Swartz v. Coldwell Bankers
Filed 11/15/13 Swartz v. Coldwell Bankers
CA4/1
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
KEVIN F. SWARTZ et al.,
Plaintiffs and Appellants,
v.
COLDWELL BANKER RESIDENTIAL
BROKERAGE COMPANY et al.,
Defendants and Respondents.
D062324
(Super. Ct.
No.
37-2011-0051200 CU-IC-NC)
APPEAL from
a judgment of the Superior Court
of
County, Jaqueline M. Stern, Judge. Affirmed.
Naumann Law
Firm, William H. Naumann and Monnett De La Torre for Plaintiffs and Appellants.
Keeney
Waite & Stevens, Mary M. Best and Todd F. Stevens for Defendants and
Respondents.
I.
INTRODUCTION
In this case we consider whether a licensed real estate agent
owed her client a duty to conduct an independent review of public records or a
duty to engage in additional investigation to ascertain the existence of a
recorded covenant burdening property prior to her client purchasing the
property, when that covenant was not identified by a title insurance company in
its preliminary report or its policy of title insurance.
Kevin F.
Swartz and Diane Kocheran (plaintiffs) named Coldwell Banker Residential Brokerage
Company, NRT, LLC, Coldwell Banker Real Estate, LLC, and Claudia Anderson
(jointly "the Coldwell defendants") in a second amended complaint
(SAC) alleging causes of action for breach
of fiduciary duty, negligent misrepresentation, and negligence against
these defendants. The Coldwell
defendants demurred to the causes of action asserted against them in the SAC on
multiple grounds, and the trial court sustained the demurrer without leave to
amend on the ground that the causes of action were untimely under the applicable
statute of limitations. The court sustained the demurrer as to the
cause of action for negligent misrepresentation on the additional ground that
the SAC failed to allege the existence of a false statement made to plaintiffs,
and sustained the demurrer as to the breach of fiduciary duty and negligence
causes of action on the additional ground that plaintiffs failed to plead facts
that would establish that the Coldwell defendants owed a duty to plaintiffs and
breached that duty.
On appeal,
plaintiffs argue that their claims were not untimely because they did not discover,
and could not reasonably have discovered, the Coldwell defendants' failure to
meet their fiduciary duties until they learned of the recorded covenant during
litigation with the sellers of the property, who, at that point, were asserting
their rights pursuant to the easement on plaintiffs' property that was the
subject of the recorded covenant.
name="_ftnref1" title="">[1] Plaintiffs also contend that their SAC
sufficiently states causes of actions for breach of fiduciary duty, negligent
misrepresentation, and negligence.
We conclude
that the SAC fails to state causes of action for breach of fiduciary duty,
negligent misrepresentation, and negligence.
The conduct for which plaintiffs seek relief under the theories of
breach of fiduciary duty and negligence do not establish that the Coldwell
defendants owed a duty to plaintiffs and failed to meet that duty. Further, plaintiffs failed to allege that the
Coldwell defendants made any "misrepresentation" to support their
cause of action for negligent misrepresentation. The trial court thus did not err in
sustaining the Coldwell defendants' demurrer.
With
respect to the trial court's conclusion that the causes of action against the
Coldwell defendants should be dismissed with prejudice, we agree. Plaintiffs fail to make any argument as to
how they could amend to state causes of action for breach of fiduciary duty or
negligence. (See Davies v. Sallie Mae, Inc. (2008) 168 Cal.App.4th 1086, 1090 (
burden of proving that an amendment would cure the defect [citation]' "].) Although plaintiffs do identify how they
could amend the operative complaint to state a cause of action for negligent
misrepresentation, we conclude that this claim is time-barred, and thus, leave
to amend would not be appropriate. We
therefore affirm that portion of the trial court's order denying plaintiffs
leave to amend to attempt to plead any causes of action against the Coldwell
defendants.
II.
FACTUAL AND
PROCEDURAL BACKGROUND
name="_ftnref2" title="">[2]
In November
2006, plaintiffs retained Anderson, a licensed real estate agent for Coldwell
Banker, to represent them in a transaction to purchase residential property
from Tye and Lori Smith (the sellers).
The sellers own an adjacent parcel and built both the home located on
their own parcel as well as the home on the parcel that plaintiffs
purchased. According to plaintiffs, prior
to the purchase, the sellers represented to plaintiffs that the property that
plaintiffs intended to purchase was burdened by an easement, but that the
easement was "unusable." Plaintiffs
obtained a preliminary title report from defendant Fidelity National Title
Insurance (Fidelity) and a title insurance
policy that described the relevant easement as a "Proposed
Private Road Easement."
name="_ftnref3" title="">[3]
Plaintiffs
purchased the property from the sellers, and obtained title to the property in
January 2007.
In March
2009, plaintiffs filed a lawsuit against the sellers and the sellers' real
estate agent related to various construction defects on the property. In a first amended complaint in that action,
which included claims for quiet title, negligence, and fraud, in addition to
construction defects, nuisance and trespass, plaintiffs alleged that the
sellers had failed to disclose that they were asserting "an easement on
the subject property" or the "existence of what the SMITH Defendants
are now claiming is a usable road easement." Plaintiffs specifically alleged that the sellers
had represented to them "[t]hat there were no encroachments, easements, or
similar matters that might [a]ffect the subject property" and "[t]hat
the alleged easement was not useable."
Plaintiffs
allege in the SAC that during the course of their lawsuit against the sellers,
they learned that the Smiths' predecessor in interest had executed and recorded
a "Covenant of Improvement Requirements" (covenant) that burdened the
property. The covenant required the
developer of the property (i.e., the Smiths) to construct site improvements,
including a paved access road on the portion of the property that plaintiffs
ultimately purchased. At the time
plaintiffs purchased the property, there was no access road. Fidelity did not identify the recorded
covenant in either the preliminary title report or the title insurance policy.
Plaintiffs
filed their original complaint in this action on February 4, 2011, naming Fidelity National Title Insurance
Company and multiple Does as defendants.
After substituting in a new attorney, plaintiffs filed a second amended
complaint (SAC) on October 12, 2011,
in which they added the Coldwell defendants,
Coldwell defendants for breach of fiduciary duty, negligent misrepresentation
and negligence.
title="">[5]
In the SAC,
plaintiffs alleged that they obtained a title policy issued by Fidelity and, "in
reliance on the Preliminary Report [issued by
Fidelity], . . . proceeded to purchase" the
property. Plaintiffs further alleged
that "[d]uring the course of discovery in their lawsuit against the
sellers [the First Action], Plaintiffs learned for the first time that previous
owners of the subject property had executed and recorded a Covenant of
Improvement Requirements [Covenant] that burdens the subject property."
The
Coldwell defendants filed a demurrer to plaintiffs' SAC in November 2011. The trial court held a hearing on the
demurrer on March 9, 2012. At the conclusion of the hearing, the trial
court sustained the Coldwell defendants' demurrer to the SAC, without leave to
amend. The court entered a judgment
dismissing the Coldwell defendants from the action, with prejudice. Plaintiffs filed a timely
III.
DISCUSSION
A. Standards of review
We review de
novo an order sustaining a demurrer to determine whether the complaint alleges
facts sufficient to state a cause of action.
(CPF Agency Corp. v. Sevel's 24
Hour Towing Service (2005) 132 Cal.App.4th 1034, 1042.) We exercise our independent judgment as to
whether the complaint states a cause of action, "giv[ing] the complaint a
reasonable interpretation" and "treat[ing] the demurrer as admitting
all properly pleaded material facts."
(Palestini v. General Dynamics
Corp. (2002) 99 Cal.App.4th 80, 86.)
In doing so, we assume the truth of "(1) all facts properly pleaded
by the plaintiff, (2) all facts contained in exhibits to the complaint, (3) all
facts that are properly the subject of judicial notice, and (4) all facts that
may reasonably be inferred" from such facts. (Neilson
v. City of California
1305.) We do not, however, accept the
truth of allegations that constitute legal contentions, conclusions of law, or
deductions drawn from those legal contentions or conclusions. (Ibid.)
When a demurrer is sustained
without leave to amend, "we decide whether there is a reasonable
possibility that the defect can be cured by amendment: if it can be, the trial
court has abused its discretion and we reverse; if not, there has been no abuse
of discretion and we affirm.
[Citations.] The burden of
proving such reasonable possibility is squarely on the plaintiff." (Blank
v. Kirwan (1985) 39 Cal.3d 311, 318.)
B.
sufficient to state a cause of action against the Coldwell defendants.
1. Breach
of fiduciary duty (fourth cause of
action)
"The
elements of a cause of action for breach of fiduciary duty are the existence of
a fiduciary relationship, its breach, and damage proximately caused by that
breach." (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
(1998) 68 Cal.App.4th 445, 483.)
"The law imposes on a real
estate agent 'the same obligation of undivided service and loyalty that it
imposes on a trustee in favor of his beneficiary.' [Citations.] This relationship not only imposes upon him
the duty of acting in the highest good faith toward his principal but precludes
the agent from obtaining any advantage over the principal in any transaction
had by virtue of his agency." (
674-675.) A real estate licensee is "charged
with the duty of fullest disclosure of all material facts concerning the
transaction that might affect the principal's decision." (Rattray
v. Scudder (1946) 28 Cal.2d 214, 223; see also Realty Projects, Inc. v. Smith (1973) 32 Cal.App.3d 204, 210;
792-793.)
Plaintiffs assert that the Coldwell
defendants were their fiduciaries with respect to the purchase of the property,
and, as such, owed them certain duties.
For example, plaintiffs maintain that the Coldwell defendants owed them
a duty to "exercise the highest duty of loyalty," to "affirmatively
protect the interests of Plaintiffs," and "to refrain from any
conduct resulting in a disadvantage to Plaintiffs." Plaintiffs allege that the Coldwell
defendants' fiduciary duty "required them to make full and truthful
disclosure to Plaintiffs of all facts known to [the Coldwell defendants] or discoverable
by them with reasonable diligence, and likely to affect the Plaintiffs and
Plaintiffs' decision to purchase the Subject Property." (Underscore in original.) Plaintiffs further allege that the Coldwell
defendants' duty included the "duty to learn of material facts that may
affect the Plaintiffs' decision" and a "duty to counsel and advise
Plaintiffs regarding the propriety and ramifications of their decision."
With
respect to the alleged breach of these duties, the operative complaint states
that the Coldwell defendants "were aware of material facts or could have
discovered through reasonable diligence various material facts affecting Plaintiffs'
decision to purchase the Subject Property." The complaint identifies those "material
facts" as the following: (1) "A
duly recorded Covenant of Improvement Requirements burdened the Subject
Property . . . "; (2)
"The COVENANT affected title to the Subject Property"; and (3) "The
COVENANT required certain items including but not limited to: construction of
numerous quasi-public site improvements . . . ." Plaintiffs allege that the Coldwell
defendants "had no reasonable basis for failing to or disregarding the
importance of inspection of public records or permits to ensure title to
Subject Property was free and clear of any encumbrances or
defects . . . ."
In sum,
plaintiffs allege that "had [the Coldwell defendants] acted properly in
their duties as fiduciaries and undertaken a diligent investigation of public
records and of the Subject Property itself, the full extent of any encumbrances
or defects in title to the Subject Property would have been ascertained and
Plaintiffs would not have purchased the Subject Property."
Plaintiffs
are asserting that the Coldwell defendants breached their fiduciary duties by
failing to independently determine that the covenant existed, despite the fact
that the title insurance company failed to identify the covenant in either the
preliminary title report or the title insurance policy. In essence, plaintiffs seek to expand the
scope of a real estate agent's duty to his or her client to include a duty to
conduct an independent investigation and search of the public record to find
recorded documents pertaining to the property that were not disclosed by the
title insurance company. However, the
scope of a real estate agent's duty to his or her clients is not so broad as to
encompass the duty that plaintiffs propose.
"In
California . . . the parties rely on title insurance
companies, whose fundamental purpose is to search
the public land records, report their
findings as to the status of title, and provide an indemnity policy insuring their findings." (Greenwald & Asimow, Cal. Practice Guide:
Real Property Transactions (The Rutter Group 2011) ¶ 3:2, pp. 3-1 to
3-2.) In addition, a
real estate transaction "can involve many issues that are outside the
scope of the typical broker's expertise; some such as legal issues, tax
matters, accounting issues, construction, engineering, and hazardous materials,
require the assistance of other professionals," and a "broker is not
obligated to provide advice in subjects outside [the broker's] core real estate
expertise." (California Real Property
Sales Transactions (Cont.Ed.Bar 4th ed. 2010) § 2.151, p. 201.) Real estate agents are entitled to rely on
the expertise of other professionals who are hired to complete a task in their
own area of expertise. Thus, where a
title insurance company is hired to perform the task of searching the public
record, a real estate agent is entitled to rely on the work of the title
insurance company and does not have a duty to independently search the public
record to ensure that the title company has completed its job correctly.
The only
authority on which plaintiffs rely in an attempt to establish that the duties
owed by a real estate licensee to a client include a duty to independently search
the public record to find recorded documents pertaining to the property that a
client seeks to purchase is the case of Field
v. Century 21 Klowden-Forness Realty (1998) 63 Cal.App.4th 18 (
does not expand the scope of the duty of a real estate agent in the manner in
which plaintiffs contend. In
negligence, negligent misrepresentation, and breach of fiduciary duty against
defendant Century 21, based on the defendant's "failure to inspect related
title documents and to determine the scope of an easement in favor of Otay
Water District." (
by Civil Code section 2079.4 applied to claims for a breach of fiduciary duty
brought against real estate brokers by purchasers whom they exclusively
represented. The Field court concluded that actions by purchasers against brokers
who represent them exclusively in a real estate purchase transaction are not
limited by the two-year time bar of Civil Code section 2079.4, which applies to
breaches of the duties imposed on brokers by Civil Code sections 2079 through
2079.24. (Field, supra, at p. 20.)
The facts in Field established that the Fields' real estate agent not only had "not
inspect[ed] the preliminary title report in a timely manner, she did not even
receive it from the title company until after
escrow closed." (
At trial, experts for both the plaintiffs and defendants agreed that the
real estate agent had breached her duty to the Fields "
report before the close of escrow to verify, among other things, the scope
of the easement revealed in the transfer disclosure statement." (Id.
at pp. 22-23, italics added.) Notably,
the Field court did not suggest that
the real estate agent had breached any duty by failing to independently
investigate the public record to determine the extent of the easement. (Id.
at p. 23.)
In rejecting the proposition that
the two-year statute of limitations in Civil Code section 2079.4 applies to
claims of breach of fiduciary duties brought by a real estate purchaser against
his or her own exclusive broker, the Field
court explained that "the fiduciary
duty owed by brokers to their own clients is substantially more extensive than
the nonfiduciary duty codified in section
2079," and that application of a the "two-year-from-possession
limitation" in Civil Code section 2079.4 would unduly "restrict the
ability of buyers to obtain redress for duties owed by their own real estate
licensees which existed before section 2079.4 was enacted." (Field,
supra, 63 Cal.App.4th at p. 25.) The Field
court reviewed the fiduciary duties owed by a real estate professional to his
or her client, which exist independent of the nonfiduciary duties created by
the Civil Code that a real estate professional owes to a purchaser of real
property who is not his or her client.
After identifying the fiduciary duties owed by a real estate professional
to his or her client, the Field court
broadly asserted: "Thus, depending on the circumstances, a broker's
fiduciary duty may be much broader than the duty to visually inspect and may
include a duty to inspect public records or permits concerning title or use of
the property, a duty which is expressly excluded from section 2079." (Field,
supra, at p. 26.)
Plaintiffs' contention that the Coldwell
defendants owed them a duty to independently search the public record is based
on the Field court's statement that "a
broker's fiduciary duty may be much broader than the duty to visually inspect
and may include a duty to inspect public records or permits concerning title or
use of the property." (
Plaintiffs maintain that if the Coldwell defendants had searched the public
records, they would have found the covenant.
However, this language from Field
is dicta. The Field court did not have to consider how far the scope of the
fiduciary duties owed by a real estate licensee might extend, since in that
case it was clear that the plaintiffs' real estate agent had failed to even
examine the preliminary title report.
In this case, in contrast to
Coldwell defendants failed to read the title report or pass on to them the
information that the title company had identified the existence of an easement
that was clearly marked on the recorded parcel map. Further, unlike in Field, an examination of the preliminary title report would not
have led the real estate agent to the covenant at issue, since the title
insurance company did not identify the covenant in any of its documents.
We do not believe that
real estate licensee may not rely on the professional assistance of a title
company in matters related to encumbrances on the property, and instead must
independently research the public record to determine whether there are any
encumbrances on the property that are not identified by the title company in
its report or title insurance policy. We
decline to impose such a duty on real estate professionals. A real estate agent is entitled to rely on
the reporting of a title company to the same extent as a purchaser of real
property, and does not have an affirmative duty to independently scour the
public record to "double check" the work of a title company.
Plaintiffs
also suggest, without citation to the operative complaint, that the duty they
are seeking to impose on the Coldwell defendants is not a duty to search public
records for encumbrances on property, but rather, a broader duty to do
something to "verify whether such easements [i.e., 'unusable' or 'proposed'
easements] existed." However, plaintiffs
later specify that what they believe the Coldwell defendants should have done,
and had a duty to do, was to "perfor[m] necessary research and
investigation, and disclose that information." Thus, although plaintiffs complain that the
Coldwell defendants and the trial court improperly "narrow[ed] the duty
that Plaintiffs' allege the Coldwell Defendants owed to them" by defining
that duty as a duty to independently search public records, we disagree. The allegations of the operative complaint,
as well as plaintiffs' briefing, confirm that the duty they allege the Coldwell
defendants owed them is a duty to conduct an independent investigation to identify
encumbrances on the property that were not identified by the title company. As we have already explained, a real estate
licensee's fiduciary duties to a client do not require that the licensee search
the public record to attempt to discover other recorded documents that affect
the property that the title company failed to identify. This is not a situation in which a real estate
professional failed to pass along material information to the client, or, as in
Field, failed to review the
preliminary title report prior to the closing of escrow. In Field,
the real estate agent's conduct effectively prevented the purchasers from
knowing what was in the title report or considering that information prior to
making the purchase. Here, plaintiffs
were aware of the contents of the title report, and knew that an easement
existed. Their real estate agent did not
have an additional duty to independently "check" the completeness of
the title insurance company's work. We
conclude that plaintiffs have failed to state a cause of action for breach of
fiduciary duty under the facts alleged in the SAC.
2. Negligent
misrepresentation (fifth cause of action)
"The elements of negligent
misrepresentation are (1) the misrepresentation of a past or existing material
fact, (2) without reasonable ground for believing it to be true, (3) with
intent to induce another's reliance on the fact misrepresented, (4) justifiable
reliance on the misrepresentation, and (5) resulting damage. [Citation.] In contrast to fraud, negligent
misrepresentation does not require knowledge of falsity. A defendant who makes false statements ' "honestly
believing that they are true, but without reasonable ground for such belief, .
. . may be liable for negligent misrepresentation . . . ." [Citations.]'
[Citation.] However, a positive
assertion is required; an omission or an implied assertion or representation is
not sufficient." (
Partners, LLC (2007) 158 Cal.App.4th 226, 243.) Although the Supreme Court has not decided the
issue, it appears that the rules for pleading fraud may apply to negligent
misrepresentation. (See
Cal.4th 167, 184 [holding that heightened pleading standard for fraud applies
to claim for negligent misrepresentation in an action for securities fraud, but
"express[ing] no view on whether this pleading requirement would apply in
other actions for negligent misrepresentation"]; see also
Cal.App.4th 170, 185, fn. 14 ["Fraud and negligent misrepresentation must
be pleaded with particularity and by facts that ' " 'show how, when,
where, to whom, and by what means the representations were tendered.' " ' "].)
The allegations of the operative
complaint state that the Coldwell defendants "negligently misrepresented
and/or withheld important material facts related to the Subject Property
including but not limited to: Defects in
the Subject Propert[y's] title history, the existence of a valid easement, and
the existence of a duly recorded Covenant of Improvement Requirements." Plaintiffs allege that these "representations,
or lack thereof, regarding title were false," and that the Coldwell
defendants knew or in the exercise of reasonable diligence should have known of
the existence of the encumbrances and thus should have known that these
representations were not true.
Plaintiffs failed to allege in the
operative complaint the existence of even a single false statement that the
Coldwell defendants made to them.
Rather, the allegations supporting this cause of action appear to be the
same facts that plaintiffs allege to support their other causes of action
against the Coldwell defendants, namely, that the Coldwell defendants failed to
adequately investigate the existence of the nature of the easement on the
property. Thus, rather than identifying
any affirmative statement made by the Coldwell defendants, plaintiffs appear to
be relying on the Coldwell defendants' failure to investigate and to inform
plaintiffs about the nature and extent of the recorded covenant identifying the
easement encumbering the property—i.e., the failure to make a statement to
plaintiffs. However, a "negligent
misrepresentation claim 'requires a positive assertion,' not merely an
omission." (Lopez v. Nissan North America, Inc. (2011) 201 Cal.App.4th 572, 596.)
Because plaintiffs made no
allegations of any affirmative misrepresentation on the part of any of the
Coldwell defendants, the trial court properly sustained the Coldwell defendants'
demurrer to the negligent misrepresentation cause of action.
3. Negligence
(sixth cause of action)
"The elements of a claim for
specific standard of care into the elements of a negligence claim." (Burgess
v. Superior Court (1992) 2 Cal.4th 1064, 1077.) " 'The elements of a cause of action in
tort for professional negligence are: (1) the duty of the professional to use
such skill, prudence and diligence as other members of his profession commonly
possess and exercise; (2) a breach of that duty; (3) a proximate causal
connection between the negligent conduct and the resulting injury; and (4) actual
loss or damage resulting from the professional's negligence. [Citations.]' " (Ibid.)
To make out
their sixth cause of action, plaintiffs allege that the Coldwell defendants
owed them a duty of care "to perform services competently, prudently, and
thoroughly," and that the Coldwell defendants failed to meet this standard
of care by "fail[ing] to fully investigate the material defects in title,
failures, and deficiencies with the Subject Property which were known and/or
should have been known to [the Coldwell defendants]; and in failing to so act,
breached the aforesaid duties of due care." Plaintiffs further claim that as a result of
this alleged breach, they purchased the property, which suffered from material
defects, to their detriment.
As with
their cause of action for breach of fiduciary duty, plaintiffs allege in their claim
for negligence that the specific breach was the Coldwell defendants' failure to
complete an independent search of the public record to discover an encumbrance
on the property that the title company failed to identify in the preliminary
title report and title insurance policy.
However, under the specific facts alleged in this complaint, we must
conclude that the duty of care owed by the Coldwell defendants to use the skill,
prudence and diligence that other members of the profession commonly possess
and exercise does not extend so far as to require them to independently comb
the public record in an attempt to find recorded encumbrances that the title insurance
company failed to include in its preliminary report and title insurance policy. We therefore conclude that plaintiffs have
failed to state a claim against the Coldwell defendants for negligence, and we
affirm the trial court's sustaining of the demurrer as to this cause of action
alleged against the Coldwell defendants.
C. Plaintiffs
have not demonstrated a reasonable possibility that the defects in the SAC
could be cured
We next consider
whether plaintiffs have established that there is some manner in which they
could amend the operative pleading to cure the defects that we have
identified. It is clear that the burden
to establish the possibility of curing any defect rests upon plaintiffs'
shoulders. (See Davies, supra, 168
Cal.App.4th at p. 1090 [" 'The plaintiff has the burden of proving that an
amendment would cure the defect [citation]' "].)
Plaintiffs do
not suggest in their briefing on appeal what additional facts they would allege
with respect to the fourth and sixth causes of action (breach of fiduciary duty
and negligence) to attempt to cure the defects in these causes of action. They have thus failed to meet their burden of
establishing that an amendment would cure the defects with respect to their
claims for breach of fiduciary duty and negligence.
Plaintiffs do, however, set forth
an argument in which they explain how they could amend the operative complaint
to state a cause of action for negligent misrepresentation. Plaintiffs contend that after the sellers
disclosed an " 'unusable easement,' " they asked Anderson, their
real estate agent, about the " 'unusable easement.' " Plaintiffs allege that rather than looking
into the issue further or offering them guidance with respect to this easement,
Anderson represented to them, prior to the close of escrow, "that
everything was fine and to proceed with the transaction." They further contend that Anderson had no
reasonable ground for believing that "everything was fine," that she
intended for them to rely on her assertion that "everything was fine,"
and that they did in fact rely on that assertion and went through with the
transaction, suffering damage as a result.
However,
even assuming that plaintiffs could allege sufficient facts to state a cause of
action for negligent misrepresentation, it is clear that such a claim would be
untimely under any of the potentially applicable statutes of limitations. "The limitations period, the period in
which a plaintiff must bring suit or be barred, runs from the moment a claim
accrues. [Citations.] Traditionally at common law, a 'cause of
action accrues "when [it] is complete with all of its elements"—those
elements being wrongdoing, harm, and causation.' [Citation.]
This is the 'last element' accrual rule: ordinarily, the statute of
limitations runs from 'the occurrence of the last element essential to the
cause of action.' " (
55 Cal.4th 1185, 1191.)
Although
the parties dispute what the applicable statute of limitations is with respect
to plaintiffs' cause of action for negligent misrepresentation, we conclude
that it is of no consequence because under even the longest possible
period—i.e., the four years provided pursuant to Code of Civil Procedure
section 343
title="">[8] urged by plaintiffs in their appellate
briefing—the cause of action is time-barred.
According
to the Coldwell defendants, plaintiffs had constructive notice of the existence
of the easement and the covenant because the covenant was a recorded document. The Coldwell defendants claim that because
the plaintiffs had constructive notice that they were damaged as of the date
that plaintiffs took title to the property, which was in January 2007, the
claim is time-barred.
"Civil
Code section 1213 provides that every 'conveyance' of real property recorded as
prescribed by law provides 'constructive notice' of its contents to subsequent
purchasers. The term 'conveyance' is
broadly defined to include 'every
instrument in writing . . . by which the title to any real property
contents is conclusively presumed.' "
(Citizens for Covenant Compliance
v. Anderson (1995) 12 Cal.4th 345, 355.) Thus, plaintiffs are charged with the
equivalent of actual knowledge of the existence and contents of the covenant as
of January 2007. Once plaintiffs had
constructive notice of the covenant and its contents, which revealed that the
property they had purchased was burdened by an easement for a paved access road,
they were on notice of the existence of their negligent misrepresentation claim
based on Anderson's alleged comments to them that "everything [is] fine." Plaintiffs' negligent misrepresentation claim
therefore accrued as of January 2007.
Their amendment to add the Coldwell defendants and assert a negligent
misrepresentation cause of action against the Coldwell defendants in October
2011 occurred more than four years after their claim accrued. Any cause of action for negligent
misrepresentation that plaintiffs could allege would thus be untimely.
We conclude that plaintiffs have
not demonstrated how they could amend the operative complaint to attempt to restate
any of their causes of action. We therefore
affirm the trial court's order denying plaintiffs leave to amend.
IV.
DISPOSITION
The
judgment is affirmed. The Coldwell
defendants are entitled to costs on appeal.
AARON, J.
WE CONCUR:
McCONNELL,
P. J.
McDONALD,
J.
name="_ftn1" title="">[1] With
respect to the easement, plaintiffs' property is the servient estate, and the
sellers' property is the dominant estate.
name="_ftn2" title="">[2] We
take the factual background from the SAC, to the extent that its allegations
are not contradicted by allegations asserted in the prior complaints. (See Haggis
v. City of Los Angeles (2000) 22 Cal.4th 490, 495 ["On appeal from
dismissal following a sustained demurrer, we take as true all well-pleaded
factual allegations of the complaint"].)
