Masters v.
Filed 7/25/13 Masters v. Burton CA2/6
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opinion has not been certified for publication or ordered published for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
SECOND
APPELLATE DISTRICT
DIVISION
SIX
CAROLYN MASTERS et al.,
Plaintiffs, Appellants, Respondents
v.
SCOTT BURTON et al.,
Defendants, Respondents, Appellants.
2d
Civil No. B234555
2nd
Civil No. B239447
(Super.
Ct. No. 56-2008-00321433-CU-OR-VTA)
(Ventura
County)
This appeal is about
errant golf balls and the $2.15 million sale of a residence at the Spanish
Hills Country Club. Appellants, Carolyn
Master and Mark E. Moore, purchased the property knowing that it fronted a golf
course fairway. They were told that
errant golf balls would land on the property.
(See e.g., Hellman v. La Cumbre Golf & Country Club (1992) 6
Cal.App.4th 1224, 1231.) Stray golf
balls were such a common problem that the CC&R's required homeowners to (1)
acknowledge the risks of property damage caused by errant gold balls, (2)
assume the risk of property
damage, personal injury, or death caused by errant golf balls, and (3)
release, waive, discharge, and covenant not to sue past or present homeowners
for liability arising out of errant golf balls.
Appellants sued the
former owners (respondents Scott Burton and Linda Burton) and the Burtons'
relocation company (respondents Executive Relocation dba SIRVA Relocation, LLC
and SIRVA Relocation Credit, LLC (collectively SIRVA)) for
concealment/non-disclosure of an errant golf ball hazard. Having lost at trial, appellants appeal from
an order granting summary adjudication on a breach
of contract cause of action and appeal from the judgment entered in favor
of the Burtons and SIRVA on a rescission cause of action. The Burtons, in a separate appeal (B239447),
contend that the trial court erred in denying their motion for $1.35 million
attorney fees (Civ. Code § 1717) and
ordering them to pay $45,000 discovery prove up costs (Code Civ. Proc., §
2033.420). We affirm.
Facts & Procedural History
On May 7, 2007,
appellants entered into a $2.15 million contract to purchase the residence at
1708 Via Aracena, Camarillo, located on the 7th fairway at the Spanish Hills
Country Club. Earlier that year, Scott
Burton and Linda Burton listed the property for sale after Scott Burton changed
jobs and relocated to Northern California.
Burton's employer hired SIRVA, a third-party relocation company, to
assist in the sale. Troop Real Estate,
Inc. and real estate agent Laura L. Means listed the property as the Burtons'
and SIRVA's broker.
Appellants wanted to
live next to the golf course and were provided a copy of the CC&R's and
written disclosures that there were errant golf balls.
Seller Property Questionnaire disclosed "some golf balls on
property," a broken window repair, and roof tile and house stucco repairs. Appellants were also provided a Seller's Real
Estate Transfer Disclosure Statement (Civ. Code, § 1102.6)
During the two month
escrow, appellants visited the property several times and, on one occasion,
brought a licensed home inspector. The
inspection was uneventful until a golf ball hit a palm tree near the
house, Moore said, "a golf ball
just flew in and hit that palm tree."
Linda Burton responded, "That happens sometimes." Before leaving, Moore and his son picked up
20 to 25 golf balls in the backyard and put them in a pile.
Appellant Carolyn
Masters, a licensed real estate agent, acted as the buyer's agent for Moore and
herself, and received a $53,000 real estate commission. Before escrow closed on July 16, 2007,
Masters executed an Agent's Inspection Disclosure certifying that she made a
reasonably competent and diligent inspection and saw no property conditions
that required disclosure.
After escrow closed,
appellants became concerned about the number of stray golf balls landing on the
property, an average of three to four a
day. Most of the golf balls landed away
from the house but a few hit the house exterior stucco, a house window, the
roof tiles, and the swimming pool.
Appellants claimed it was a hazardous condition, moved out, and
defaulted on the house mortgage.
name="_ftnref3" title="">[3]
The Lawsuit
On June 20, 2008,
appellants sued for damages and rescission.
The first amended complaint alleges causes of action for breach of
contract, rescission based on fraud and mistake, failure to make a statutory
disclosure (§ 1102.6), and fraud. It
alleges that the Burton's Real Estate Transfer Disclosure Statement (TDS; §
1102.6) failed to disclose "a severe problem of errant golf balls and that
the frequency, trajectory, velocity and direction of errant golf balls coming onto the PROPERTY represents a
significant hazard for injury to persons and damage to property which cannot be
reasonably guarded against." The
fourth cause of action for breach of contract alleges that SIRVA breached the
purchase agreement by not disclosing known material facts affecting the value
and desirability of the property and not executing a seller's Transfer
Disclosure Statement pursuant to section 1102.6. Appellants claimed that the property had $0
market value and that they suffered at
least $2.15 million damages.
SIRVA moved for summary
adjudication.
title="">[4] The trial court granted summary adjudication
on the breach of contract cause of action but kept SIRVA as a nominal defendant
for purposes of "unwinding" the deal if appellants prevailed on the
rescission cause of action. (See Shapiro
v. Sutherland (1998) 64 Cal.App.4th 1534, 1551-1552.)
Appellants dismissed the
Burtons on the causes of action for failure to make a statutory disclosure
(third cause of action), breach of contract (fourth cause of action), and fraud
(fifth cause of action). After a 30 day
trial, judgment was entered for the Burtons and SIRVA on the rescission causes
of action for fraud and mistake. The
trial court, in a statement of decision, found that the Burtons concealed the
errant golf ball hazard but appellants failed to prove justifiable
reliance. In post-trial motions, the
trial court denied Burtons' motion for $1.35 million attorney fees (§ 1717) and ordered the Burtons to pay $45,000 prove
up costs on three requests for admissions. (Code Civ. Proc., § 2033.420.) SIRVA was awarded $256,529.31 attorney
fees.
Summary Adjudication - SIRVA
Appellants contend that
that the trial court erred in granting summary adjudication on the breach of
contract cause of action. Relying on Shapiro
v. Sutherland, supra, 64
Cal.App.4th 1534 (Shapiro), the trial court concluded that SIRVA fully
performed its disclosure obligations as a third-party relocation company and
there were no material triable facts.
" ''On review
of a summary [adjudication], the appellant has the burden of showing error,
even if he did not bear the burden in the trial court. [Citation.]. . . . " [D]e novo review does not obligate us to cull
the record for the benefit of the appellant in order to attempt to uncover the
requisite triable issues. As with an
appeal from any judgment, it is the appellant's responsibility to affirmatively
demonstrate error and, therefore, to point out the triable issues the appellant
claims are present by citation to the record and any supporting authority. . .
." [Citation.]' " (Baines v. Moores (2009) 172
Cal.App.4th 445, 455.)
Appellants argue that
the seller of real property has a common law and statutory duty to disclose
facts materially affecting the value or desirability of the property. (Shapiro, supra, 64
Cal.App.4th at p. 1544.) "A breach
of this duty of disclosure will give rise to a cause of action for both
rescission and damages.
[Citation.]" (Ibid.) The duty to disclose sounds in tort, not
contract. (See § 1102.13 damages limited
to "actual damages"; Saunders v. Taylor (1996) 42 Cal.App.4th
1538, 1544-1545.) "[S]tatutory
disclosures are not warranties by the seller or seller's agent; nor are
they a substitute for warranties or inspections that the parties actually
obtain. Further, the seller's § 1102.6
(or § 1102.6d) disclosures are not intended to be part of the purchase
contract between the buyer and seller.
[Citations.]" (Greenwald
& Asimow, Cal. Practice Guide, Real Property Transactions (The Rutter Group
2012) ¶ 4:360, p. 4-86.9.)
Appellants claim that
SIRVA breached a contractual duty to make a statutory disclosure and knew or
should have known there was a significant errant golf ball problem. We reject the argument because a relocation
company's duty to disclose is limited to information in the company's personal
knowledge. (§ 1102.4, subd. (a).)
In Shapiro v.
Sutherland, supra, 64
Cal.App.4th 1534 (Shapiro), the seller (Sutherland) took a job transfer
and hired a third party relocation company (Prudential) to sell his house. Sutherland executed a TDS that failed to
disclose a noisy neighbor problem, signed a blank grant deed, and moved out. A year later, Prudential gave Sutherland's
TDS to the buyer, believing it was accurate.
(
inspection. After closed escrow, buyer
discovered the noise problem and sued Prudential.
The trial court granted
summary judgment because Prudential did not know about the noise problem and
never took possession of the property. (
"[i]f plaintiff is to recover against anyone for misrepresentation, it
must be against the Sutherlands [sellers]." (Id., at p. 1547.) For Prudential to be liable for negligent
misrepresentation, "it would have to have made a false statement to
plaintiff, honestly believing it to be true, but without a reasonable ground
for such belief. However, if
Prudential's belief was both honest and reasonable, then the
misrepresentation would be an innocent one and there would be no
liability. [Citation.]" (Ibid.)
Appellants argue that Shapiro
is distinguishable because the relocation company did not acquire title before
the property was transferred to the buyer.
Here the Burtons deeded the property to SIRVA and SIRVA executed a grant
deed transferring title to appellants.
The "acquired title" argument fails because SIRVA never took
possession or occupancy of the property.
The first amended complaint states that SIRVA "acted as the
agent[]" of the Burtons and was an intermediary in the sale The Burton/SIRVA grant deed was recorded July
16, 2007, the same day the SIRVA/Masters-Moore grant deed was recorded. Like Shapiro, the sale was actually a
sale from the Burtons to appellants with SIRVA acting as the intermediary. SIRVA reasonably believed the property
disclosures from the Burtons and the real estate agent (Laura Means) were
accurate.
Market Analysis Report
Appellants argue that
the Market Analysis prepared by Laura Means put SIRVA on notice that the
property had a serious errant golf ball problem. The Market Analysis stated "large
quantity of golfballs on one side of the house may be an issue" but
"the area affected by the golfballs is limited and remote from the rest of
this 1.76 acre property." The
Market Analysis recommended a $2.39 million list price and projected that the
property would sell for $2.3 million "AS IS." SIRVA had no duty to disclose the market
analysis to prospective buyers because it was a realtor's personal opinion of
property value.
title="">[5] (Assilzadeh v. California Federal Bank
(2000) 82 Cal.App.4th 399, 411-412.)
The information in the
Market Analysis did not require a special disclosure. It stated that golf balls were landing in a
remote part of the lot, i.e., an orchard area that was shown to
appellants. It did not say that errant
golf balls were landing on all parts of the property or hitting the house,
patio, or swimming pool area. When Laura
Means prepared the Market Analysis, the Burtons told her about a large quantity
of golf balls on the side of the house
and said the problem was corrected after the golf course was
"changed to suit them." It is
undisputed that SIRVA had no conversation or communication with the Burtons,
Troop Real Estate, or Laura Means about a large quantity of golf balls landing
on the property or how it might affect the value of the property. Nor are there triable material facts that
SIRVA believed that Burton's disclosures or Means' Real Estate Disclosure
Statement (saw golf balls on right side of house (nearest golf course)) were
inaccurate and warranted further investigation.
Appellants argue that
paragraphs 5 and 7 of the purchase agreement required that SIRVA execute and
deliver its own statutory disclosure.
Multiple disclosures were provided including the "ERRANT GOLF
BALLS" Statewide Buyer and Seller Advisory signed by the Burtons, a CAR
Seller Property Questionnaire by the Burtons disclosing "some golf balls
on the property," the Burtons' TDS,
the Real Estate Agent's Inspection Disclosure by Laura Means, and the SIRVA
Property Disclosure Addendum stating that SIRVA was a third party relocation
company assisting the Burtons. The CAR
Statewide Buyer and Seller Advisory warned "there is a possibility that
golf balls may damage the Property or injure persons or pets on it."
On a motion for summary
judgment or summary adjudication, the pleadings define the issues. (Hejmadi v. AMFAC, Inc. (1988) 202
Cal.App.3d 525, 536.) The first amended
complaint states that SIRVA was hired "as an intermediary" to
facilitate the sale, that the Burtons prepared a false TDS knowing that SIRVA
would give the TDS to prospective buyers,
and that the Burtons violated section 1102.6. The argument that SIRVA was contractually
required to execute a seller's TDS because it used two grant deeds to
facilitate the sale (i.e., Burton/SIRVA grant deed and a SIRVA/Masters-Moore
grant deed) exalts form over substance.
A section 1102.6 Transfer Disclosure Statement is not "part of the
purchase contract or a separate contract containing conditions upon which the
formation of the primary contract is based." (Brasier v. Sparks (1993) 17
Cal.App.4th 1756, 1760.)
Appellants assert that
the statutory disclosure requirements
(§ 1102 et seq.) are a term of the purchase agreement but that does not change
the Shapiro analysis. Section
1102.4, subdivision (a) provides that no transferor may be held liable for any
error or inaccuracy or omission in a disclosure statement if such "error,
inaccuracy, or omission was not within the personal knowledge of the transferor
. . . ." The purchase agreement and
SIRVA Property Disclosure Addendum stated that SIRVA was selling the property
in its present condition and acting as a conduit in the sale. Appellants signed the SIRVA Property
Disclosure Addendum acknowledging that SIRVA "is a third party relocation
firm assisting the former owner in the sale of this property" and that
"buyer understands that SIRVA Relocation . . . [and] officers or employees
have ever been in actual possession of the property."
A
court is not required to close its eyes to an unmeritorious claim when ruling
on a motion for summary adjudication. (Juge
v. County of Sacramento (1993) 12 Cal.App.4th 59, 69-70.) Consistent with Shapiro, supra, 64 Cal.App.4th at pages
1546-1548, the trial court correctly found that SIRVA fully performed its
disclosure obligations under the purchase agreement. Even if we assumed that summary adjudication
was erroneously granted, there was no prejudice or
Cal.4th 780, 800.) Section 1102.13
provides that the failure to make a proper statutory disclosure limits the
purchaser to actual damages caused by the transferor's willful or negligent
failure to perform any duty proscribed by section 1102 et seq. The trial court, after 30 days of testimony,
found that SIRVA did nothing wrong and that the Burtons did not disclose the
serious errant golf ball problem to anyone connected with the transaction.
Defense Judgment - Rescission
On the rescission causes
of action based on mistake and fraud, the trial court found that the Burtons
intentionally concealed an errant golf ball hazard but appellants did not prove
justifiable reliance. The written
statement of decision states: "The Burtons knew at the time they put their
home up for sale that approximately a thousand errant gold balls a year (3 to 4
balls per day on the average) were landing in various locations on their
premises below the orchard, particularly on the side of the yard closest to the
7th fairway, [and] . . . from time to time, . . . impacting on the walls and
roof of their residence (causing damage) as well as landing in the BBQ and pool
area in the backyard. [¶] At the time the Burtons put their house up
for sale and filled out various disclosure forms, the Burtons knew that because
of numerous errant golf ball impacts, they had to repair resulting damage to
their residence's roof tiles, plaster walls and windows, and outdoor lights.
[¶] . . . [T]he Burtons
intentionally chose not to disclose to anyone connected with this transaction .
. . this information . . . in order to enhance the saleability of their
property."
The trial court found
that appellants failed to make reasonable inquiries and that Carolyn Masters,
acting as the buyers' real estate agent, breached a duty to investigate what
caused the roof tile and house stucco damage.
The statement of decision includes findings that Masters was
"negligent" and notes that the trial court would have found for
appellants had Masters specifically asked the Burtons "or their agent
Means . . . whether golf balls had caused the need for the repairs to the house.
. . ."
Justifiable Reliance - Failure of
Proof
Appellants argue that
"negligence" is not a defense to intentional misrepresentation. (See Seeger v. Odell (1941) 18 Cal.2d
409, 414.) Appellants, however, failed
to prove justifiable reliance which is an essential element of fraud and
concealment. (Ibid.; Coldwell Banker
Residential Brokerage Co., Inc. v. Superior Court (2004) 117 Cal.App.4th
158, 168 [active concealment requires that plaintiff show justifiable
reliance]; Home Budget Loans, Inc. v. Jacoby & Meyers Law Offices
(1989) 207 Cal.App.3d 1277, 1285 [justifiable reliance is an element of
negligent misrepresentation and constructive fraud].) " 'If the conduct of
the plaintiff in the light of his [or her] own intelligence and information was
manifestly unreasonable, he [or she] will be denied a recovery.' [Citation.]" (Alliance Mortgage Co. v. Rothwell
(1995) 10 Cal.4th 1226, 1240.)
Rescission based on
fraud or mistake requires justifiable reliance.
(Podlasky v. Price (1948) 87 Cal.App.2d 151, 162-163; Lawrence
v. Doty (1950) 96 Cal.App.2d 937,
942.) The buyer's failure to ascertain
the precise nature and scope of a disclosed property condition can defeat the
claim that there was actual and justifiable reliance. (§§ 2079; 2079.5; Pagano v. Krohn (1997) 60 Cal.App.4th 1, 12.) Where the buyer is apprised of a problem
affecting the value and desirability of the property, the burden is on the
buyer to investigate the problem and assess its severity. (Id., at pp. 8-9 [water intrusion problems];
Assilzadeh v. California Federal Bank, supra, 82 Cal.App.4th
at p. 412 [disclosure of construction defect litigation that was settled].) "[N]eglect of a legal duty"
precludes rescission based on mistake.
(§ 1577; Lawrence v. Shutt (1969) 269 Cal.App.2d 749, 765-766.)
The question here is
whether the evidence compels a finding of justifiable reliance. (See Roesch v. De Mota (1944) 24
Cal.2d 563, 570-571 [discussing failure of proof standard of review].) The defense judgment will be upheld unless the
plaintiff's evidence is (1) "uncontradicted and unimpeached," and (2)
"of such a character and weight as to leave no room for a judicial
determination that it is insufficient to support a finding . . . ." (Id., at p. 571.) The issue is not whether appellants
"failed to prove their case by a preponderance of the evidence. That was a question for the trial court and
it was resolved against them. The
question for this court to determine is whether the evidence compelled the
trial court to find in their favor on [the issue of justifiable
reliance.]" (Id., at pp. 570-571.)
The evidence shows that
appellants visited and inspected the property several times, were provided
errant golf ball disclosures, were told that stray golf balls were landing on
the property, and that appellants picked up golf balls in the backyard. Appellants had played golf in the past and
were sophisticated in real estate matters.
During the property inspection, Moore saw a golf ball hit a palm tree
and commented on it. Linda Burton told
him, "Sometimes that happens."
Appellants' trial
attorney argued "there was no golf ball in the backyard" and that
appellants never saw a golf ball. It was
the focal point of the case. Masters
conceded that Moore had a "sensitivity to golf balls hitting the
house" and that it would be "a deal breaker."
The trial court asked
Moore to explain. Moore said that he
would not have purchased the property had he known golf balls were hitting the
house and causing stucco damage. Moore
believed that a single golf ball strike to the house was too great a risk. If it happened once, it "could happen
again at any time. And it's uncertain as
to where the ball would wind up . . . .
And that would potentially mean someone in the backyard could be hurt .
. . . I would say, no. I would not have bought the house."
Carolyn Masters, Moore's
partner and real estate agent, confirmed that Moore would not have purchased
the property had he been told that a stray golf ball ever hit the house or
swimming pool. Masters also believed
that Moore would not have bought the property had he known or been told that
errant golf balls landed in the area between the house and the pool.
Appellants received
written golf ball disclosures warning appellants to conduct their own
investigation. The purchase agreement
had a similar warning and stated the "the
Property is sold (a) in its PRESENT physical condition . . . and (b)
subject to Buyer's investigation rights."
agent (Laura Means) to show them where stray golf balls were landing. Means stood at the base of the orchard and
made a "sweeping type gesture" indicating that golf balls were
landing in both the yard and orchard.
The trial court found that appellants decided not to ask "any
follow up questions or conduct any investigation . . . . Nor did [appellants] ever make any inquiry of
Linda Burton regarding errant gold balls and/or why she and her husband had
noted 'some golf balls' as a concern on . . . the real estate disclosure
statement."
As the buyer's real
estate agent, Masters had a statutory duty to make a reasonably competent and
diligent visual inspection and disclose to Moore "all facts materially
affecting the value or desirability of the property that an investigation would
reveal." (§ 2079; Robinson v. Grossman (1997) 57 Cal.App.4th 634,
644.) Moore had a statutory duty to
exercise reasonable care as a prospective buyer. (§ 2079.5; Assilzadeh v. California
Federal. Bank, supra, 82 Cal.App.4th at p. 413.) Merely "because a buyer has a right to
rely on the representations of a seller or a seller's agent does not mean that
the buyer has no duty to inspect the property to be purchased. When there is a duty, a failure to inspect
the property may be below the standard of care and negligence and, in some
cases, may preclude a finding of justifiable reliance on the other party's
misrepresentation or failure to disclose." (Miller & Starr, Cal. Real
Estate (3rd ed. 2011) § 1:149, pp. 607-608.)
"The test is not only whether the [buyer] acted in reliance upon a
misrepresentation, but whether he was justified in his reliance. [Citation.]" (Kahn v. Lischner (1954) 128
Cal.App.2d 480, 489.)
Appellants were told
about errant golf balls, about prior repairs to the house stucco and roof
tiles, about a broken window, and were present when a golf ball hit a palm tree
near the house. They received a Seller
Property Questionnaire that warned: "Seller's disclosures are not a substitute
for your own investigation, personal judgments or common sense." During the two month escrow, they were
provided a copy of the property CC&R's acknowledging the potential for
errant golf ball damage to the house stucco, roof tiles, and windows. Section 15.18 of the CC&R's entitled,
"Golfing Indemnity," stated that if appellants purchased the property
they assumed the risk of any property damage, personal injury, death or any
trespass or nuisance caused by errant golf balls.
The trial court concluded there were enough
"red flags" and disclosures to put appellants on notice that errant
golf balls were a problem and required further investigation. It found that Masters, acting as the real
estate agent for buyers/appellants, "had a duty to look beneath the
surface beauty of the residence and make a formal inquiry into the cause of the
disclosed damage which . . . was . . . manifestly consistent with errant golf
ball strikes."
Justifiable reliance is
a subjective standard measured by the buyer's conduct, intelligence, and
information. (Seeger v. Odell,
18 Cal.2d at p. 415.) It is a
question of fact for the trial court's determination (Guido v. Koopman (1991) 1 Cal.App.4th
837, 843; Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d
498, 503.) "[T]he issue is whether
the person who claims reliance was justified in believing the representation in
the light of his own knowledge and experience. [Citations.]" (
from reweighing the evidence or determining witness credibility. (Ibid.)
This is especially so where the trier of fact finds an essential element of
plaintiff's case was not proven. Failure
of proof is a daunting standard of review where the plaintiff challenges a
"no proof" finding on appeal.
(Roesch v. De Mota, supra, 24
Cal.2d at p. 571.) Appellants
make no showing that the evidence is so "uncontradicted and
unimpeached" that it compels a finding of justifiable reliance or
reasonable mistake. (
Burton Appeal - Attorney Fees
The Burtons appeal the denial of
their motion for $1.35 million fees based on an attorney fee provision in the
purchase agreement. (§ 1717.) "As a general rule, attorney fees are
awarded only when the action involves a claim covered by a contractual attorney
fee provision and the lawsuit is between signatories to the
contract." (Real Property
Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375,
379-380.) The Burtons are not
signatories to the purchase agreement which provides: "In any action . . .
between Buyer and Seller arising out of this Agreement, the prevailing Buyer or
Seller shall be entitled to reasonable attorney fees and costs from the
non-prevailing Buyer or Seller . . . ."
In
Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124 (Reynolds),
our Supreme Court held that a nonsignatory defendant has a section 1717
reciprocal right to attorney fees where (1) the nonsignatory defendant is sued
on the ground that he stands in the shoes of a party to the contract, and (2)
the defendant would be liable for fees had the signatory plaintiff prevailed on
the contract action. (
the theory they were alter egos of the corporate entity that signed promissory
notes with an attorney's fee provision.
Defendants were held not liable on the notes and awarded attorney fees
under the reciprocity provision of section 1717. The Reynolds court reasoned: "Had plaintiff prevailed on its cause of
action claiming defendants were in fact the alter egos of the corporation
[citation], defendants would have been liable on the notes. Since they would have been liable for
attorney's fees pursuant to the fees provision had plaintiff prevailed, they
may recover attorney's fees pursuant to section 1717 now that they have prevailed." (Id., at p. 129.)
Unlike Reynolds, there is no
allegation or claim that the Burtons are alter egos of SIRVA. The Burtons were sued on the theory that, as
prior owners, they concealed an errant golf ball hazard. Had appellants prevailed at trial, the
Burtons would not be liable for attorney fees because the purchase agreement
limits attorney fees to the buyer (appellants) and the seller (SIRVA). (Id., at pp. 128-129.) As non-signatory defendants, the Burtons have
no reciprocal right to attorney fees.
Super
7 Motel Associates v. Wang (1993) 16 Cal.App.4th 541 illustrates this
prininciple. There, the buyer
unsuccessfully sued the seller and seller's broker for rescission and
compensatory damages. The Court of
Appeal held that the seller's broker could not recover attorney fees because it
was not a signatory to the purchase agreement.
(
The
same principle controls here. Had
appellants prevailed on the rescission cause of action, the Burtons would not
be liable for attorney fees but SIRVA would.
(See e.g., Hastings v. Matlock (1985) 171 Cal.App.3d 826, 840-8481 [attorney
fees awarded against signatory defendant on action to rescind land sale
contract]; Shapiro, supra, 64 Cal.App.4th at p. 1551, fn.
18.) Fundamental principles of contract
law dictate that a defendant may not enforce a contractual attorney's fee
provision unless he or she is a party to the contract. (Super 7 Motel Associates v. Wang, supra, 16 Cal.App.4th at pp.
544-545.)
The
Burtons argue that the CC&R's have an attorney's fee provision. Appellants, however, did not sue on the
CC&R's nor did the Burtons successfully defend based on the
covenant-not-to-sue clause in the CC&R's.
The action was for rescission of the purchase agreement, not enforcement
of the CC&R's. (See e.g., Diamond
Heights Village Assoc., Inc. v. Financial Freedom Senior Funding Corp.
(2011) 196 Cal.App.4th 290, 307.)
Citing Jones v. Drain (1983)
149 Cal.App.3d 484, the Burtons argue that attorney fees should be granted to a
nonsignatory defendant where it would be inequitable to deny fees. The argument is based on the theory that if a
plaintiff alleges the right to recover attorney fees, then plaintiff is
estopped from claiming that the nonsignatory defendant who prevails at trial is
not entitled to fees. The equitable
estoppel doctrine is no longer followed by our courts and contradicts Reynolds. (Sessions Payroll Management, Inc. v.
Noble Construction Company, Inc. (2000) 84 Cal.App.4th 671, 681-682; Blickman
Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858,
897.) "The goal of section 1717 is
full mutuality of remedy between parties to a contract, whether
plaintiffs or defendants, in the matter of attorney fees. [Citation.]" (Scott Co. v. Blount,
Inc. (1999) 20 Cal.4th 1103, 1113,
italics added.) The motion for
attorney's fees was properly denied.
Discovery Prove Up Costs
The Burtons argue that
the trial court erred in ordering them to pay $45,000 prove up costs for
unreasonably denying three requests for admissions. (Code Civ. Proc. § 2033.420) Before trial, requests for admissions (RFAs)
were served on the Burtons, asking them to admit or deny whether they
"believed" errant golf balls caused damage to the house window, the
roof tiles, and the house exterior stucco prior to January 6, 2007 (the date
they executed the TDS). The Burtons
categorically denied the RFAs and argued that they did not have to admit the
RFAs unless they actually saw a golf ball hit the house.
The trial court found
that the Burtons were "word-smithing" to avoid liability. This gamesmanship is exemplified by Linda
Burton's testimony that, prior to the sale, she heard the loud sound of
something hitting the house. Burton was
asked whether she assumed golf balls were hitting the roof or house, and
answered "I never gave it a thought."
Scott Burton was asked why, in responding to RFA about the broken
window, he did not believe the house window was broken by a golf ball. Burton testified that "in order to
believe, I have got to witness something."
The trial court found that Burton's statement "is absolutely
incredible to this Court."
Section 2033.420 is
designed to reimburse a party for reasonable costs to prove the truth of a RFA,
which if properly admitted, would have expedited or shortened the trial. (Stull v. Sparrow (2001) 92
Cal.App.4th 860, 865.) The Burtons'
prior knowledge of golf ball strikes to the house was central to the case. Although it was a simple case about errant
golf balls, the trial took more than 30 days.
The trial court did not abuse its discretion in ordering the Burtons to
pay $45,000 prove up costs. (Wimberly
v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 637, fn. 10.)
The judgment is
affirmed. The parties shall bear their
own costs on appeal.
NOT TO BE PUBLISHED.
YEGAN,
J.
We
concur:
GILBERT, P.J.
PERREN, J.
Frederich H. Bysshe, Judge
Superior Court County of Ventura
______________________________
Peter A. Goldenring and
James E. Prosser; Goldenring & Prosser, for Carolyn Masters and Mark E.
Moore, Plaintiffs/Appellants and Respondent.
Jeffrey Huron, for Scott
Burton and Linda Burton, Defendants and Appellants
Finch
Law, Brent M. Finch. Klapach &
Klapach, Joseph S. Klapach, for Executive Relocation, dba SIRVA Relocation LLC
and SIRVA Relocation Credit, L, Defendants and Respondent.
name="_ftn1" title="">[1] The Burtons signed a California Association of Realtors (CAR)
Seller Property Questionnaire that there were "some golf balls on the
property." Under the caption
"Errant Golf Balls," a CAR Statewide Buyer and Seller Advisory warned
"there is a possibility that golf balls may damage the Property or injure
persons or pets on it." The SIRVA Homeowner's Disclosure Statement
stated: "Are there any other
neighborhood conditions or problems affecting the property?" The Burtons wrote: "Yes, some golf
balls."
name="_ftn2" title="">[2] All statutory references are to the Civil Code
unless otherwise stated.
