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Mullin v. Valley of California, Inc.

California Court of Appeals, First District, First Division
Aug 11, 2010
No. A124641 (Cal. Ct. App. Aug. 11, 2010)

Opinion


HOWARD R. MULLIN et al., Plaintiffs and Appellants, v. VALLEY OF CALIFORNIA, INC. et al., Defendants and Respondents. A124641 California Court of Appeal, First District, First Division August 11, 2010

NOT TO BE PUBLISHED

San Mateo County Super. Ct. No. CIV471306

Banke, J.

Plaintiffs Howard R. Mullin and Susan L. Mullin appeal from a judgment dismissing their lawsuit against Valley of California, Inc., dba Coldwell Banker and two of its agents, Pamela Nietert and Tom Hilligoss. Plaintiffs alleged causes of action for fraud, negligent misrepresentation, and breach of fiduciary duty based upon their purchase of certain real property in 1979 and their discovery, after having lived on the property for more than 20 years, the lot was actually smaller than represented at the time of purchase. Plaintiffs filed their original complaint in March 2008. After sustaining two demurrers with leave to amend, the trial court sustained defendants’ demurrer to the second amended complaint (SAC) without leave to amend on the ground all causes of action were barred by the statute of limitations. We affirm the judgment.

Facts

A. Summary of Material Allegations

In 1979, plaintiffs purchased a residence at 86 Kilroy Way in Atherton, California (the property). Defendant Valley of California, Inc, dba Coldwell Banker (Coldwell Banker) acted as the real estate broker for both the sellers and plaintiffs. Coldwell Banker advertised the lot size as 1.5 acres, and agent Pamela Nietert conveyed this information to plaintiffs. The multiple listing service (MLS) also described the lot as 1.5 acres.

In 1999, after living on the property for approximately 20 years, plaintiffs moved to South Carolina and decided to list the property for rent. Another Coldwell Banker agent, Tom Hilligoss, handled the rental for them, and the MLS listing again stated the lot was 1.5 acres. Plaintiffs did not actually see the 1999 MLS listing, however, because they had already moved to South Carolina.

In 2001, Hilligoss, who was no longer employed by Coldwell Banker, and Howard Mullin measured the lot with a tape measure. Hilligoss subsequently informed plaintiffs an engineer calculated the lot was only 1.13 acres. Plaintiffs allegedly were “uncertain” about the accuracy of that information because the engineer’s calculation was at odds with the 1979 MLS listing and advertisement and with a 1998 appraisal report they had requested and received.

In 2003, plaintiffs decided to market the property for sale with another real estate agent not employed by Coldwell Banker. Their agent obtained a certified report from a surveyor who also determined the lot was not 1.5 acres, but was 1.1 acres.

On June 20, 2003, counsel for plaintiffs wrote a letter to the original agent, Nietert, informing her of the discrepancy between the 1979 advertised lot size and the actual lot size. Counsel asked Nietert to forward his letter “to the appropriate party at Coldwell Banker for handling the matter.”

Counsel for Coldwell Banker, Michael Davidson, initially responded he was “investigating the matters in... [plaintiffs’] claim letter, ” but believed “the claim is time-barred.” On August 11, 2003, Davidson wrote a second letter to plaintiffs’ counsel (August 2003 letter), stating: “[W]e now have an MLS advertisement from June 1999 (#130218) evidently prepared by a Mr. Hilligoss that lists the lot size of the subject property as 1.13 acres. Pursuant to Civil Code [section] 2332 the claim is clearly time barred and is denied.” The next day Davidson faxed plaintiffs’ counsel a copy of the referenced MLS listing, a copy of which plaintiffs attached to their SAC as Exhibit D (hereinafter Exhibit D).

Civil Code section 2332 provides, “both principal and agent are deemed to have notice of whatever either has notice of, and ought, ... to communicate to the other.” Davidson reasoned if plaintiffs’ agent listed the lot size as 1.13 acres in June 1999, plaintiffs were deemed to have notice of the smaller lot size in 1999. Therefore any cause of action accrued no later than June 1999, and under either a three- or four-year limitations period, was barred by August 2003.

Plaintiffs did not succeed in selling the property in 2003. They listed the property for sale with Coldwell Banker again in 2004, and the property sold in 2005.

Two years later, in December 2007, plaintiffs’ counsel wrote another letter to Coldwell Banker about the lot size. Counsel asserted Davidson had previously misrepresented “the situation to [plaintiffs’] counsel.” Davidson made the same response he made in August 2003 and again provided a copy of Exhibit D. Davidson reiterated that plaintiffs, through their agent Hilligoss, learned of the smaller lot size “not later than June, 1999, more than eight years ago, and probably much earlier.” He asserted any cause of action was “clearly time-barred” in 2003 and certainly time-barred in 2007.

Plaintiffs and their counsel then “realized” Davidson was incorrect about Exhibit D, the MLS document he had first provided in August 2003 and provided again in 2007. Exhibit D included information from plaintiffs’ 1999 MLS listing and a 2001 MLS listing. The information Davidson cited as support for his assertion the 1999 MLS listing included the smaller lot size description was actually from the 2001 listing. Accordingly, plaintiffs alleged Coldwell Banker had “twice cited the wrong MLS listing... as the basis for its denial of plaintiffs’ claim on the ground... it was barred by the statute of limitations.” Plaintiffs alleged they did not discover the “true facts” about the content of their 1999 MLS listing, which in fact listed the size of the lot as 1.5 acres, and not 1.13 acres as Davidson had asserted, until “late 2007.” In February 2008, they obtained a copy of their 1999 MLS listing, confirming it had stated the lot size was 1.5 acres. Plaintiffs therefore alleged “any claim plaintiffs may have had... accrued, at the earliest in 2001, ” not in 1999 as Davidson had asserted, and their causes of action were not time-barred in 2003, again contrary to what Davidson had claimed.

Plaintiffs further alleged defendants should be “estopped from raising the bar of the statute of limitations” because the “misrepresentations” in Davidson’s August 2003 letter concerning the content of their 1999 MLS listing and expiration of the statute of limitations were intended to, and did, “induce” them not to file a complaint in 2003 when they still had timely causes of action. Plaintiffs alleged they reasonably relied upon these “misrepresentations” because Exhibit D “was replete with unexplained abbreviations and dates.” They alleged it was not “readily apparent” that (a) Exhibit D included information from their 2001 MLS listing and some information from their 1999 MLS listing and (b) Davidson had circled and underlined information relating to the 2001 MLS listing in reference to his assertion the 1999 MLS listing included the smaller lot size description. Their counsel therefore had “accepted Coldwell Banker’s interpretation” of Exhibit D and relied upon it in deciding not to file a complaint in 2003 and continued to rely on it until late 2007.

Based upon the foregoing, plaintiffs alleged causes of action for fraud, breach of fiduciary duty and negligent misrepresentation. As to the first, second, and third causes of action for fraud, breach of fiduciary duty, and negligent misrepresentation, plaintiffs alleged their reliance on the misrepresentations in the August 2003 letter induced them not to file a complaint for the 1979 misrepresentation of the lot size until March 2008. As to the fourth and fifth causes of action for fraud and breach of fiduciary duty, plaintiffs again relied upon the August 2003 letter as the reason they did not file suit when they first discovered the smaller lot size. In their sixth cause of action for breach of fiduciary duty, they alleged Coldwell Banker, in 2004, failed to disclose the 1979 misrepresentation about the lot size and the August 2003 misrepresentations about the content of the 1999 MLS listing and running of the statute of limitations.

B. Prior Rulings and Order Sustaining Demurrer to the SAC

The order sustaining defendants’ demurrer to the original complaint noted “a very serious problem with the statute of limitations” because “at the very least” plaintiffs were on notice the property was less than 1.5 acres in 2001 when Hilligoss measured it, yet they “did not file suit until 2008.” The order sustaining the defendants’ demurrer to the first amended complaint again stated any cause of action for fraud or breach of fiduciary duty based upon the 1979 misrepresentation of the lot size was “barred by the applicable statute of limitations, 3 years for fraud and 4 years for breach of fiduciary duty.” The order further stated plaintiffs could not state causes of action for “fraud, breach of fiduciary duty, and negligent misrepresentation” based upon the August 2003 misrepresentations because the litigation privilege applied. Nonetheless, the court gave plaintiffs leave to amend to allege that the August 2003 letter was not “related to an anticipated lawsuit” and to allege facts showing defendants should be equitably estopped to assert the statute of limitations.

The trial court concluded plaintiffs’ allegations in their SAC failed to rectify the deficiencies in their claims, and this time the court sustained the defendants’ demurrer without leave to amend. The court’s order stated all causes of action are “barred by the statute of limitations and/or the pleading fails to allege facts demonstrating the exist[ence] of a fiduciary relationship between the parties at the time of the alleged ‘breach.’ ” The order further stated: “The [SAC] itself admits... Plaintiffs knew and/or discovered and/or had reason to know that their property was less than 1.5 acres back in 2001 (¶ 10), and again had such information... in 2003 (¶ 12). Plaintiffs’ alleged reliance upon any subsequent representation to the contrary would not be reasonable or justified, and certainly would not remedy the running of the statute of limitations which started when Plaintiffs ‘knew or should have known’ of the discrepancy.” The court concluded: “The doctrine of estoppel... ‘does not come into play, whatever the lengths to which a defendant has gone to conceal the wrongs, if a plaintiff is on notice of a potential claim.’ (3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 771.) Logic dictates... there is no ‘concealment’ if the Plaintiffs already have knowledge or are put on notice of the facts supporting a claim. [¶] Accordingly further leave to amend would not resolve the pleading problems.”

The court thereafter entered judgment for defendants, and plaintiffs filed a timely notice of appeal.

Analysis

A. Standard of Review.

“ ‘The defense of statute of limitations may be asserted by general demurrer if the complaint shows on its face that the statute bars the action.’ [Citations.]” (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315 (E-Fab).) It is, however, error for a trial court to sustain a demurrer when the facts alleged, if assumed to be true, state a cause of action under any possible legal theory. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) “On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, ... [t]he reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. [Citations.] The court does not, however, assume the truth of contentions, deductions or conclusions of law.” (Ibid.) We may also consider documents attached to the complaint as exhibits, and to the extent the factual allegations conflict with the content of the exhibits, we instead rely on and accept as true the contents of the exhibits. (Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal.App.4th 659, 665.) We review the trial court’s ruling de novo, and may affirm the judgment if it is correct on any ground stated in the demurrer, regardless of the trial court’s stated reasons. (E.L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497, 504.)

B. Plaintiffs Were on Inquiry Notice of the Smaller Lot Size in 2001 and Had Actual Notice by 2003.

The limitations period for an action for relief based upon fraud or mistake is three years (Code Civ. Proc., § 338, subd. (d)), and the limitations period for breach of fiduciary duty is usually four years. (Code Civ. Proc., § 343; Stalberg v. Western Title Ins. Co., supra, 230 Cal.App.3d at p. 1230.) Plaintiffs contend the trial court erred in concluding their causes of action were time-barred because they alleged they were not on notice their lot was less than 1.5 acres until shortly before they filed their original complaint, within the three- or four-year limitations periods.

No statute of limitations expressly applies to a cause of action for breach of fiduciary duty. As a general rule, a cause of action not specifically subject to any other statute of limitations is governed by Code of Civil Procedure section 343, and must be commenced within four years. (Stalberg v. Western Title Ins. Co. (1991) 230 Cal.App.3d 1223, 1230.) Where, however, the gravamen of the breach of fiduciary cause of action is fraud the applicable limitation period is three years as provided in section 338 subdivision (d). (See City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 889.) We need not decide whether the gravamen of plaintiffs’ causes of action is fraud because even if we assume the four-year statute applies, plaintiffs’ causes of action are barred.

“ ‘[U]under the delayed discovery rule, a cause of action accrues and the statute of limitations begins to run when the plaintiff has reason to suspect an injury and some wrongful cause....’ ” (E-Fab, supra, 153 Cal.App.4th at p. 1319, italics added, quoting Fox v. Ethicon Endo–Surgery, Inc. (2005) 35 Cal.4th 797, 803.) Notice sufficient to trigger accrual of a cause of action under the delayed discovery rule may be actual or constructive. (E-Fab, supra, 153 Cal.App.4th at p. 1318.) Actual notice is express information of a fact. (Ibid.) A person with “ ‘notice of circumstances sufficient to put a prudent [person] upon inquiry’ is deemed to have constructive notice of all facts that a reasonable inquiry would disclose.” (Id. at p. 1319.) A person is “charged with presumptive knowledge of an injury” if he has “ ‘ “ ‘information of circumstances to put [him] on inquiry’ ” ’ ” or if he has “ ‘ “ ‘the opportunity to obtain knowledge from sources open to [his] investigation.’ ” ’ ” (Fox v. Ethicon Endo-Surgery, supra, 35 Cal.4th at pp. 807-808.)

With respect to causes of action that otherwise appear to be time-barred, it is the plaintiff’s burden to plead specific facts showing “ ‘ (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’ ” (E-Fab, supra, 153 Cal.App.4th at p. 1319.) Once properly pleaded, belated discovery is normally a question of fact. (Id. at p. 1320.) However, conclusory allegations of late discovery and diligence “will not withstand demurrer.” (Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal.4th 623, 638.) “ ‘[W]henever reasonable minds can draw only one conclusion from the [alleged facts], the question becomes one of law.’ [Citation.]” (E-Fab, supra, 153 Cal.App.4th at p. 1320.)

Here, reasonable minds could draw only one conclusion from the facts alleged in the SAC-plaintiffs’ claims are time-barred because plaintiffs had both constructive and actual notice their lot was less than 1.5 acres in size more than four years before they filed suit.

Plaintiffs were on inquiry notice their lot was less than 1.5 acres by at least 2001, when Tom Hilligoss and Howard Mullin measured it and Hilligoss then told them an “engineer had determined that the subject property was only 1.13 acres not 1.5 acres.” Plaintiffs’ allegation they were “uncertain” about what Hilligoss told them because he had used a tape measure to measure the lot instead of conducting “a proper survey, ” is immaterial because “inquiry notice is triggered by suspicion.” (E-Fab, supra, 153 Cal.App.4th at p. 1319.) “ ‘Subjective suspicion is not required. If a person becomes aware of facts which would make a reasonably prudent person suspicious, he or she has a duty to investigate further and is charged with knowledge of matters which would have been revealed by such an investigation.’ [Citation.]” (Wilshire Westwood Associates v. Atlantic Richfield Co. (1993) 20 Cal.App.4th 732, 740; see also Bedolla v. Logan & Frazer (1975) 52 Cal.App.3d 118, 131.) Any reasonably prudent property owner, upon being informed an engineer calculated their lot as being almost half an acre smaller than as represented at the time of purchase, would be alarmed and conduct further investigation to determine the true state of affairs. Moreover, despite plaintiffs’ allegation they did not obtain an official survey until 2003, they are charged with “presumptive” knowledge in 2001 of what the survey confirmed in 2003. (See Wilshire Westwood Associates v. Atlantic Richfield Co., supra, 20 Cal.App.4th at p. 740; see also Shamsian v. Atlantic Richfield Co. (2003) 107 Cal.App.4th 967, 980.)

Plaintiffs also had actual notice of the smaller lot size no later than June 2003, when they received the “certified report” stating the property was only 1.1. acres and their agent proposed listing it as only one acre. (E-Fab, supra, 153 Cal.App.4th at p. 1318.)

In light of plaintiffs’ actual notice of the smaller lot size in 2003, their reliance on cases such as Sanchez v. South Hoover Hospital (1976) 18 Cal.3d 93, 102, Lee v. Escrow Consultants, Inc. (1989) 210 Cal.App.3d 915, 920-921 and Bedolla v. Logan & Frazer, supra, 52 Cal.App.3d at page 131, is misplaced. These cases recognize that during the existence of a fiduciary relationship the plaintiff’s duty of inquiry may be diminished or delayed. However, even where a fiduciary relationship exists, the limitations period begins to run when the plaintiff “actually discovers the facts.” (Hobbs v. Bateman Eichler, Hill Richards, Inc. (1985) 164 Cal.App.3d 174, 202, italics omitted.)

Although we need not reach the question in light of the fact plaintiffs had actual notice of the smaller lot size in 2003, their assertion they had a continuing fiduciary relationship with Coldwell Banker in 2001 and 2003 also fails. Coldwell Banker allegedly acted as agent for both sellers and buyers in the 1979 transaction, and as rental agent for plaintiffs in 1999. It had no agency relationship with plaintiffs, however, in 2001 or 2003. As a general rule, “[t]he duties of real estate agents, even to their own clients, terminate ‘when the subject matter of the agency is sold.’ ” (Robinson v. Grossman (1997) 57 Cal.App.4th 634, 646.) Plaintiffs cite no authority that supports their assertion a real estate agent continues to owe fiduciary duties to a client years after the subject matter of the agency has ended. The cases they cite, Leff v. Gunter (1983) 33 Cal.3d 508, 515; Sequoia Vacuum Systems v. Stransky (1964) 229 Cal.App.2d 281, 287, concern the very different fiduciary duties partners owe to each other with respect to certain business opportunities even after the partnership has dissolved, and the duty not to use their position to take advantage of a competing business opportunity. Although the sixth cause of action alleged a fiduciary relationship with Coldwell Banker existed again in 2004, plaintiffs failed to make any argument based on this relationship in their opening brief and thus waived any such argument. (See, e.g., Shade Foods, Inc v. Innovative Product Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 894, fn. 10.) In any event, a subsequent fiduciary relationship in 2004 would not alter the fact plaintiffs were on inquiry or actual notice based upon facts already known to them in 2001 and 2003.

It is unclear whether plaintiffs contend the misstatements in Davidson’s August 2003 letter (that the 1999 MLS listing stated the lot was 1.13 acres and their claim made in 2003 was time-barred) delayed accrual, or whether these misstatements are solely the basis of their equitable estoppel argument, which we discuss, infra. In any case, the misstatements in the August 2003 letter do not alter the accrual analysis. As discussed above, plaintiffs were on inquiry notice that their lot was less than 1.5 acres by at least 2001, as soon as their former agent, Hilligoss, measured the lot and told them an engineer calculated it was almost half an acre smaller than was represented when they purchased it 1979. That Davidson asserted they were on notice as early as June 1999, does not change what Hilligoss told them, which put them on inquiry notice by at least 2001. Nor does what Davidson asserted, change the fact they received a “certified report” in 2003 stating their lot was only 1.1. acres, which put them on actual notice the lot was not 1.5 acres.

Plaintiffs’ bare allegation they did not discover the falsity of Davidson’s misrepresentations until “late 2007” is manifestly inadequate to delay accrual. “It is not sufficient merely to allege ignorance at one time and discovery at another.” (Wilson v. Wilson (1962) 199 Cal.App.2d 542, 544 -545.) Rather, plaintiffs were required to plead both the circumstances of discovery of the facts underlying their claims and inability to have made earlier discovery despite reasonable diligence. (Id. at p. 545; see also Camsi IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1537.) Plaintiffs’ SAC was devoid of any allegation explaining why they were able to discern in 2007 the information Davidson cited in Exhibit D was from a 2001 MLS listing, rather than a 1999 MLS listing, but were unable to discern that in 2003, when Davidson first sent them Exhibit D. In the absence of any specific allegation why they were precluded from earlier discovery, their allegation they did not discover the misstatements in Davidson’s August 2003 letter until “late 2007” was merely conclusory and insufficient to delay accrual of their claims until 2007. (Camsi IV v. Hunter Technology Corp., supra, 230 Cal.App.3d at p. 1537.)

C. Plaintiffs Failed to Plead Facts Sufficient to Support Equitable Estoppel.

Plaintiffs next contend that even if they were on inquiry notice of the smaller lot size in 2001, or actual notice by 2003, they adequately alleged defendants are equitably estopped from asserting the statute of limitations. They rely entirely on the misstatements in Davidson’s August 2003 letter.

Plaintiffs alleged the August 2003 letter “intentionally induced” them not to sue in 2003 by falsely asserting they were on inquiry notice of the smaller lot size as early as June 1999 and therefore any claim was time-barred. Plaintiffs further alleged they did not know or discover until late 2007 their 1999 MLS listing stated the lot was 1.5 acres, not 1.13 acres as Davidson represented. Nor did they realize until late 2007 that Exhibit D, which Davidson sent them in 2003 and again in 2007, included their 2001 MLS listing and some information from their 1999 MLS listing and that Davidson had circled and underlined information relating to the2001 listing. They alleged, but for their reliance upon the misrepresentations in the August 2003 letter, they could and would have filed a timely complaint in 2003.

“ ‘ “Equitable estoppel... comes into play only after the limitations period has run and addresses... the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period....” ’ ” (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 383.) It is based upon the equitable principle “ ‘ “[o]ne cannot justify or equitably lull his adversary into a false sense of security, and thereby cause his adversary to subject his claim to the bar of the statute of limitations, and then be permitted to plead the very delay caused by his course of conduct as a defense to the action when brought.” ’ ” (Ibid.; see also Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 652.)

Unlike the usual equitable estoppel case in which a defendant lulls the plaintiff into a false sense of security and inaction within the limitations period by, for example, promising to repair or remediate damage (see, e.g., Holdgrafer v. Unocal Corp. (2008) 160 Cal.App.4th 907, 927) or to settle (see, e.g., Union Oil Co. of California v. Greka Energy Corp. (2008) 165 Cal.App.4th 129, 138), plaintiffs’ novel equitable estoppel argument is that defendants created a false sense of insecurity by inducing them to believe filing a lawsuit was futile because the statute of limitations had already run in 2003, when it, in fact, had not.

Plaintiffs argue some of the trial court’s rationale in its order sustaining the demurrer suggests it may have misunderstood their estoppel theory as being based upon concealment of the actual lot size, when in fact their estoppel theory was predicated upon misrepresentation of the content of their 1999 MLS listing. We need not belabor the question whether the trial court’s reasoning reflects a misunderstanding of plaintiffs’ theory because we “review the trial court’s ruling, not its rationale, [and] we are not bound by the explanation the lower court gave in support of its decision.” (Mills v. Forestex Co., supra, 108 Cal.App.4th at p. 640.)

“In order to assert equitable estoppel, the following four elements must be present: (1) the party to be estopped must be apprised of the facts; (2) he must intend... his conduct be acted on, or must so act that the party asserting estoppel had a right to believe it was so intended; (3) the party asserting estoppel must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury.” (Sofranek v. County of Merced (2007) 146 Cal.App.4th 1238, 1250.) The party asserting estoppel must also show reliance upon the conduct of the party to be estopped was reasonable. (Mills v. Forestex Co., supra, 108 Cal.App.4th at p. 655.) “[W]here the complaint pleads undisputed facts establishing... equitable estoppel does not apply, the issue may be resolved on demurrer.” (Sofranek v. County of Merced, supra, 146 Cal.App.4th at p. 1251.) The allegations of the SAC concerning the August 2003 letter, even if true, did not support the essential elements of estoppel for the following reasons:

First, plaintiffs already were on notice their lot was smaller than 1.5 acres by at least June 2003, before they received Davidson’s August 2003 letter. “The doctrine of fraudulent concealment... does not come into play, whatever the lengths to which a defendant has gone to conceal the wrongs, if a plaintiff is on notice of a potential claim.” (Rita M. v. Roman Catholic Archbishop (1986) 187 Cal.App.3d 1453, 1460 [priests’ alleged conspiracy to silence plaintiff regarding sexual misconduct did not equitably toll statute because as a participant in the acts plaintiff was on notice of her injury].) Plaintiffs argue this principle is inapplicable because in Rita M. the plaintiff “had undisputed actual notice” of the sexual misconduct of which she complained, whereas here there were “numerous fact questions as to whether [plaintiffs] actually did have sufficient information” before they received the August 2003 letter “to apprise them that the property size was smaller than had been represented.” To the contrary, as we have explained the allegations of the SAC established plaintiffs were on at least inquiry notice of the smaller lot size in 2001 and had actual notice by June 2003.

Second, “mere denial of legal liability does not set up an estoppel.” (Lantzy v. Centex Homes, supra, 31 Cal.4th at p. 384, fn. 18, italics omitted; Vu v. Prudential Property & Casualty Ins. Co. (2001) 26 Cal.4th 1142, 1149-1153 (Vu); Neff v. New York Life Ins. Co. (1947) 30 Cal.2d 165, 174-175.) Therefore, to the extent Davidson’s August 2003 letter denied liability based upon the legal principle plaintiffs’ agent’s knowledge of a smaller lot size was imputed to them pursuant to Civil Code section 2332, and the legal conclusion the statute of limitations had already expired, the alleged facts were insufficient. Only an alleged misrepresentation or nondisclosure of a material fact, rather than a legal principle or conclusion, is an act or omission that may support a claim of equitable estoppel. (Vu, supra, 26 Cal.4th at pp. 1149-1153; see also Jordan v. City of Sacramento (2007) 148 Cal.App.4th 1487, 1496.)

Third, even if we construe Davidson’s August 2003 letter as misrepresenting a fact regarding the content of plaintiffs’ 1999 MLS listing, i.e., that it described the lot as being 1.13 acres, the SAC failed to plead facts showing: (1) the alleged misrepresentation concerned facts “known to defendant but unknown to plaintiff[s]” (Cal. Cigarette Concessions v. City of L.A. (1960) 53 Cal.2d 865, 870); and (2) plaintiffs’ reliance upon the alleged misrepresentation was reasonable. (See Lantzy v. Centex Homes, supra, 31 Cal.4th at pp. 384-385 [complaint must allege plaintiff “actually” and “reasonably” relied upon defendant’s conduct].) “ ‘[W]here one acts with full knowledge of plain provisions of law, and the probable effect upon facts within his knowledge, especially where represented by counsel’ ” he or she cannot “ ‘claim (1) ignorance of the true facts or (2) reliance to his detriment upon the conduct of the person claimed to be estopped....’ ” (Cal. Cigarette Concessions v. City of L.A., supra, at p. 871.)

Plaintiffs cannot plead ignorance of the true facts because the subject matter of the alleged misrepresentation concerned the content of a MLS listing for their own property prepared by their own agent. Although plaintiffs alleged they did not see the 1999 MLS listing and were still unaware of its content in 2003, as principals they are deemed to have knowledge of facts known by their agent. (Civ. Code, § 2332; see also E-Fab, supra, 153 Cal.App.4th at p. 1319.) Thus, as a matter of law, the subject matter of the alleged misrepresentation did not concern facts “known to defendant but unknown to plaintiff[s].” (Cal. Cigarette Concessions v. City of L.A., supra, 53 Cal.2d at p. 870.) Moreover, a party asserting estoppel cannot claim “ignorance of the true facts... [w]here inquiry would have led to the discovery of the fraud.” (Kiernan v. Union Bank (1976) 55 Cal.App.3d 111, 117.) As we already have observed, the SAC contains no allegation explaining why plaintiffs could not have discovered in 2003 the very facts they finally “realized” in late 2007 and 2008. In fact, the SAC alleged plaintiffs accessed the MLS service in 2008 and thus determined their 1999 MLS listing stated the property was 1.5, not 1.13, acres. They had a real estate agent in 2003, who could have accessed the service and determined the same thing about the 1999 MLS at that time, within the limitations period.

Nor can plaintiffs allege their asserted reliance upon Davidson’s alleged misrepresentation about the 1999 MLS listing was reasonable under the circumstances. (Vu, supra, 26 Cal.4th at p. 1152 [party asserting estoppel based upon misrepresentation of fact must show reliance is reasonable]; Mills v. Forestex Co., supra, 108 Cal.App.4th at p. 655.) Reliance is reasonable only when “ ‘circumstances were such to make it reasonable for plaintiff to accept defendant’s statements without an independent inquiry or investigation.’ [Citation.]” (Philipson & Simon v. Gulsvig (2007) 154 Cal.App.4th 347, 363.) Davidson’s August 2003 letter was directed to plaintiffs’ counsel, who should have been aware of (a) the legal significance of when plaintiffs would be deemed to have knowledge pursuant to Civil Code section 2332 and (b) the importance of verifying the accuracy of Davidson’s assertion about the content of plaintiffs’ 1999 MLS listing and position any claims were time-barred. Furthermore, since Davidson provided plaintiffs’ counsel with a copy of Exhibit D, he had the ability to assess the accuracy of Davidson’s interpretation of the document, and could have, in 2003, used the same means he finally used in late 2007 and early 2008 to conclude although Exhibit D incorporated some information from the plaintiffs’ 1999 MLS listing, Davidson had circled and underlined information relating to the2001 listing. (See Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1332 [upholding order sustaining demurrer because, among other reasons, it was not reasonable for party represented by counsel to rely on representations of an adversary without an independent inquiry].)

An attorney may be liable for an intentionally fraudulent misrepresentation even to a non-client represented by counsel, if the litigation privilege is inapplicable. However, the circumstances must support a finding reliance was justifiable. (See, e.g., Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 69, 76 [reliance on coverage counsel’s misrepresentation regarding insurance coverage was justifiable where opposing party stood in shoes of insured and had no reason to know or suspect secret agreement with insured affecting the extent of coverage].) Here, plaintiffs had no such special relationship with Davidson, could review the document Davidson relied on and see the smattering of numbers on it for themselves. They had the means independently to verify his reading of the document.

The only explanation alleged for why plaintiffs and their counsel, instead, accepted Davidson’s “interpretation” of Exhibit D, was that the “merging of two MLS documents [one from 1999 and one from 2001] was not readily apparent” due to “unexplained abbreviations and dates.” However, since plaintiffs attached Exhibit D to the SAC we may disregard allegations characterizing it and examine it ourselves. (Performance Plastering v. Richmond American Homes of California, Inc., supra, 153 Cal.App.4th at p. 665.) Exhibit D clearly includes two different MLS numbers, 918972 and 130218, and these numbers also correspond to two different dates “10/Jun /99, ” and “09/Jul/01.” The abbreviation “LS:1.13 AC” does appear on Exhibit D, but the unabbreviated text includes a description of a “large 1.13 acre lot” followed by the words “available 7/1/01.” Thus, an examination of Exhibit D would itself raise questions about the accuracy of Davidson’s assertion it was the 1999MLS listing that described the lot as 1.13 acres, rather than the 2001 listing. Moreover, the SAC alleged another fact known to plaintiffs in 2003 that called into question the accuracy of Davidson’s assertion: Howard Mullin had measured the lot with Hilligoss in 2001, not 1999, and Hilligoss told him the engineer calculated the lot as 1.13 acres. Under these circumstances, no trier of fact could conclude plaintiffs could mindlessly rely on Davidson’s reading of Exhibit D, rather than use readily available means to independently verify his assertion their 1999 MLS listing included a smaller lot size. (Cal. Cigarette Concessions v. City of L.A., supra, 53 Cal.2d at p. 871.)

The circumstances here are wholly distinguishable from those in Vu, supra, 26 Cal.4th at page 1152 , on which plaintiffs rely. In Vu, an insurer inspected Vu’s property to determine the nature and extent of damage caused by an earthquake and informed Vu the loss was less than the deductible. Vu took no further action until after the limitations period expired. He then discovered substantial additional damage and hired an independent appraiser who determined the damage to his home far exceeded the deductible. The insurer denied Vu’s claim for the newly discovered damage on the ground it was barred by the applicable limitations period. (Id.at p. 1147.) On certification of the question from the Ninth Circuit concerning its review of an order granting the insurers’ summary judgment motion (see Vu v. Prudential Prop. & Cas. Ins. Co. (9th Cir.1999) 172 F.3d 725), the California Supreme Court confirmed the statute of limitations had run, but held the insurer would be estopped to raise a statute of limitations defense if the insured could show he refrained from bringing a timely action because he reasonably relied on the insurer’s factual misrepresentation regarding the extent of damage. (Vu, supra, 26 Cal.4th at p. 1152.) For guidance to the Ninth Circuit, the Supreme Court enumerated several facts relevant to the determination of the issue of reasonable reliance including, “whether Vu himself was qualified to evaluate the damage or had to rely on an expert... [and] what led Vu to suspect his damage was greater than the policy’s deductible amount, and whether Vu then acted diligently after he so suspected....” (Id. at p. 1153.) Ultimately, because Vu did not have the benefit of the Supreme Court’s clarification of the law in opposing the insurer’s motion for summary judgment, the Ninth Circuit remanded the case back to the district court to allow the parties to develop the factual record relevant to equitable estoppel. (See Vu v. Prudential Property & Cas. Ins. Co. (9th Cir. 2002) 291 F.3d 603, 605.)

Plaintiffs argue similar issues of fact remain to be resolved here, preventing determination of the issue of reasonable reliance on demurrer. To the contrary, the plaintiff in Vu had not yet had the opportunity to marshal facts relevant to his equitable estoppel claim because our Supreme Court clarified the law allowing a claim of equitable estoppel based upon a misrepresentation of fact only after the defendant had been granted summary judgment and the appeal was pending before the Ninth Circuit. Plaintiffs, on the other hand, had the benefit of this 2001 clarification of the law and several opportunities to allege facts showing reasonable reliance upon an alleged misrepresentation of fact. They were simply unable to do so. Unlike the misrepresentation of fact in Vu about the extent of property damage, a fact a layperson might well not be qualified to evaluate or be presumed to know, here the subject matter of the alleged misrepresentation concerned the content of an MLS listing prepared by plaintiffs’ own agent, knowledge of which is imputed to plaintiffs by law. (See Civ. Code, § 2332.) Moreover, in light of the appearance of two different dates and MLS numbers in Exhibit D, plaintiffs had ample information in 2003 to at least suspect Davidson’s assertion it was the 1999 listing that first published the smaller lot size could be inaccurate. Yet they failed diligently to pursue available means of verifying it.

We also see no analogy between the facts alleged in the SAC and those in Sofranek v. County of Merced, supra, 146 Cal.App.4th 1238, also cited by plaintiffs. In Sofranek, the plaintiff submitted an initial and amended claim pursuant to the California Tort Claims Act (Gov. Code, § 810 et seq.). (Sofranek, at pp. 1242-1243, 1250.) The county denied both claims, and each time sent a notice informing the plaintiff he had “ ‘only six (6) months from the date this notice was personally delivered or deposited in the mail to file a court action.’ ” (Id. at pp. 1242-1243.) The plaintiff filed a lawsuit more than six months after the first notice, but within six months after the second. (Id. at p. 1246.) Since the amended claim related back to the first, the six-month limitations period began to run when the county rejected the first claim, and the lawsuit was not timely filed. (Id. at p. 1247.) The plaintiff alleged the county should be estopped from asserting a statute of limitation defense because, by sending the second notice, the county induced plaintiff to conclude the county intended to “waive” its right to stand on the first notice as triggering the limitations period. (Id. at p. 1251) The Court of Appeal held the facts adequately alleged the plaintiff’s reliance upon the second notice as an intended waiver was reasonable because the county’s actual intention was a fact only the county could know, and even a diligent investigation of the applicable law regarding the relation back doctrine would not have revealed the fact the county did not actually intend to waive the limitations period. (Id. at pp. 1251-1252.)

By contrast, here, far from doing anything to mislead plaintiffs regarding their intention to waive the statute of limitation defense, defendants consistently asserted it. Also, unlike intent to waive the limitations period, here the alleged misrepresentation concerned facts plaintiffs were deemed to know pursuant to Civil Code section 2332, and a simple investigation in 2003 to obtain their own copy of the 1999 MLS listing would have revealed the inaccuracy of defendants’ alleged misrepresentation.

Plaintiffs’ reliance upon Kleinecke v. Montecito Water Dist. (1983) 147 Cal.App.3d 240, is also misplaced. Kleinecke concerned the very different circumstance of equitable estoppel based upon concealment of the identity of the correct defendant by counsel representing both entities when the plaintiff has otherwise filed a timely complaint. (Id. at pp. 242-244.) Here, plaintiffs did not file a timely complaint against any defendant. Nor did plaintiffs allege defendants did anything to conceal from them, or affirmatively misled them, regarding the identity of the proper defendants in this case.

For all the foregoing reasons, the SAC failed to allege a factual basis to equitably estop defendants from asserting the bar of the statute of limitations.

Because we conclude the trial court properly determined plaintiffs’ claims are time-barred, we do not reach the other grounds urged by defendants in support of the judgment.

Conclusion

The judgment is affirmed.

We concur: Margulies, Acting P. J. Dondero, J.


Summaries of

Mullin v. Valley of California, Inc.

California Court of Appeals, First District, First Division
Aug 11, 2010
No. A124641 (Cal. Ct. App. Aug. 11, 2010)
Case details for

Mullin v. Valley of California, Inc.

Case Details

Full title:HOWARD R. MULLIN et al., Plaintiffs and Appellants, v. VALLEY OF…

Court:California Court of Appeals, First District, First Division

Date published: Aug 11, 2010

Citations

No. A124641 (Cal. Ct. App. Aug. 11, 2010)

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