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Esquivel v. Better Net, Inc.

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION EIGHT
Nov 9, 2011
B222606 (Cal. Ct. App. Nov. 9, 2011)

Opinion

B222606

11-09-2011

ALBERTO ESQUIVEL et al., Plaintiffs and Appellants, v. BETTER NET, INC., et al., Defendants and Respondents.

Law Offices of Jonathan D. Winters and Jonathan D. Winters for Plaintiffs and Appellants. Morris Polich & Purdy, David L. Brandon and Penelope M. Diehl for Defendants and Respondents Better Net, Inc., and Mario Gascon. Carlson Law Group, Mark C. Carlson and Anne M. Watson for Defendants and Respondents Cal State Realty & Lending, Inc., and Jesus Quintero. Ferruzzo & Ferruzzo, David N. Shaver and Vassil Mitzev for Defendant and Respondent Bug Wiser. Lanphere Law Group, Michael A. Lanphere and Aaron B. Fairchild for Defendants and Respondents Moctezuma Luna and Gloria Luna.


NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. NC051360)

APPEAL from the judgment of dismissal of the Superior Court of Los Angeles County. Patrick T. Madden, Judge. Affirmed in part; dismissed in part and remanded.

Law Offices of Jonathan D. Winters and Jonathan D. Winters for Plaintiffs and Appellants.

Morris Polich & Purdy, David L. Brandon and Penelope M. Diehl for Defendants and Respondents Better Net, Inc., and Mario Gascon.

Carlson Law Group, Mark C. Carlson and Anne M. Watson for Defendants and Respondents Cal State Realty & Lending, Inc., and Jesus Quintero.

Ferruzzo & Ferruzzo, David N. Shaver and Vassil Mitzev for Defendant and Respondent Bug Wiser.

Lanphere Law Group, Michael A. Lanphere and Aaron B. Fairchild for Defendants and Respondents Moctezuma Luna and Gloria Luna.

This action arises from the purchase of a single family home in the City of Long Beach. The home contained multiple defects that were allegedly not disclosed at the time of sale, including the presence of mold that resulted in emotional and physical injuries to the plaintiffs. This appeal concerns only the claims of the three family members of the purchaser of the real property against the sellers, the brokers and agents involved in the transaction, and the termite inspection company. We conclude the trial court correctly determined on demurrer that the family member plaintiffs who were not parties to any of the contracts in issue failed to state any claim, as a matter of law, against the sellers' agents and therefore affirm the judgment of dismissal as to them. As to the appeal of the family members' claims against the remaining defendants, we conclude there was no timely notice of appeal filed from an appealable judgment and therefore dismiss as to those defendants.

FACTUAL AND PROCEDURAL BACKGROUND

1. Facts Pertaining to the Subject Real Estate Transaction.

We limit our summary of the facts to those material allegations pled against the sellers' agents, except to the extent other allegations lend context to our discussion.

Carmen Sanchez, who is not a party to this appeal, entered into an agency agreement with defendant and respondent Mario Gascon, a real estate agent employed by defendant and respondent Better Net, Inc., dba Keller Williams Coastal Properties and Spurr and Associates. (Gascon and Better Net, Inc., will be referred to collectively, where appropriate, as the Keller Williams Defendants.) Sanchez engaged the Keller Williams Defendants to represent her to buy a home. After looking at various homes for sale, Sanchez became interested in a parcel of real property on East Smith Place in Long Beach, California (the subject property).

Defendants and respondents Moctezuma Luna and Gloria Luna (the Lunas) owned the subject property. The Lunas were represented in the sale of their home by defendant and respondent Jesus Quintero, a real estate agent employed by defendant and respondent Cal State Realty & Lending, Inc. (Cal State). (Quintero and Cal State will be referred to collectively, where appropriate, as the Cal State Defendants.)

Sanchez's primary language is Spanish and her English language skills are limited. Sanchez did not receive Spanish translations of all documentation related to the transaction, specifically the disclosure statements. Sanchez relied on the oral representations of the defendants. The Lunas, the Keller Williams Defendants and the Cal State Defendants all affirmatively represented that the subject property had been inspected and was in good condition and did not disclose the existence of any mold infestation or related defects. Sanchez therefore submitted an offer to the Lunas to purchase the subject property which the Lunas accepted. The purchase agreement identifies Sanchez as the sole buyer of the subject property.

During escrow, the Lunas hired defendant and respondent George Moran dba G.B. Home Inspections (Moran) to inspect the subject property and prepare a home inspection report. Moran's inspection report identified a number of potential areas of concern, including a lack of secondary drains on the roof to prevent water buildup, improper installation of bathroom water lines and remodeling of the garage which modified its intended use. The report recommended that specialists in appropriate trades evaluate the noted conditions and suggested that the city be contacted about the changes to the garage.

The Lunas also hired defendant and respondent Bug Wiser to inspect the home for evidence of termite infestation and to prepare a report. Bug Wiser's report noted evidence of subterranean termites at various interior and exterior locations.

After the close of escrow, Sanchez moved into the subject property with plaintiff and appellant Alberto Esquivel and their two children, plaintiffs and appellants Walter Sanchez and Selena Esquivel. (Alberto, Walter and Selena will be referred to collectively as Plaintiffs.) Sometime in 2007, a wall in the bathroom of the home began to bulge, and a crack appeared in the living room. Tile and plaster began to crumble and drop off. Sanchez and Alberto Esquivel hired a contractor to repair the walls. The contractor demolished portions of the walls to determine a cause and discovered "humid air" behind the walls and some sort of plant-like material growing in the bathroom walls. The home has since been "completely destroyed" and the entire family is living in the garage. Plaintiffs have suffered allergies, asthma, emotional distress and loss of sleep.

2. Pertinent Procedural Background.

Sanchez and Plaintiffs filed an action seeking to recover damages for the loss of the home, as well as for the personal injuries suffered as a result of exposure to the mold and other defects discovered in the subject property. After a series of pleading challenges, the operative fourth amended complaint was filed in September 2009. The fourth amended complaint contains 19 causes of action in 124 pages. Copies of the purchase agreement bearing only Sanchez's name, Moran's home inspection report, and Bug Wiser's termite report were attached as exhibits. We discuss below only the causes of action Plaintiffs asserted against the Cal State Defendants.

Plaintiffs pled seven causes of action against the Cal State Defendants: the first cause of action entitled "Broker Liability to Purchaser for Intentional Non Disclosure of Material Facts"; the second cause of action entitled "Broker Liability to Prospective Purchaser for Failure to Inspect and Disclose"; the eighth cause of action for fraud (suppression of fact); the ninth cause of action for negligent misrepresentation; the 11th cause of action for concealment; the 18th cause of action for unjust enrichment; and, the 19th cause of action for violation of Business and Professions Code section 17200.

Plaintiffs pled an additional four claims against Quintero, the Cal State real estate agent: the 12th cause of action for intentional infliction of emotional distress; the 13th cause of action for nuisance; the 14th cause of action for negligence per se; and the 15th cause of action for negligence.

Each cause of action against the Cal State Defendants rests on the alleged failure to disclose defects in the subject property and misrepresenting the condition of the subject property. No other wrongful conduct is alleged against the Cal State Defendants. As nonpurchasers of the subject property, Plaintiffs alleged they suffered physical injuries and emotional distress arising from exposure to the mold and other alleged contaminants in the subject property, as well as distress related to losing the family home.

The Cal State Defendants demurred and filed a motion to strike portions of the fourth amended complaint, as did all of the other defendants except Bug Wiser, which answered. The court coordinated the hearing on all of the defendants' demurrers and motions to strike to be held on November 24, 2009. The court did not issue a ruling on the day of the hearing but took the motions under submission. On December 1, 2009, the court issued its joint ruling on all demurrers. The minute order was served by mail by the clerk the same day along with a notice of entry of the order. The December 1 order dismissed all of Plaintiffs' claims as to all demurring defendants, but left some of Sanchez's claims against certain defendants to be resolved on the merits.

The court did not rule on Plaintiffs' motion to strike portions of the defendants' demurrers for alleged procedural defects. Plaintiffs argue on appeal that this failure denied them due process. Plaintiffs cite no authority for this contention and we will not consider it. (Advanced Choices, Inc. v. State Dept. of Health Services (2010) 182 Cal.App.4th 1661, 1671.)

In response to the court's order, the Cal State Defendants duly submitted a proposed judgment of dismissal which was signed and entered by the court on December 31, 2009. The Cal State Defendants served notice of entry of the judgment of dismissal in their favor by mail on January 7, 2010. On February 16, 2010, Plaintiffs filed a timely notice of appeal as to the Cal State Defendants' judgment of dismissal.

Defendant Moran also submitted a proposed judgment of dismissal. It was signed and entered by the court on January 22, 2010. Plaintiffs did not file any notice of appeal as to Moran's separately entered judgment of dismissal.

The Keller Williams Defendants and the Lunas never submitted a proposed judgment of dismissal of Plaintiffs' claims based on the court's December 1 order. Nor did Plaintiffs offer any proposed judgment of dismissal in order to perfect their appeal of the court's December 1 ruling sustaining the demurrer of those defendants without leave to amend. The record does not reflect the entry of any judgment of dismissal as to these defendants.

Instead, in April 2010, while this appeal from the judgment of dismissal of the Cal State Defendants was pending, Plaintiffs presented the trial court with a proposed order entitled "Order Clarifying 12/31/09 Judgment of Dismissal." The "clarifying" order states in pertinent part: "To avoid any ambiguity regarding this court's prior ruling, [¶] IT IS ORDERED that the following plaintiffs, Alberto Esquivel, Walter Sanchez, and Selina [sic] Esquivel be and hereby are dismissed from all causes of action as against all named defendants." The order is file stamped April 27, 2010.

Plaintiffs then moved this court for an order augmenting the appellate record to include a copy of the April 27, 2010 order. We construed Plaintiffs' unopposed motion to be a request to take judicial notice of the April 27 order and granted it. In Plaintiffs' opening brief before this court, a discussion of the claims against Moran was included. Moran filed a motion to dismiss based on jurisdictional grounds, which we granted in light of Plaintiffs' failure to file a timely notice of appeal as to Moran's separate judgment of dismissal dated January 22, 2010. Moran was dismissed from this appeal on January 19, 2011.

Following receipt of the remaining parties' briefs, we issued a letter pursuant to Government Code section 68081 giving all parties an opportunity to submit supplemental letter briefs on the issue of whether we have jurisdiction to consider the merits of the appeal from the order of dismissal of Plaintiffs' claims against the Keller Williams Defendants, the Lunas and Bug Wiser. Plaintiffs, the Keller Williams Defendants, and the Lunas submitted letter briefs. Bug Wiser submitted a letter requesting dismissal with no citation to any authority.

DISCUSSION

1. Plaintiffs Failed to State any Actionable Claims Against the Cal State Defendants.

Our standard of review of a judgment of dismissal following an order sustaining a demurrer without leave to amend is well-established. "A demurrer tests the legal sufficiency of the complaint, and the granting of leave to amend involves the trial court's discretion. Therefore, an appellate court employs two separate standards of review on appeal. [Citations.] [¶] The complaint is reviewed de novo to determine whether it contains sufficient facts to state a cause of action. [Citation.] The properly pleaded material factual allegations, together with facts that may be properly judicially noticed, are accepted as true. Reversible error exists if facts were alleged showing entitlement to relief under any possible legal theory. [Citation.] [¶] Where a demurrer is sustained without leave to amend, the reviewing court must determine whether the trial court abused its discretion in doing so. [Citation.] It is an abuse of discretion to deny leave to amend if there is a reasonable possibility that the pleading can be cured by amendment. [Citation.] Regardless of whether a request therefore was made, unless the complaint shows on its face that it is incapable of amendment, denial of leave to amend constitutes an abuse of discretion." (Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 321-322; accord, Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)

a. The statutory claim

The second cause of action against the Cal State Defendants is based on alleged violations of the statutory duty embodied in Civil Code section 2079 (section 2079). Plaintiffs allege the Cal State Defendants failed to disclose that the subject property suffered from termite infestation, mold infestation, dry rot, "other structural defects" and that the roof and garage were in violation of city building ordinances. They further alleged Quintero had actual or constructive knowledge of these defects, due in part to his discussions with his clients (the Lunas), Moran and Bug Wiser; that his nondisclosure and misrepresentations were intended to induce Plaintiffs to purchase the subject property; and that they would not have purchased the property had they known the true facts.

A seller's agent owes statutory inspection and disclosure duties to a prospective purchaser of residential real property, as set forth in section 2079, which provides in relevant part: "It is the duty of a real estate broker or salesperson, . . . to a prospective purchaser of residential real property comprising one to four dwelling units, . . . to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal . . . ." (Italics added.)

Section 2079 was enacted in 1985 and was intended to codify a real estate broker's duty of care with respect to inspection and disclosure requirements in certain residential real estate transactions and to clarify the manner of its discharge. (Civ. Code, § 2079.12; see also Coldwell Banker Residential Brokerage Co. v. Superior Court (2004) 117 Cal.App.4th 158, 164-165 (Coldwell Banker).) As this district has previously explained, the Legislature, in enacting section 2079, expressly provided that the statutory duty is "'declarative of the common law [and] intended the statutory duty to 'preempt the common law regarding this duty.' [Citation.]" (Assilzadeh v. California Federal Bank (2000) 82 Cal.App.4th 399, 413.)

Given the unequivocal language of section 2079, Plaintiffs' express admission in the fourth amended complaint that they were not the purchasers of the subject property is fatal to their statutory claim. Plaintiffs admit that Sanchez was the sole purchaser of the subject property but that they nonetheless have standing because they were "persons whom [the Cal State Defendants] intended or reasonably should have foreseen would rely on [Quintero's] representations or nondisclosures regarding the property." However, "[i]n accordance with the clear and unambiguous language of section 2079, the inspection and disclosure duties of residential real estate brokers and their agents apply exclusively to prospective buyers, and not to other persons who are not parties to the real estate transaction. Only a transferee, that is, the ultimate purchaser, can recover from a broker or agent for breach of these duties. [Citation.] Where, as here, '"a statute enumerates the persons or things to be affected by its provisions, there is an implied exclusion of others . . . [and] the court is without power to supply an omission."' [Citation.]" (Coldwell Banker, supra, 117 Cal.App.4th at p. 165, italics added.)

Plaintiffs nevertheless contend their use of the plural form of "plaintiffs" in the fourth amended complaint renders their statutory claim viable. The argument is unavailing. There are some general allegations in the pleading where the plural form is used. But in multiple paragraphs, it is specifically alleged that "Carmen Sanchez . . . was a party to the real estate purchase contract and she owns and currently holds title to the real property in dispute," and "Carmen Sanchez was the purchaser of the property." Similar allegations specifically identifying Sanchez as the sole buyer appear throughout the fourth amended complaint. Moreover, the real estate purchase contract is attached as an exhibit, and Sanchez is the only identified buyer of the subject property in that document.

Alberto Esquivel argues he is the alleged "husband" of Sanchez and therefore deemed to hold title jointly with Sanchez. While the fourth amended complaint is somewhat ambiguous, Plaintiffs concede before this court that Alberto is the "common law husband" of Sanchez. (Elden v. Sheldon (1988) 46 Cal.3d 267, 275, fn. 5 [California does not recognize common law marriage, unless legally established in another state which recognizes such marriages as valid].) Even if it could be alleged that Alberto is in a legally recognizable common law marriage with Sanchez, it does not override the specific allegations that Sanchez was the sole purchaser and is the sole holder of title. Therefore, this additional standing argument is equally without merit.

In construing pleadings, specific allegations control over general, conclusory allegations. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1389; see also Shusett, Inc. v. Home Sav. & Loan Assn. (1964) 231 Cal.App.2d 146, 150 [where general allegation states mere conclusion of law, plaintiff is bound by any weakness in specific facts alleged]; 4 Witkin, Cal. Procedure (5th ed. 2008) Pleadings, § 450, p. 584 ["specific allegations control" if inconsistent with general allegations].) And, in testing the validity of a demurrer, the court "will not close [its] eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts which are judicially noticed." (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604; accord, Mead v. Sanwa Bank California (1998) 61 Cal.App.4th 561, 567-568 [facts appearing in attached exhibit "given precedence" over inconsistent allegations pled in complaint].)

Considering the specific allegations in the operative pleading and the facts set forth in the attached exhibits, including the real estate purchase agreement, there are no viable allegations that Plaintiffs were purchasers of the subject property to whom any statutory duties of inspection and disclosure were owed. Nor is there any reasonable basis to find the allegations on this point are capable of being cured by further opportunities to amend. Plaintiffs already made five ineffective attempts to state a claim. There is no basis for granting them leave to plead around their own judicial admissions. The court justifiably sustained the Cal State Defendants' demurrer without leave to amend as to the second cause of action.

We discuss the first cause of action for intentional nondisclosure in the next part below; to the extent the first cause of action incorporates allegations of violations of the statutory duty, it is defective for the same reasons discussed in this part.

b. The common law fraud claims

The first (intentional nondisclosure), eighth (suppression of fact), ninth (negligent misrepresentation) and 11th (concealment) causes of action against the Cal State Defendants all sound in fraud. The gist of these claims is that the Cal State Defendants either intentionally concealed or failed to disclose information they knew about the defects in the subject property and affirmatively misrepresented the house was in good condition with no material defects, thus fraudulently inducing the purchase of the subject property.

The codification of the statutory duty of inspection and disclosure at section 2079 was not intended to "modify or restrict" other existing duties owed by real estate agents and brokers. (Civ. Code, § 2079.12, subd. (b).) As such, claims of common law fraud against a seller's agent were not displaced by the enactment of section 2079. The elements of a claim for fraud or deceit are "(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or 'scienter'); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage." (5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 772, p. 1121; see also Civ. Code, §§ 1709, 1710; 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 727, pp. 143-144.)

Therefore, in order for Plaintiffs' first, eighth, ninth and 11th causes of action to be viable, Plaintiffs had to plead facts showing their reliance on the alleged fraud and the Cal State Defendants' intent to induce that reliance. Under a plain reading of the allegations in the fourth amended complaint, Plaintiffs did not, and cannot, plead reliance. Based on Plaintiffs' own allegations, Sanchez was the sole purchaser of the subject property. Sanchez is the only party that can state facts showing detrimental reliance and defendants' intent to induce her reliance. (See Coldwell Banker, supra, 117 Cal.App.4th at pp. 167-168 [homeowner's minor son who developed asthma due to alleged exposure to undisclosed mold in home unable as a matter of law to state facts showing reliance on misrepresentations by seller's agent].) The demurrer was properly sustained without leave to amend as to all fraud claims on this basis.

c. The unjust enrichment claim

Plaintiffs' status as nonpurchasers of the subject property is also fatal to the unjust enrichment claim. Plaintiffs allege the Cal State Defendants unfairly received a commission from the sale of the allegedly defective house for which restitution is owed. However, to the extent this theory of recovery is viable at all, it would lie only in favor of the purchaser, Sanchez, whose funds were used to purchase the allegedly defective house and from which the allegedly improper commission was paid. As such, the demurrer was properly sustained without leave to amend as to this theory.

d. The Business and Professions Code section 17200 claim

Plaintiffs' 19th cause of action alleges the Cal State Defendants committed unfair or fraudulent business practices by failing to properly discharge their statutory inspection and disclosure duties set forth in various statutes pertaining to residential real estate transactions, including Civil Code section 2079, section 1102 et seq., and section 1632. However, Plaintiffs' status as nonpurchasers remains a fatal flaw which cannot be cured by further amendment.

Like the duties embodied in section 2079, the duties set forth in the other identified statutes flow only to a prospective purchaser or transferee of real property. For instance, transfer disclosure statements are owed to a "prospective transferee" of the real property (Civ. Code, § 1102.3); the failure to comply with the transfer disclosure statute does not invalidate the sale, but anyone who violates the statute shall be liable for the actual damages "suffered by a transferee" (Civ. Code, § 1102.13); and failure to provide contract or related loan documents translated into Spanish gives the contracting party a right to rescind (Civ. Code, § 1632). Plaintiffs' judicial admission they were not purchasers eliminates any factual predicate for standing to state a claim for unfair business practices arising from the alleged violation of any of the identified statutes. The demurrer was properly sustained without leave to amend.

e. The intentional infliction of emotional distress claim

Plaintiffs asserted a 12th cause of action for intentional infliction of emotional distress against Quintero. Even assuming the allegations of intentional concealment of material defects in the subject property are correctly deemed to be sufficiently "extreme and outrageous," there are no facts alleged that such outrageous conduct was directed at Plaintiffs or in their presence. (Coldwell Banker, supra, 117 Cal.App.4th at p. 169; see also Catsouras v. Department of California Highway Patrol (2010) 181 Cal.App.4th 856, 875 [not enough for offending conduct to be "'intentional and outrageous,'" also must "'be conduct directed at the plaintiff, or occur in the presence of a plaintiff of whom the defendant is aware'"].)

The Cal State Defendants' alleged conduct of failing to disclose material defects was directed at Sanchez, the prospective purchaser of the subject property, and intended solely to induce her conduct in connection with the sale and purchase of the property. Even if it could be adequately pled that the misrepresentations and concealment occurred in the presence of Plaintiffs, the claim would still be legally insufficient. The alleged basis for the outrageousness of the conduct is that it fraudulently induced the purchase of a defective house for financial gain. The only victim of the alleged wrongdoing was the prospective purchaser, not mere bystanders to the transaction. (Christensen v. Superior Court (1991) 54 Cal.3d 868, 906 [plaintiffs did not state intentional infliction claim because they did not allege that any conduct of the defendants was directed primarily at them, was calculated to cause severe emotional distress, or was done with knowledge of their presence and of a substantial certainty they would suffer severe emotional injury].) The demurrer was properly sustained without leave to amend.

f. The nuisance claim

The 13th cause of action for nuisance against Quintero is also without merit as a matter of law. Plaintiffs allege "defendants" created a nuisance on the subject property (the mold and termite infestation) by failing to correct and repair the defects and by failing to disclose same.

Unlike the other theories of recovery, Plaintiffs' status as nonpurchasers of the subject property is not dispositive of this cause of action. A party with a possessory interest in land short of ownership may have standing to state a nuisance claim. (Stoiber v. Honeychuck (1980) 101 Cal.App.3d 903, 920 ["occupant" of land may recover damages for discomfort and mental suffering associated with nuisance that disrupts enjoyment and use of property]; Civ. Code, § 3479 [anything that is an "obstruction to the free use of property" constitutes a nuisance].) However, Quintero's status as the sellers' agent is dispositive.

A nuisance need not arise from neighboring property; it can exist on the property of the complaining party as alleged here. (See Newhall Land & Farming Co. v. Superior Court (1993) 19 Cal.App.4th 334, 343.) In Newhall Land & Farming, the court held that prior owners of the plaintiff's property could be held to answer a claim of nuisance for creating contamination on the property, including polluting the groundwater, and failing to disclose that hidden defect during the sale of the property. (Id. at pp. 343-344.) The focus of the court's analysis was on the prior owners of the property having taken acts that created and maintained the nuisance in the first instance. It did not expand the holding to other parties with no interest in, or right to control, the property.

We find nothing in the case law, and Plaintiffs fail to cite any authority, that a real estate agent representing a property owner, whose only alleged wrongdoing is a failure to disclose, may be liable on a nuisance theory. The demurrer was properly sustained in Quintero's favor.

g. The negligence claim

The remaining causes of action against Quintero are two duplicative negligence claims. Plaintiffs assert a common law claim of general negligence against Quintero for acts taken in his capacity as a real estate agent. "Real estate brokers are subject to two sets of duties: those imposed by regulatory statutes, and those arising from the general law of agency." (Carleton v. Tortosa (1993) 14 Cal.App.4th 745, 755.) As explained above, the statutory inspection and disclosure duties codified in section 2079 are not owed to nonpurchasers like Plaintiffs. Moreover, Quintero was the Lunas' agent. There was no agency relationship of any kind between Quintero and Plaintiffs. Therefore, the common law of agency does not provide a basis for imposing a duty of care on Quintero in favor of Plaintiffs.

Nevertheless, Plaintiffs, relying on Merrill v. Buck (1962) 58 Cal.2d 552 (Merrill), argue that a duty of care is properly imposed against Quintero. "'Whether a legal duty of care exists in a given factual situation is a question of law to be determined by the court. . . .' [Citations.]" (Padgett v. Phariss (1997) 54 Cal.App.4th 1270, 1279.) On the facts here, we find no basis for imposing a duty of care upon Quintero, as the sellers' agent, in favor of nonpurchasers like Plaintiffs.

As already noted, Plaintiffs conceded in their pleading they were not purchasers of the subject property. The question becomes whether Plaintiffs pled facts establishing a basis for the imposition of a legal duty of care beyond the ordinary duties imposed on a real estate agent in favor of his or her own client or in favor of other parties to the real estate transaction. Plaintiffs allege, in a conclusory fashion, they were in a "zone of foreseeable risk" as "defendants" knew they were going to live in the defective house with Sanchez and could be injured as a result of the misrepresentations or nondisclosures about the safety and integrity of the subject property.

In Merrill, the Supreme Court explained: "'The determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm.'" (Merrill, supra, 58 Cal.2d at p. 562, citing Biakanja v. Irving (1958) 49 Cal.2d 647, 650.)

Merrill concerned a prospective tenant of residential real property injured after renting the house, which had been shown to her by the defendant real estate agents. The plaintiff tenant alleged the house contained a concealed hazard, a dangerous stairwell descending into the basement; that the agents knew of the concealed hazard and failed to disclose it; and that she suffered physical injury when she fell down the stairs due to its defective condition after she moved into the residence. (Merrill, supra, 58 Cal.2d at pp. 555-557.)

The Merrill court found the defendant real estate agents owed plaintiff a duty of care because they had shown the home to the plaintiff with the intent to induce her to enter into a rental agreement from which the agents would earn a commission; the agents knew of the hazardous condition and it was reasonably foreseeable the plaintiff would be injured by the concealed hazard after moving into the home; and the policy of preventing future harm would be served by imposing liability on the agents for such conduct. (Merrill, supra, 58 Cal.2d at pp. 555-557.) "[H]aving affirmatively undertaken to show the house to plaintiff in the regular course of their business with the purpose of earning a commission if she decided to rent it, these defendants were under a duty of care to warn her of a concealed danger in the premises of which they were aware and from which her injury might be reasonably foreseen if she did become a tenant." (Id. at p. 562.)

Merrill does not assist Plaintiffs because the defendants in Merrill knew the plaintiff contemplated occupying the property, and plaintiff was therefore akin to a prospective purchaser of real property, like Sanchez, but unlike Plaintiffs, whose interests in the property did not arise from a contract or any other relationship with defendants giving rise to a duty of care. There is nothing in Merrill that leads us to conclude that the Merrill court would have extended the duty to other persons beyond a prospective tenant; in other words, to individuals who were strangers to the rental transaction.

Here, the real estate transaction was plainly not intended to affect Plaintiffs. It was intended to affect Sanchez as the prospective purchaser. Perhaps more importantly, extending a duty to persons beyond the potential buyer of the property would impose liability disproportionate to any potential fault attributable to a seller's agent. Assuming it is true that Quintero could foresee the risk of harm to others who might occupy the subject property with Sanchez, "[t]he mere existence of foreseeability of harm to persons other than parties to the real estate transaction is, for public policy reasons, not sufficient to impose liability on a supplier of information in a commercial context. [Citations.] A real estate broker exposed to negligence claims from all foreseeable third parties faces potential liability far out of proportion to its fault." (Coldwell Banker, supra, 117 Cal.App.4th at p. 167.)

If the duty were to be extended to persons like Plaintiffs, then perhaps Quintero would also owe a duty of care to future invitees of the buyer who may visit the subject property; to a worker or repair person called upon to work in the home for a period of time; to a housekeeper regularly employed in the home, and so forth. There would be no clear boundary limiting the number of strangers to the real estate transaction to whom a real estate agent might owe a duty of care simply because they had access to the allegedly defective and unsafe property. "Extending the broker's duty of care to . . . third parties to whom no statutory duty is owed would be contrary to the Legislature's stated concern for facilitating the issuance of liability insurance for real estate licensees in an effort to ensure coverage for duties defined in section 2079." (Coldwell Banker, supra, 117 Cal.App.4th at p. 167, fn. 5; see also Civ. Code, § 2079.12, entitled "Legislative findings and declarations" ["the absence of a comprehensive declaration of duties . . . has caused insurers to modify professional liability coverage of real estate licensees . . . . [¶] . . . [¶] . . . it is desirable to facilitate the issuance of professional liability insurance as a resource for aggrieved members of the public"].)

In FSR Brokerage, Inc. v. Superior Court (1995) 35 Cal.App.4th 69 (FSR Brokerage), this district decided squarely against extending the duty. There, invitees of the buyer were injured when a balcony collapsed during a private party being held at the recently purchased home. The injured invitees sued various defendants, including the agents of the seller for allegedly failing to disclose the defective structural condition of the home. (Id. at pp. 71-72.) In finding no duty owed by the sellers' agents to the injured invitees, the court relied primarily on Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370 (Bily) and its discussion of the duty owed by a supplier of information in a commercial transaction. (FSR Brokerage, at p. 73.)

Bily held that "a provider of information in a commercial context is not liable to third parties who are neither the beneficiaries of, nor parties to, a contract. [Citation.] In Bily, investors in a computer company sued the defendant, an accounting firm, for an allegedly negligent audit of the company. The audit contract was between the computer company and the defendant; the investors were not parties to the contract. The investors contended they suffered injury as a result of their decision to invest in the company in reliance on the defendant's negligent audit. Bily held liability should be narrowed for suppliers of information in commercial transactions and as a result no duty was owed to the investors." (Formet v. The Lloyd Termite Control Co. (2010) 185 Cal.App.4th 595, 599, citing Bily, supra, 3 Cal.4th at pp. 392, 376; FSR Brokerage, supra, 35 Cal.App.4th at pp. 73-74.)

We find the analysis persuasive in this factual context. "'[A] supplier of information is liable for negligence to a third party only if he or she intends to supply the information for the benefit of one or more third parties in a specific transaction or type of transaction identified to the supplier.' [Citation.] Thus, the benefit must be both intended and an objective of the particular service." (Coldwell Banker, supra, 117 Cal.App.4th at p. 166.) The court in Coldwell Banker found that the minor child of the homeowner could not be deemed an intended beneficiary of the services provided by the seller's agent. "The objective of [the agent's] service as real estate broker, from which its duty derived, was to provide sufficient accurate information to allow a prospective buyer to make an informed decision. The information supplied . . . was for [the prospective buyer's] benefit to guide her in a real estate purchase decision. [The seller's agent], as a professional supplier of information in a commercial context, intended to induce [the buyer, not her minor child] to act in reliance on its representations." (Ibid.) Accordingly, there was no factual basis for imposition of a duty to nonpurchasers. Nor do we find one here. Under no reasonable reading of the facts can it be advanced that the intended objective of the Cal State Defendants' service in the subject real estate transaction was to provide a benefit of any kind to Plaintiffs.

Finally, Plaintiffs cite to Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 35 (Krug). Krug however is factually inapposite. The seller's agent in Krug had actual knowledge of Krug and his unrecorded deed of trust in the subject property, which had arisen from prior financial transactions between his client (the seller) and Krug. Because Krug had a known recordable interest in the subject property that could be extinguished in a sale, the court found a duty was owed to the prospective purchaser, or to Krug, to disclose the circumstances surrounding Krug's legal interest in the property prior to the close of escrow. (Id. at pp. 42-43.) There are no similar facts here on which to impose liability against Quintero for an alleged failure to disclose information to Plaintiffs. The trial court correctly sustained Quintero's demurrer without leave to amend.

2. The Court Lacks Jurisdiction to Resolve the Appeal as to all Other Defendants.

The time for appealing a judgment is jurisdictional. In the absence of a proper and timely notice of appeal from an appealable order, an appellate court is without power to determine the merits of the appeal and must dismiss. (Silverbrand v. County of Los Angeles (2009) 46 Cal.4th 106, 113 (Silverbrand); Van Beurden Ins. Services, Inc. v. Customized Worldwide Weather Ins. Agency, Inc. (1997) 15 Cal.4th 51, 56.) The only notice of appeal in the record is the notice filed February 16, 2010. That notice explicitly and unambiguously states it is an appeal from the judgment of dismissal entered on December 31, 2009, following an order sustaining a demurrer. The December 31, 2009 judgment of dismissal was prepared by counsel for the Cal State Defendants and plainly was a judgment dismissing only the claims against those two defendants. Plaintiffs' February 16, 2010 notice is without question a timely notice of appeal as to the dismissal of the Cal State Defendants, notice of entry of which was served less than 60 days earlier. (Cal. Rules of Court, rule 8.104(a)(2).) However, it cannot properly be construed as applicable to any other defendant.

The Keller Williams Defendants and the Lunas never submitted a proposed judgment of dismissal following the court's December 1, 2009 order in their favor, and no document titled judgment of dismissal has ever been entered as to those parties so far as we know. And, instead of offering their own proposed judgment of dismissal as to those defendants, Plaintiffs, some five months later, presented the trial court with the inartfully labeled "Order Clarifying 12/31/09 Judgment of Dismissal." The order purports to clarify that the Cal State Defendants' judgment of dismissal was intended to be a dismissal of all of Plaintiffs' claims as against "all named defendants." The order is signed by the court and file stamped April 27, 2010.

Plaintiffs argue that the February 16, 2010 notice of appeal should be liberally construed to cover the subsequent April 27, 2010 order. We acknowledge "'[i]t is, and has been, the law of this state that notices of appeal are to be liberally construed so as to protect the right of appeal if it is reasonably clear what [the] appellant was trying to appeal from, and where the respondent could not possibly have been misled or prejudiced.' [Citations.]" (In re Joshua S. (2007) 41 Cal.4th 261, 272; see also Cal. Rules of Court, rule 8.100(a)(2).) However, the discretionary policy of liberal construction of notices of appeal is not a panacea for every flagrant disregard of the rules of procedure concerning the timely filing of a proper notice of appeal from an appealable order or judgment. If it were, this discretionary exception would effectively swallow the rule; a rule which serves the salient purpose of ensuring finality of judgments and the timely disposition of challenges thereto. (Silverbrand, supra, 46 Cal.4th at p. 113.)

The policy of liberal construction is often invoked to save premature appeals, such as where a party timely appeals from a nonappealable minute order instead of the subsequently entered appealable judgment or order. (See, e.g., Groves v. Peterson (2002) 100 Cal.App.4th 659, 666, fn. 2 [notice of appeal filed within 60 days of entry of order sustaining demurrer deemed to be from subsequent entry of judgment of dismissal]; see also Cal. Rules of Court, rule 8.104(d).)

However, that is not what happened here. Plaintiffs did not mistakenly and prematurely appeal from the nonappealable December 1 order on demurrer. In fact, the February 16, 2010 notice of appeal was not timely filed as to the December 1 order as it was filed more than 60 days after the clerk's notice of entry of same. (Cal. Rules of Court, rule 8.100(a)(1).) Rather, Plaintiffs timely and correctly appealed from the December 31, 2009 judgment of dismissal.

Moreover, we cannot construe the April 27, 2010 "clarifying" order as having been a proper nunc pro tunc order modifying the December 31, 2009 judgment of dismissal, thus rendering the February 16, 2010 notice of appeal applicable to all defendants. The April 27 order contains no language that the court intended to have it entered nunc pro tunc. In any event, the December 31 judgment of dismissal of the Cal State Defendants could not be modified nunc pro tunc to constitute a judgment of dismissal of the other defendants. "The scope of orders and judgments nunc pro tunc in California has consistently been described by our Supreme Court in the following terms: 'A court can always correct a clerical, as distinguished from a judicial error which appears on the face of a decree by a nunc pro tunc order. [Citations.] It cannot, however, change an order which has become final even though made in error, if in fact the order made was that intended to be made. . . . "The function of a nunc pro tunc order is merely to correct the record of the judgment and not to alter the judgment actually rendered—not to make an order now for then, but to enter now for then an order previously made."' [Citation.]" (Hamilton v. Laine (1997) 57 Cal.App.4th 885, 890, italics added.)

The only reasonable interpretation of the record is that the Cal State Defendants timely prepared their own judgment of dismissal, submitted same to the court following their successful demurrer, and the court intended to, and did, execute and enter that proposed judgment solely as to those two defendants. It cannot reasonably be argued that the Cal State Defendants' judgment of dismissal, drafted by their counsel, was intended by the parties, or the court, to apply to all demurring defendants. There is nothing in the record indicating the Cal State Defendants had been ordered to prepare a joint, all-inclusive judgment of dismissal following the court's December 1 order. The proposed judgment was in proper form as to those two defendants and the court merely executed and entered same. No other defendant submitted a proposed form of judgment, except Moran, and the court duly executed and entered that separate judgment of dismissal in January 2010. The record before us does not reveal the filing or entry of any other appealable judgment of dismissal.

We do not find the policy of liberal construction appropriately applied to the circumstances here which amount to nothing more than the parties' improper attempt to belatedly stipulate to this court's jurisdiction because the clearly established procedures for perfecting an appeal following demurrer were not followed. (See Krug, supra, 220 Cal.App.3d at p. 47 ["jurisdiction can never be created by consent, waiver or estoppel"].) Our discretion to save an appeal under the policy of liberal construction is not properly invoked to extricate litigants from a problem of their own making. (Hill v. City of Long Beach (1995) 33 Cal.App.4th 1684, 1695.) Indeed, the trend in this district is "to be less indulgent of parties who fail to perfect their rights of appeal." (Id. at p. 1696.) "The trend of recent cases of the Courts of Appeal is to hold appellate counsel to strict account for ensuring that their appeal rights are perfected according to the applicable statutes and rules of court." (Jordan v. Malone (1992) 5 Cal.App.4th 18, 22.) Accordingly, the appeal is dismissed as to the Keller Williams Defendants, the Lunas and Bug Wiser.

We note for the record there does not appear to be any basis for Bug Wiser to have been included in the April 27, 2010 order since it had answered the fourth amended complaint without raising a demurrer.

DISPOSITION

The December 31, 2009 judgment of dismissal entered in favor of the Cal State Defendants is affirmed. The Cal State Defendants shall receive their costs on appeal. The appeal as to the Keller Williams Defendants, the Lunas and Bug Wiser is dismissed, with the parties to bear their own respective costs on appeal, and the action remanded to the trial court for further proceedings.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

GRIMES, J. I CONCUR:

BIGELOW, P. J. RUBIN, J. - Concurring and dissenting

I respectfully concur and dissent.

Appeal as to Cal State Realty & Lending, Inc. and Jesus Quintero

Verbosity aside, appellants' allegations are straightforward: Carmen Sanchez entered into a real estate contract to buy a house from homeowners Moctezuma and Gloria Luna. (¶¶ 18, 44.) Belonging to Sanchez's household were Sanchez's life partner, appellant Alberto Esquivel, and their children, appellants Walter Sanchez and Selena Esquivel. Respondent broker Cal State Realty & Lending Inc. and its sales agent, respondent Jesus Quintero (collectively Cal State Realty), represented the Lunas in the sale. (¶ 132.) Cal State Realty knew about, but did not disclose, toxic mold contamination in the house. ¶¶ 21, 22, 27, 28.) After appellants and Sanchez moved into the house, the mold made appellants sick, causing asthma, allergies, emotional distress, and loss of sleep. ¶¶ 34, 35, 37, 38, 41.)

Appellants' complaint alleges Alberto Esquivel is Carmen Sanchez's common law husband. I accept the majority's explanation of why that appellation does not apply in California. (Maj. Opn. at p. 9, fn. 1.) Because Alberto Esquivel and Sanchez live together in the same house and have two children, "life partner" is more apt.

Cal State Realty demurred to appellants' complaint on the ground it failed to state a cause of action against it. The trial court sustained the demurrer. Cal State Realty's argument before us is direct: It owed no legal duty to appellants because they were not parties to the real estate contract; only Carmen Sanchez was a party to the contract and thus Cal State Realty's duties went only to her.

I agree with the majority that appellants cannot state a cause of action against Cal State Realty for violating Civil Code section 2079. (Maj. Opn. at p. 7.) That statute imposed on Cal State Realty the duty to inspect the house and disclose to the buyer, Carmen Sanchez, what a reasonable inspection would have revealed. (See Coldwell Banker Residential Brokerage Co. v. Superior Court (2004) 117 Cal.App.4th 158, 165 (Coldwell Banker).) I also accept the majority's conclusion that appellants cannot state causes of action for nuisance, common law fraud, unjust enrichment, and unfair business practices.

I disagree, however, with the majority's holding that appellants, who were family members of Sanchez's household whom Cal State Realty allegedly knew, or should have known, were going to live in the house with Sanchez, cannot state causes of action for negligence and intentional infliction of emotional distress for the injuries they suffered from the toxic mold. Although only Sanchez's name was on the contract, her purchase of the house is properly understood as a family undertaking intended for her family's use. Such an understanding falls within the complaint's allegations, and comports with how most families manage their lives. The complaint alleges appellants "were all persons whom [respondents] intended or reasonably should have foreseen would rely on [respondents'] representations or nondisclosures regarding the property. [¶] . . . [¶] [Respondents] failed to disclose material facts that were unknown to plaintiffs. [Respondents] failed to disclose that the property was infested with . . . toxic mold . . . [¶] . . . [¶] [Respondents'] purpose of non-disclosure was to induce plaintiffs, i.e. the buyers, to purchase the property. Plaintiffs would not have purchased the property had proper disclosure been made. As a result of [respondents'] failure to disclose material facts, plaintiffs . . . have suffered personal injuries for which they have sought medical attention. [¶] . . . [¶] The purpose of [respondents'] nondisclosure was to induce Carmen Sanchez to purchase the property. [¶] Carmen Sanchez . . . would not have purchased the property if they would have made an honest disclosure regarding the . . . mold infestation . . . . None of the plaintiffs would have wanted to purchase and move into the home had they known about the true facts that [respondents] withheld from them."(¶¶ 132, 134, 137, 140, 143, 144, 150-154.)

The complaint is at times inartfully pled, alternating sometimes in the same or adjoining paragraphs between "plaintiff" or "plaintiffs" to refer to appellants, or Carmen Sanchez, or both, when the context suggests no reason for making a distinction. Because this appeal is from a demurrer, the complaint's allegations must be interpreted generously to permit appellants to make well-stated claims unless no reasonable interpretation of the complaint allows them to do so.
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Based on the complaint's allegations and under long standing principles of tort law, Cal State Realty had a duty to appellants. "A tort, whether intentional or negligent, involves a violation of a legal duty . . . owed by the defendant to the person injured. [¶] . . . 'Duty' is simply ' "an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection." ' [Citation.]" (Coldwell Banker, supra, 117 Cal.App.4th at pp. 163-164.) A duty's existence rests on several factors. (Biakanja v. Irving (1958) 49 Cal.2d 647, 650 (Biakanja).) Looking to those factors, I believe the complaint's allegations support imposing a duty on Cal State Realty for appellants' protection.

• The real estate sale was intended to affect appellants. (Biakanja, supra, 49 Cal.2d at p. 650.) I disagree with the majority's assertion that "the real estate transaction was plainly not intended to affect" appellants. (Maj. Opn. at p. 16.) Buying a family home affects the family. All family members suffer if the home contains contaminants that make them sick. I see no reason the parent who signs the sales contract should have legal remedies for her injuries, but other family members in the household, including children, should not.

• Harm to appellants was foreseeable. (Biakanja, supra, 49 Cal.2d at p. 650.) The house was a free-standing, single-family home. Moreover, the complaint alleges appellants visited the house while the sale was being negotiated. (¶¶ 52, 72, 73.) Under those circumstances, Cal State Realty could reasonably foresee that appellants would be exposed to the toxic mold which Cal State Realty had not disclosed.

• Medical experts concluded the mold made appellants sick. (Biakanja, supra, 49 Cal.2d at p. 650 [certainty of injury a factor supporting duty].)

• Cal State Realty's conduct was closely connected to appellants' injuries. (Biakanja, supra, 49 Cal.2d at p. 650.) But for Cal State Realty's non-disclosure of the mold contamination, the family would not have moved into the house. The complaint alleged, "Carmen Sanchez . . . would not have purchased the property if they would have made an honest disclosure regarding the . . . mold infestation . . . . None of the plaintiffs would have wanted to purchase and move into the home had they known about the true facts that defendant withheld from them."

• Cal State Realty's conduct was morally blameworthy. (Biakanja, supra, 49 Cal.2d at p. 650.) Cal State Realty helped sell a house that it knew contained contaminants dangerous to human health. By withholding its knowledge of the toxic mold, Cal State Realty contributed to injuring appellants' health.

• Imposing a duty advances the policy of preventing future harm. (Biakanja, supra, 49 Cal.2d at p. 650.) The risk of lawsuits and money damages will discourage Cal State Realty and other brokers from withholding knowledge of dangerous contaminants in houses that the brokers sell.

The majority discusses several decisions as part of its conclusion Cal State Realty owed no duty to family members of Sanchez's household whom Cal State Realty knew, or should have known, were moving into the house with her. I find none of them persuasive. One decision is Merrill v. Buck (1962) 58 Cal.2d 552, which involved an individual tenant who sued a broker for not disclosing a defective cellar stairway. (Id. at p. 555.) Nothing in Merrill suggests that the tenant's household consisted of more than the tenant herself. (Id. at pp. 556-557.) Because Merrill involved a one-member household, it did not discuss a broker's duties to a multi-member household containing more people than just the actual contracting party. (Id. at pp. 561-563.) Accordingly, Merrill is inapposite. In any event, Merrill found a duty of care existed between the lessor's real estate agent and the tenant even though no privity of contract existed between them, a finding at odds with Cal State Realty's position in this appeal.

Another decision the majority cites in support of finding Cal State Realty had no duty is FSR Brokerage, Inc. v. Superior Court (1995) 35 Cal.App.4th 69, but that decision is distinguishable, turning on the difference between social guests and family members of a household. In that decision, the plaintiffs were guests attending a party at a home with a defective balcony which the broker had not disclosed to the homeowner. The balcony collapsed, seriously injuring dozens of guests. FSR Brokerage, Inc. held the broker owed no duty to the partygoers. (Id. at p. 72.) Relying on Bily v Arthur Young & Co. (1992) 3 Cal.4th 370, the appellate court found the broker was not liable for misinformation involving the balcony because the broker did not intend at the time it sold the house to influence the acceptance by future partygoers of the homeowner's social invitations. (Id. at pp. 73-74.) Here, in contrast, appellants are members of Sanchez's household, not mere party guests, and Cal State Realty intended to influence the Sanchez family's decision to make the house their home, a decision which determined whether and when Cal State Realty earned its sales commission.

The majority also cites Coldwell Banker, supra, which is the case most helpful for Cal State Realty because its facts are very similar to those there. Nevertheless, I do not believe Coldwell Banker governs the outcome of this appeal. In Coldwell Banker, a child alleged medical injuries from toxic mold in the family home his mother bought. Alleging the broker had withheld information about the mold, the child sued the broker. (Coldwell Banker, supra, 117 Cal.App.4th at p. 162.) Coldwell Banker found the broker owed no duty to the child because the child was neither the broker's customer nor the actual purchaser of the house. (Id. at pp. 163-166.) The Coldwell Banker court relied in part on FSR Brokerage, Inc., which it found persuasive, but which I find distinguishable because it involved a broker's duty to social guests (partygoers injured when a balcony collapsed), not members of the household living in the house. (Coldwell at p. 165.) The Coldwell Banker court also relied on the analysis in Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370 of the duties of one who provides information in a commercial transaction. Coldwell Broker described the broker's non-disclosure of the mold contamination as not intended to affect anyone other than the child's mother, whom the broker hoped would buy the house. (Id. at p. 166.) Under Bily v Arthur Young & Co., "[a] supplier of information is liable for negligence to a third party [i.e. the mother's child] only if he or she intends to supply the information for the benefit of one or more third parties in a specific transaction or type of transaction identified to the supplier." (Coldwell Banker at p. 166 quoting Bily.) Concluding the broker intended no effect or benefit toward the child, Coldwell Banker held the broker owed no duty to the child concerning the mold contamination.

Coldwell Banker does not persuade me for two reasons. First, it ignores the nature of buying a family home - or at least how the complaint here alleges Sanchez and her family went about buying their home as a group decision in which any family member's objection could have scuttled the sale. (See e.g. ¶ 144 ["None of the plaintiffs would have wanted to purchase and move into the home had they known about the true facts that [respondents] withheld from them."].) Second, Coldwell Banker's discussion of Bily is incomplete. Bily in fact involves an expanding circle of duty depending on the egregiousness of the provider's withholding of information. (Murphy v. BDO Seidman, LLP (2003) 113 Cal.App.4th 687, 694.) "Casting an ever-widening circle of obligation, Bily established that the more egregious the misstatement, the broader the duty: . . ." When, as alleged here, the broker intentionally withheld information, the broker's duty extends to third parties whose conduct could be reasonably foreseen to be affected by that information. (See Murphy, at p. 694.) Because appellants' injury from mold was reasonably foreseeable, Cal State Realty's duty attaches.

The majority worries about limitless liability for brokers if we extend Cal State Realty's duty beyond Sanchez, the actual purchaser of the property, to include appellants. Asking where would one draw the line, the majority posits brokers could become liable to countless "strangers" to the home's purchase whom the mold might sicken, such as houseguests, repairmen, and housekeepers. The majority states, "There would be no clear boundary limiting the number of strangers to the real estate transaction to whom a real estate agent might owe a duty of care. . . ." (Maj. Opn. at p. 16.) I disagree because a clear boundary exists: Members of the purchaser's household who make the house their home. The concept of a "household" is at its core (if not at its margins) relatively clear. Each of us employs it when, for example, we prepare our taxes or buy homeowners and automobile liability insurance. Contrary to the majority's concern about limitless liability, extending a broker's duty to members of a purchaser's household squares a broker's liability with modern American practices in which families "buy" homes even if not every member of the household signs the purchase contract.

In addition to alleging negligence, appellants also allege a cause of action for intentional infliction of emotional distress, which the majority also rejects. I see this cause of action as a closer call, but I ultimately conclude the majority reads appellants' claim too narrowly. Appellants allege outrageous conduct - withholding information about mold contamination and other health risks - directed at appellants or in their presence. The majority holds appellants fail to state a claim because Cal State Realty's withholding of information was "intended solely to induce [Sanchez's] conduct" of buying the house, rendering appellants "mere bystanders" who suffered no injury because it was not their money at stake. (Maj. Opn. at p. 12.) I disagree. Buying a home typically requires the acquiescence, if not the outright agreement, of those members of the household who are old enough to have some say in family matters - and that is what appellants' complaint alleges when it states that Sanchez's purchase of the house involved appellants' input and "[n]one of the plaintiffs would have wanted to purchase and move into the home had they known about the true facts that defendant withheld from them." (¶ 144.) And the injuries here were not only to Sanchez's pocketbook, but also to appellants' health. Thus, rather than being mere bystanders, appellants had skin in the game.

Finally, I offer one concluding observation about how Cal State Realty's duty to inspect under Civil Code section 2079 casts a shadow over this appeal that has obscured the issues. If one is not careful, one could be led astray by Cal State Realty's argument that section 2079 limits its duty of care solely to a home's actual purchaser. To the contrary, section 2079 does not immunize brokers or cut off their liability. Instead, section 2079 codifies a duty established by Easton v. Strassburger (1984) 152 Cal.App.3d 90. (See § 2079.12.) In Easton, a seller's broker argued it was "only obliged to disclose [to the buyer] known facts and has no duty to disclose facts which 'should' be known to him 'through reasonable diligence.' " (Easton at p. 98) The Easton court disagreed. It held that a seller's broker has a duty to inspect a house and disclose to the buyer what a reasonable inspection would have revealed. Before Easton, a seller's broker needed to disclose only known defects, but Easton expanded the broker's duty to include defects which the broker would have discovered. (Id. at pp. 99, 102.) Section 2079, which codified Easton, closely tracks the language of Easton's holding. Section 2079, subdivision (a) states: "It is the duty of a real estate broker or salesperson . . . to a prospective purchaser of residential real property . . . to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal . . . ."

Having noted the foregoing about Civil Code section 2079, it bears cautioning that section 2079 is somewhat of a red herring in this appeal. Cal State Realty's duty to inspect is not at issue. The complaint alleges Cal State Realty knew about the toxic mold. (¶¶ 137, 139, 150-153, 235.) The question is whether Cal State Realty had a duty to disclose that contamination to others besides the actual purchaser, Carmen Sanchez; the majority holds "no," I conclude "yes." I do not believe the Legislature's intent in enacting the duty to inspect under section 2079 was to narrow or limit the liability of a seller's broker for withholding information known about dangerous conditions in the house. The Legislature intended section 2079 to supplement, not displace, a broker's duties under ordinary concepts of negligence. The Legislature declared in codifying the duty to inspect that "It is not the intent of the Legislature to modify or restrict existing duties owed by real estate licensees." (§ 2079.12, subd. (b); see also § 2079.24 ["Nothing in this article shall be construed to either diminish the duty of disclosure owed buyers and sellers by agents . . . from liability for their conduct in connection with acts governed by this article or for any breach of a fiduciary duty or a duty of disclosure."].) Where I believe the majority here and the opinion in Coldwell Banker go astray is in their assumption that section 2709 begins and ends the duty analysis, a conclusion that I believe is at odds with the limitations that the statute places on itself.

At bottom, Cal State Realty is alleged to have participated in putting into the stream of commerce a home it knew, or should have known, was dangerous to its new inhabitants' health. Cal State Realty's desire to narrow this case solely to its duty to inspect under section 2079, and that duty's limitation to the actual purchaser, is akin to an auto dealer knowingly selling a car with defective brakes to a mother, and then denying liability for the injuries the mother's children suffered when the brakes failed because the mother, not the children, had bought the car; it is akin to a butcher knowingly selling tainted meat to a father whose children get sick from eating the meat, and the butcher denying liability because the father, not the children, had paid for the meat. Appellants allege - and in reviewing a demurrer we must accept - that Cal State Realty and other defendants made appellants sick by selling Carmen Sanchez a house that Cal State Realty knew was contaminated with toxic mold. Cal State Realty denies liability because Carmen Sanchez, not appellants, bought the house. I would reverse and permit appellants to pursue their claim for damages for negligence and intentional infliction of emotional distress against the Cal State Realty defendants.

Appeal as to Other Defendants

I agree with the majority that we do not have jurisdiction to resolve the appeal as to the other defendants. RUBIN, J.


Summaries of

Esquivel v. Better Net, Inc.

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION EIGHT
Nov 9, 2011
B222606 (Cal. Ct. App. Nov. 9, 2011)
Case details for

Esquivel v. Better Net, Inc.

Case Details

Full title:ALBERTO ESQUIVEL et al., Plaintiffs and Appellants, v. BETTER NET, INC.…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION EIGHT

Date published: Nov 9, 2011

Citations

B222606 (Cal. Ct. App. Nov. 9, 2011)