appeals.
II.
DISCUSSION
A. The Standard of Review.
“A trial court properly grants summary judgment where no triable issue of
material fact exists and the moving party is entitled to judgment as a matter of law.
(Code Civ. Proc., § 437c, subd. (c).) We review the trial court‟s decision de novo,
considering 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.” (Merrill v. Navegar, Inc. (2001) 26 Cal. 4th 465, 476.)
A defendant meets his or her burden of showing a cause of action has no merit by
showing one or more element of the cause of action cannot be established or that there is
a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).) Once
the defendant has met that burden, the burden shifts to the plaintiff to show that a triable
issue of one or more material fact exists as to that cause of action or defense. (Merrill v.
Navegar, Inc., supra, 26 Cal.4th at pp. 476-477; see Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal. 4th 826, 854-855.)
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B. The Duty of Aurora and the Listing Agents to Disclose to Visitors Known
but Concealed Dangerous Conditions.
We begin by discussing the duties of property owners and real estate agents to
notify people viewing their marketed property of known but concealed dangerous
conditions. These duties arise partly as a result of the legal responsibilities imposed on
property owners and agents, and partly because of the legal relationship between them.
Under Civil Code section 1714, all people, including property owners, are required
to use ordinary care to prevent injury to others. “[T]he basic policy of this state set forth
by the Legislature in section 1714 . . . is that everyone is responsible for an injury caused
to another by his want of ordinary care or skill in the management of his property.”
(Rowland v. Christian (1968) 69 Cal. 2d 108, 118-119.) As a consequence, property
owners are required to “maintain land in their possession and control in a reasonably safe
condition.” (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal. 4th 666, 674,
disapproved on another point in Reid v. Google, Inc. (2010) 50 Cal. 4th 512, 527, fn. 5.)
To establish liability on a negligence theory against an owner for injuries caused
by a dangerous condition of the property, a plaintiff must prove duty, breach, causation,
and damages. (Ortega v. KMart Corp. (2001) 26 Cal. 4th 1200, 1205.) The same
concepts of duty applicable to general negligence claims apply to premises liability
claims. (Melton v. Boustred (2010) 183 Cal. App. 4th 521, 530.) The scope of an owner‟s
duty to visitors regarding dangerous conditions of the property was explained by our
Supreme Court. “Because the owner is not the insurer of the visitor‟s personal safety . . .,
the owner‟s actual or constructive knowledge of the dangerous condition is a key to
establishing its liability. Although the owner‟s lack of knowledge is not a defense, „[t]o
impose liability for injuries suffered by an invitee due to [a] defective condition of the
premises, the owner or occupier “must have either actual or constructive knowledge of
the dangerous condition or have been able by the exercise of ordinary care to discover the
condition, which if known to him, he should realize as involving an unreasonable risk to
invitees on his premises . . . .” ‟ ” (Id. at p. 1206, quoting Hatfield v. Levy Brothers
(1941) 18 Cal. 2d 798, 806.)
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A property owner‟s legal relationship with an agent hired to help market a
property is created and defined by the listing agreement. In addition to the contractual
terms of the agreement, “an entirely different set of legal rules is brought into play. The
law of agency is not a substitute for the law of contracts, but an additional and
overlapping legal framework” that governs the relationship. (2 Miller & Starr, Cal. Real
Estate (3d ed. 2011) § 3:1, p. 3 (Miller); see also R.J. Kuhl Corp. v. Sullivan (1993)
13 Cal. App. 4th 1589, 1599 [“ „[t]he broker-principal relationship is governed by both
agency and contract law.‟ . . . [Citation.]”])
Under the law of agency, real estate agents owe a duty of care to all persons,
including third persons, within the area of foreseeable risk. (Norman I. Krug Real Estate
Investments, Inc. v. Praszker (1990) 220 Cal. App. 3d 35, 42-43.) “One who assumes to
act as an agent is responsible to third persons as a principal for his acts in the course of
his agency . . . [¶] . . . [¶] . . . [w]hen his acts are wrongful in their nature.” (Civ. Code,
§ 2343.) The extent of a real estate agent‟s duty to a third person is “determined by an
examination of whether a reasonable person would have foreseen an unreasonable risk of
harm to the third person and whether in view of such risk the [agent] exercised ordinary
care under the circumstances.” (Miller, Cal. Real Estate, supra, at § 3:45, p. 268.)
Information about a property known by an agent is imputed to the owner. “As
against a principal, both principal and agent are deemed to have notice of whatever either
has notice of, and ought, in good faith and the exercise of ordinary care and diligence, to
communicate to the other.” (Civ. Code, § 2332.) And, the negligence of an agent is the
negligence of the principal. “[A] principal is responsible to third persons for the
negligence of his agent in the transaction of business of the agency . . . .” (Civ. Code,
§ 2338.) In short, “[t]he acts of an agent are, in legal effect, the acts of the principal, and
notice or knowledge of a fact to a principal or an agent is deemed as notice to the other
party.” (Miller, Cal Real Estate, supra, at § 3:2, p. 5.)
There are only a couple of decades-old reported cases that specifically address the
duty of real estate agents to warn visitors of marketed property of known but concealed
dangerous conditions. More than 50 years ago our Supreme Court discussed the duty in a
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case arising out of an agent‟s showing a property to a prospective tenant in Merrill v.
Buck (1962) 58 Cal. 2d 552. “[W]e are satisfied that, having affirmatively undertaken to
show the house to plaintiff in the regular course of their business with the purpose of
earning a commission if [the prospective tenant] decided to rent it, these [real estate
agents] were under a duty of care to warn [the prospective tenant] of a concealed danger
in the premises of which they were aware and from which [the prospective tenant‟s]
injury might be reasonably foreseen. . . . It was up to the jury to determine the extent of
the hazard, the question of latency, and the character of the conduct of these defendants
necessary to constitute the exercise of reasonable care under all of the circumstances.
[Citations.]” (Ibid, at pp. 562-563.) Eleven years before Merrill, an appellate court held
that real estate agents are bound to exercise reasonable care to discover dangerous
conditions of property they are marketing and to warn visitors of them or to make them
safe. (Coughlin v. Harland L. Weaver, Inc. (1951) 103 Cal. App. 2d 602, 605-606.)
Based on Merrill v. Buck, supra, 58 Cal.2d. 552 and the principles discussed
above, we conclude that a real estate agent has a duty to notify visitors of marketed
property of concealed dangerous conditions of which the agent has actual or constructive
knowledge. The agent‟s actual or constructive knowledge of a dangerous condition is
imputed to his or her principal, the property owner, who shares with the agent liability for
damages proximately caused by a breach of this duty.
C. Whether Aurora and the Listing Agents Had Actual or Constructive
Knowledge that the Stairway Ladder Was a Concealed Danger.
We now turn to the central issue in this appeal, which is whether evidence was
presented upon which a jury could find that Aurora and the listing agents knew or should
have known that the stairway ladder was unsafe. We note at the outset that Hall does not,
and cannot, claim to have been unaware of the stairway ladder or the general risks
associated with using one. It was obvious that access to the attic room was by means of
the stairway ladder. Hall had reservations about using it, and she cautioned her clients
when they climbed it. The question in this case, therefore, is not whether Aurora and the
listing agents had reason to know that the stairway ladder was dangerous simply because
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it was a ladder. Instead, the question is whether evidence was presented upon which a
jury could conclude that Aurora and the listing agents had reason to know that the
stairway ladder was potentially dangerous because it was in disrepair. We believe that
such evidence was presented.
In his inspection report, Trent identified the stairway ladder and recommended that
it be replaced as part of the items listed under the heading entitled “Health and Safety
Required Repairs-Group 1.” Although there was no evidence that Aurora received or had
actual knowledge of the report, the report was delivered to the listing agents, and Wood
admitted looking at it.
This report raises a question as to whether the listing agents knew or should have
known that the stairway ladder might have been in disrepair. It is true, as Aurora and the
listing agents point out, that the recommendation to remove and replace the stairway
ladder was buried in a long list of suggestions for mostly ordinary or cosmetic repairs.
But the recommendation to replace the stairway ladder suggests at least the possibility
that it was worn or broken. For all the listing agents knew at the time, Trent
recommended the stairway ladder be replaced because he believed it would soon
collapse. Yet there is no indication in the record that the listing agents did anything to
follow up with Trent about the reasons for his recommendation or to inquire further into
the stairway ladder‟s safety.
Aurora and the listing agents correctly point out that Trent did not recall any safety
concerns with the stairway ladder when he was deposed. At his deposition, he testified
that he saw the stairway ladder when he inspected the property, and he climbed it to go
into the attic room. It did not appear to him to be dangerous, and he explained that if
there had been a problem with the stairway ladder other than appearance, he would have
noted it in his report. He stated that although he had no specific recollection as to why he
recommended that the stairway ladder be replaced, he had prior experience with similar
ladders, and he did not like them. He remarked that they are “crummy” products that
look “poor.” In his words, “They‟re functional but they just look bad.”
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This testimony, however, does not negate the possibility that a jury could conclude
that a reasonable person who received the report might have believed that the stairway
ladder needed to be replaced because it was in disrepair. To begin with, a fair review of
Trent‟s deposition testimony reveals that he could not remember exactly why he listed
the stairway ladder as a health and safety issue and that he did not rule out the possibility
that it was included in the list partly for safety concerns. Furthermore, as mentioned
above, the recommendation to replace the stairway ladder was included in the report‟s
section entitled “Health and Safety Required Repairs-Group 1,” which at the very least
suggests the possibility of a safety problem. Aurora and the listing agents cannot claim,
based on Trent‟s explanations given long after the accident, that they had no reason to
believe that the stairway ladder might be dangerous at the time of the accident.
Drawing all reasonable inferences in favor of plaintiffs, as we must (Saelzler v.
Advanced Group 400 (2001) 25 Cal. 4th 763, 768), we conclude that summary judgment
was improperly granted because evidence was presented that created a triable issue as to
whether defendants knew or should have known that the stairway ladder in this case was
a concealed danger. 1 Our reversal is on strictly limited grounds, and our opinion should
not be taken to reflect any view of the ultimate merits.
D. The Loss of Consortium Cause of Action.
Finally, the loss of consortium claim brought by Hall‟s husband is reversed and
remanded because such a claim “stands or falls with [the spouse‟s] claims.” (Jablonski v.
Royal Globe Ins. Co. (1988) 204 Cal. App. 3d 379, 388.)
III.
DISPOSITION
The judgment is reversed. Plaintiffs shall recover their costs on appeal.
1
In light of our remand, we need not decide whether defendants‟ conduct is presumed
negligent under Evidence Code section 669 and whether the court erred in excluding
evidence of the photograph captured from the YouTube video. Because the remand is
unqualified, these and other issues raised by the parties can be adjudicated in the further
proceedings.
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_________________________
Humes, J.
We concur:
_________________________
Reardon, Acting P.J.
_________________________
Rivera, J.
Hall v. Rockcliff Realtors (A133045)
Hall v. Aurora Loan Services (A134180)
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Trial Court: Contra Costa County Superior Court
Trial Judge: Honorable Judith S. Craddick
Counsel for Appellant: Paoli & Geerhart, Thomas Alan Paoli
Counsel for Respondent Manning & Kass Ellrod Ramirez Trest, Scott David
Aurora Loan Services LLC: Long, Thomas Anthony Trapani
Counsel for Respondent Gilbert Kelly Crowley & Jennett, Daniel Charles
Rockcliff Realtors Taylor, Paul Andrew Bigley, Peter James Godfrey
10