Lange v. Segerstrom Real Estate








Filed 11/18/10 Lange v. Segerstrom Real Estate CA3




NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.


IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Calaveras)

JAY LANGE, Plaintiff and Appellant, v. SEGERSTROM REAL ESTATE, INC. et al., Defendants and Respondents.

C062052 (Super. Ct. No. CV34283)

Having unsuccessfully attempted to recover the attorney fees he incurred in an underlying action involving the purchase of a residence, buyer Jay Lange attempts a second bite of the attorney fee apple in this action. (See Lange v. Schilling (2008) 163 Cal.App.4th 1412 [in which this court determined that Lange could not be awarded his attorney fees under the residential property purchase agreement because he commenced the action without first attempting mediation, as required under the agreement].) He now seeks, as the sellers’ assignee, to recover the sellers’ attorney fees from the sellers’ real estate agent.
Lange’s complaint contains two causes of action: (1) breach of fiduciary duty and (2) implied contractual indemnity. The only damages claimed are the attorney fees incurred by the sellers, Dwight and Linda St. Peter, in the underlying dispute. The trial court sustained the demurrer of the sellers’ agent and broker, defendants Roxanne Schilling and Segerstrom Real Estate, Inc. (Segerstrom), to Lange’s third amended complaint.
Lange alleged that the pleaded causes of action were assigned to him by the sellers, who sold him a residence using Schilling as their real estate agent. Lange was successful in recovering damages in the prior action for negligence regarding the sale of the residence. He obtained a judgment in the amount of $13,475, the total damages having been reduced by the 51 percent the jury found Lange to have been at fault. The judgment made the St. Peters jointly and severably liable for the full amount of the judgment. He seeks to recover over $76,000 in attorney fees.
We shall conclude that the trial court correctly sustained the demurrer without leave to amend. The breach of fiduciary duty claim must fail because Schilling and Segerstrom did not cause the sellers to incur attorney fees, since the sellers were required to litigate Lange’s allegations regarding their own wrongful and/or negligent actions. The indemnity action fails because Lange is not seeking indemnity for an obligation owed jointly by the sellers, Schilling, and Segerstrom to an injured party, but is seeking to collect only the sellers’ attorney fees.
FACTUAL AND PROCEDURAL BACKGROUND
In the underlying action plaintiff Lange sued Dwight and Linda St. Peter (Sellers), Roxanne Schilling, and Segerstrom Real Estate, Inc., for alleged negligence, misrepresentation, and non-disclosure with regard to a residential real estate transaction. Lange had entered into an agreement with the Sellers to purchase their home on Lake Tulloch. The Sellers were represented in the transaction by their real estate agent, Schilling, who operated under the broker’s license of Segerstrom. Lange’s underlying complaint alleged the misrepresentations and nondisclosures concerned the ability to float boats on the lake year round, the excessive tilt of the house, mud flows on the property, building code violations, and issues with regard to the foundation.
Schilling and Segerstrom prevailed on a motion for summary adjudication with regard to the issues involving the tilt of the house, mud flows and the foundation, but were required to proceed to trial on the lake level issue. The Sellers were denied summary judgment on all issues, thus were required to proceed to trial on all issues.
By special verdict, the jury found that the Sellers knowingly made a false representation to Lange, but found that Lange was not damaged by the representation. The jury also found the Sellers negligent, but again found the negligence was not a cause of damage to Lange. The jury found Schilling was not liable for fraud or nondisclosure, but that she was negligent, and that such negligence caused Lange damage. The jury found that Lange’s total damages were $27,500, and apportioned 51 percent of the damages to Lange himself, 45 percent to Shilling and Segerstrom, and 4 percent to the Sellers, in spite of the fact it also found the Sellers had not caused any damages.
On August 23, 2006, a judgment was signed and entered by the trial court in the underlying action. The judgment allocated none of the fault to the Sellers, and awarded Lange the sum of $12,375 against Schilling and Segerstrom, an amount that was $1,100 less than the total judgment of $13,475.
Lange moved to vacate the judgment and enter a different judgment. In his motion, he represented to the trial court that the Sellers had submitted a proposed judgment on an ex parte basis that failed to award damages associated with the four percent of negligence attributable to the Sellers, and inappropriately changed the jury’s verdict by reassigning the four percent negligence from the Sellers to “any other persons” and inappropriately found in favor of the Sellers, even though they were vicariously liable for the acts of their agents. As a result of the motion, a new judgment was entered in the amount of $13,475 (four percent of the total damages more than the prior judgment), allocating four percent of fault to the Sellers.
Subsequent to the entry of the new judgment, Lange and the Sellers entered into a settlement agreement pursuant to which the Sellers assigned to Lange all claims they held against Schilling and/or Segerstrom for indemnity, contribution, tort of another, breach of tort or contractual duty arising out of the judgment or the listing agreement. Lange then brought this action as the assignee of the Sellers against Schilling and Segerstrom. The third amended complaint contains two causes of action: (1) breach of fiduciary duty, and (2) implied contractual indemnity. The only damages claimed in the complaint are for the Sellers’ attorney fees in the sum of $76,835.75.
Segerstrom and Schilling demurred to the third amended complaint on the grounds the first cause of action was time barred, and both causes of action failed to state a sufficient indemnity claim, since the Sellers were not without fault in the underlying action and they never tendered the defense of the underlying action to the agent and broker. The trial court sustained the demurrer to the third amended complaint without leave to amend, and entered a judgment of dismissal.




DISCUSSION
I
Breach of Fiduciary Duty
The elements of a cause of action for breach of fiduciary duty are: 1) the existence of a fiduciary duty; 2) a breach of the fiduciary duty; and 3) resulting damage. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 483.) Lange’s first cause of action alleges that Segerstrom and Schilling breached their fiduciary duties to the Sellers by making material misrepresentations concerning the property, and that as a result of the breach, a judgment was rendered against the Sellers under the doctrine of respondeat superior, and that but for the breach, the Sellers would have recovered their attorney fees from Lange in the underlying action. As the Sellers’ assignee, Lange claims damages in the sum of $76,835.75, which represents the attorney fees incurred by the Sellers. There are two flaws in Lange’s complaint, the second one being fatal.
First, although Lange alleges that Segerstrom and Schilling’s material misrepresentations of fact were a breach of their fiduciary duties to the Sellers resulting in a judgment against the Sellers, the records judicially noticed by the trial court show this to be untrue. No judgment was rendered as a result of Schilling’s misrepresentations. The judgment was based upon Schilling’s negligence. We nevertheless assume, for the purpose of argument, that a broker’s negligence may constitute a breach of fiduciary duty.
The second and fatal flaw, is that Lange cannot plead that Segerstrom and Schilling’s breach of fiduciary duty caused the Sellers to incur attorney fees in the first instance.
The trial court properly took judicial notice of the motion for summary judgment filed by the Sellers as well as the trial court’s ruling on the motion. The trial court denied the Sellers’ motion for summary judgment or summary adjudication, specifically finding disputed issues of material facts on three subjects: (1) whether the Sellers represented a boat could be floated at the dock year-round, (2) whether the Sellers represented the work on the house was properly permitted, and (3) whether the Sellers knew or should have known the house had an excessive tilt.
The trial court also properly took judicial notice of the ruling in the underlying matter granting the motions of Schilling and Segerstrom for summary adjudication on the issues of failure to disclose unpermitted work, excessive tilt, and prior mudflows, but denying the motion for summary adjudication on the issue of the ability to float a boat at the dock year-round. Thus, while the Sellers were required to defend their own representations and/or failure to disclose with regard to three matters in issue, Schilling and Segerstrom were required to defend their representations and/or failure to disclose with regard to only one matter.
This means that the Sellers were required to defend and incur attorney fees because of their own conduct, and not because of any conduct of Schilling and Segerstrom. In other words, the actions of Schilling and Segerstrom did not cause the Sellers to incur attorney fees in the first instance, an essential element of a breach of fiduciary duty claim. Also, the Sellers were not entirely exonerated for their own actions in the underlying case. The jury specifically found that the Sellers made false representations to Lange with the intent that he rely on such representations, and that they were negligent, but found that such actions did not cause Lange any damages.
Lange attempts to confuse the issue by claiming that Schilling and Segerstrom’s breach of fiduciary duty caused the Sellers to be unable to recover their attorney fees from Lange. While this may be true in the remote sense that no judgment would have been rendered against them absent the breach of fiduciary duty, such was not the immediate cause of their inability to recover attorney fees from Lange. The Sellers are unable to recover their attorney fees from Lange because Lange was the prevailing party in the action, recovering damages against them (and the other defendants) in the joint and severable amount of $13,475.
More fundamentally, the Sellers would be unable to show that the breach caused them to incur attorney fees in the first instance, because they were required to defend their own actions though trial. The breach of fiduciary duty cause of action thus fails for lack of causation.[1]
II
Implied Contractual Indemnity
The implied contractual indemnity cause of action fails because there is no implied contractual indemnity in the absence of a joint legal obligation to an injured party, and the Sellers owed no obligation for which they could be indemnified.[2]
Implied contractual indemnity was historically available when two parties in a contractual relationship were both responsible for injuring a third party. (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1159. It originated as a means of shifting the risk of loss from one joint tortfeasor to another when both were liable to the injured party. (Id. at p. 1161.) Implied contractual indemnity is now viewed as a form of equitable indemnity. (Id. at p. 1157.) Equitable indemnity is not available in the absence of a joint legal obligation to an injured party, and this joint legal obligation is also a requirement of a claim for implied contractual indemnity. (Id. at p. 1161.)
There can be no indemnity without liability, meaning that the indemnitor and indemnitee must share liability for the injury to another party. (Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 573.) Thus, while the theory of indemnity applied to the underlying judgment in favor of Lange for which the Sellers, Schilling, and Segerstrom were jointly liable, it has no applicability to the Sellers’ attorney fees. The Sellers’ attorneys are not an injured party, and Schilling and Segerstrom have no legal obligation to pay the Sellers’ attorneys. No indemnity may be obtained from an entity that has no duty to the injured third party. (Ibid.)
Lange’s second cause of action does not seek indemnification for an obligation the Sellers owe to an injured party, but instead seeks only payment of the Sellers’ attorney fees expended in defending the action against them. A joint tortfeasor’s attorney fees are not the kind of obligation to which the doctrine of implied contractual indemnification or equitable indemnification applies. Because implied contractual indemnification requires a joint obligation to an injured party, and there is no such joint obligation claimed in the third amended complaint, the demurrer to the second cause of action was properly sustained.
DISPOSITION
The judgment is affirmed. Costs are awarded to respondents. (Cal. Rules of Court, rule 8.278(a)(1).)

BLEASE , J.
We concur:
SCOTLAND , Acting P. J.*

HULL , J.

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