http://www.sdcoe.net/business2/risk/claim-district.pdf
Enclosures
SAMPLE
(Send Out When Claim Form Requested)
[Date]
[Addressee]
Subject: Tort Claim Form Requirements
Dear ___________:
Government Code Section 910.4(a) requires claimants wishing to submit a
claim against the __________________District complete a Claim Form. A
Claim Form for your completion is attached. The Government Code has claim-
submission timelines, so please submit your claim immediately. Please direct
questions to: _____________________ at_______________________.
Thank you for your cooperation.
Sincerely,
[Person writing letter]
CLAIM AGAINST THE SCHOOL DISTRICT
DISTRICT NAME:
ADDRESS:
ATTN:
NAME OF CLAIMANT MAILING ADDRESS ZIP TELEPHONE
INSTRUCTIONS
Claims against the above school district must be filed with the Board of
Education within six (6) months after incident occurred,
as required by Government Code Section 911.2.
Where space is insufficient, please use additional paper, include your name,
identify each item of information by the paragraph
number and sign each sheet.
1. OCCURRENCE OR TRANSACTION CAUSING THIS CLAIM
DATE TIME PLACE
2. STATEMENT OF INCIDENT
(Specify the particular act or omission you claim caused the injury, damage
or loss, if known.)
3. DESCRIPTION OF CIRCUMSTANCES
STATEMENT OF HOW THE DISTRICT OR ITS EMPLOYEES WERE AT FAULT
(include names of persons causing injury damage or loss – if not known,
state “not known.”)
4. DESCRIPTION OF INCURRED INDEBTEDNESS, OBLIGATION, INJURY,
DAMAGE
OR LOSS
a. GENERAL DESCRIPTION: c. NAME OF PERSON INJURED
(So far as known as of the date of this claim)
DESCRIPTION OF PERSONAL INJURY
b. NAME OF PERSONS/s CAUSING THE ABOVE d. NAME OF PROPERTY
OWNER
DESCRIPTION OF PROPERTY DAMAGED
5. CLAIM
a. AMOUNT CLAIMED AS OF DATE OF THIS c. TOTAL AMOUNT OF CLAIM: $
CLAIM: $ (Attach estimates or bills in support of claim.)
b. ESTIMATED AMOUNT OF
ANY PROSPECTIVE INJURY, d. BASIS OF COMPUTATION OF AMOUNT
CLAIMED
DAMAGE OR LOSS. $
6. EYEWITNESSES, ATTENDING PHYSICIAN, HOSPITAL,ETC.
NAME ADDRESS TELEPHONE
I certify under penalty of perjury that I know the SIGNATURE OF CLAIMANT
DATE OF CLAIM
above to be true and correct of my own knowledge.
(IF MORE SPACE IS NEEDED, PLEASE ATTACH ADDITIONAL PAGES AS
NECESSARY.)
SAMPLE
(Send Out When Claim Form Requested)
[Date]
[Addressee]
Subject: Tort Claim Form Requirements
Dear ___________:
Government Code Section 910.4(a) requires claimants wishing to submit a
claim against the __________________District complete a Claim Form. A
Claim Form for your completion is attached. The Government Code has claim-
submission timelines, so please submit your claim immediately. Please direct
questions to: _____________________ at_______________________.
Thank you for your cooperation.
Sincerely,
[Person writing letter]
CLAIM AGAINST THE SCHOOL DISTRICT
DISTRICT NAME:
ADDRESS:
ATTN:
NAME OF CLAIMANT MAILING ADDRESS ZIP TELEPHONE
INSTRUCTIONS
Claims against the above school district must be filed with the Board of
Education within six (6) months after incident occurred,
as required by Government Code Section 911.2.
Where space is insufficient, please use additional paper, include your name,
identify each item of information by the paragraph
number and sign each sheet.
1. OCCURRENCE OR TRANSACTION CAUSING THIS CLAIM
DATE TIME PLACE
2. STATEMENT OF INCIDENT
(Specify the particular act or omission you claim caused the injury, damage
or loss, if known.)
3. DESCRIPTION OF CIRCUMSTANCES
STATEMENT OF HOW THE DISTRICT OR ITS EMPLOYEES WERE AT FAULT
(include names of persons causing injury damage or loss – if not known,
state “not known.”)
4. DESCRIPTION OF INCURRED INDEBTEDNESS, OBLIGATION, INJURY,
DAMAGE
OR LOSS
a. GENERAL DESCRIPTION: c. NAME OF PERSON INJURED
(So far as known as of the date of this claim)
DESCRIPTION OF PERSONAL INJURY
b. NAME OF PERSONS/s CAUSING THE ABOVE d. NAME OF PROPERTY
OWNER
DESCRIPTION OF PROPERTY DAMAGED
5. CLAIM
a. AMOUNT CLAIMED AS OF DATE OF THIS c. TOTAL AMOUNT OF CLAIM: $
CLAIM: $ (Attach estimates or bills in support of claim.)
b. ESTIMATED AMOUNT OF
ANY PROSPECTIVE INJURY, d. BASIS OF COMPUTATION OF AMOUNT
CLAIMED
DAMAGE OR LOSS. $
6. EYEWITNESSES, ATTENDING PHYSICIAN, HOSPITAL,ETC.
NAME ADDRESS TELEPHONE
I certify under penalty of perjury that I know the SIGNATURE OF CLAIMANT
DATE OF CLAIM
above to be true and correct of my own knowledge.
(IF MORE SPACE IS NEEDED, PLEASE ATTACH ADDITIONAL PAGES AS
NECESSARY.)
| "If a claim is submitted in letter format and is sufficient..the claim should be... returned as insufficient, late or rejected." -- Rick Rinear, SDCOE-JPA |
| Who is Rick Rinear? He's Diane Crosier's right -hand man at SDCOE. Here is his job description: Classified Management Review Requests -Rick Rinear, Risk Management Specialist, M38, Risk Management, Business Services This position reports directly to the Senior Director, Risk Management, and is responsible for directing a staff of four peopled involved in claims management for property and liability insurances covering 60 districts in the JPA. This program covers about $3 billion in property and 2,500 vehicles, and generates revenue of about $10 million per year. The recommendation is to reclassify the position and the incumbent from Risk Management Specialist, M38 to Property and LiabilityProgram Manager, M44, consistent with the other Program Managers in the department with comparable responsibilities. MSC (Seal/Rothman) to approve the recommendation as presented. PERSONNEL COMMISSION MINUTES July 19, 2006 9:00 a.m., Board Room |
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| All school districts are told by SDCOE-JPA to REJECT ALL CLAIMS |
http://caselaw.findlaw.com/data2/californiastatecases/D047285.DOC
Filed 1/24/07
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ANNE MANDERVILLE et al.,
Plaintiffs and Appellants,
v.
PCG&S GROUP, INC. et al.,
Defendants and Respondents.
D047285
(Super. Ct. No. GIE19680)
APPEAL from a judgment of the Superior Court of San Diego County, Lillian Y. Lim, Judge. Reversed and
remanded.
Stutz Artiano Shinoff & Holtz, Daniel R. Shinoff and Paul V. Carelli IV for Plaintiffs and
Appellants.
Asaro, Keagy, Freeland & McKinley, Steven A. McKinley and Charles F. Campbell for Defendants and
Respondents.
Do exculpatory clauses in standardized forms used in the purchase and sale of real estate bar
a claim for intentional misrepresentation brought by buyers of real property against the
sellers' brokers alleging the brokers intentionally misrepresented the property could be
subdivided, on the ground the buyers cannot show justifiable reliance as a matter of law? We conclude such
exculpatory clauses do not preclude, as a matter of law, the buyers' showing of justifiable reliance, and thus, for
purposes of the summary judgment proceeding at issue in this appeal, they do not bar the buyers' claim for
intentional misrepresentation against the brokers.
We further conclude that any lack of due diligence by the buyers in conducting an
investigation of the zoning and other laws restricting the development and use of the property
also does not preclude, as a matter of law, the buyers' showing of justifiable reliance as an
element of their claim for intentional misrepresentation. Therefore, we reverse the court's
grant of summary judgment in favor of the brokers on the buyers' claim for intentional
misrepresentation. Because the brokers did not seek summary adjudication of the buyers' remaining claims
for negligent misrepresentation and suppression of facts, we need not decide whether those claims are barred by
the exculpatory clauses and the buyers' alleged lack of investigatory due diligence.
FACTUAL BACKGROUND
This action for deceit arose out of the purchase and sale of a parcel of land located
in the City of El Cajon in San Diego County. The buyers were plaintiffs Anne and William
Manderville (together the Mandervilles), and coplaintiffs Roseann and Rick Rinear (together
the Rinears) (collectively Buyers). The Mandervilles are the parents of Roseann Rinear. The
two couples intended to subdivide the property and build adjacent homes on the subdivided
property.
A. The Two MLS Listings
During their search for a suitable property they could subdivide into two lots, Buyers, through their agent Marilyn
Fowler, found a multiple listing service (MLS) advertisement (the second MLS listing) for a property located in El
Cajon, California (the property). In describing the property, the second MLS listing stated in part: "ALL USEABLE
2.62 ACRES COUNTY STATES 1 ACRE MIN. LOT SIZE COULD BE SPLIT." (Italics added.) This listing was placed
by the sellers of the property, Robert and Georgia Uecker (together the Ueckers or Sellers),1 through their
brokers, defendants Russ Clark, David Norberg and PCG&S Group, Inc. (collectively Brokers).
Clark prepared the language, "COUNTY STATES 1 ACRE MIN[IMUM] LOT SIZE COULD BE SPLIT," that was
placed in the second MLS listing. He testified during his deposition that in so doing he had relied on the County of
San Diego (County). Clark indicated that during his telephone conversation with "the County," he asked about the
zoning for the property, and "they" told him the zoning was "RR1," which meant "[r]ural residential one acre per
dwelling," and the property could be split. When asked to identify the person at the County with whom he spoke,
Clark testified he had "[n]o idea" who it was, and he did not know why he did not write down the person's name.
When asked whether that person was a male or female, Clark stated, "I don't recall."
Buyers and Fowler had seen a previous MLS listing of the same property (the first MLS listing) that did not contain
the statement in the second MLS listing that "COUNTY STATES 1 ACRE MIN[IMUM] LOT SIZE COULD BE SPLIT."
During his deposition, Clark stated that as of May 25, 2002─before he obtained the listing─an MLS listing
prepared by a prior listing agent showed that the property had been listed for 347 days. Clark also stated that this
prior MLS listing did not say the property "could be split." 420:25-421:4)!
B. Fowler's Confirming Telephone Call to Clark on Behalf of Buyers
The parties acknowledge that "[s]ubdividing [real property] in rural San Diego County is a heavily regulated
process, requiring the preparation and submission of a parcel map by a professional civil engineer, compliance
with a 'labyrinth' of federal, state, and local regulations, and discretionary approval by a public body."
On June 22, 2002, as a result of the discrepancy in the two MLS listings, Fowler telephoned Clark on behalf of
Buyers to confirm that the property could be split. During that call (the June 22 call), Fowler asked Clark whether
the lot could be split. The Rinears were present during the call and observed Fowler write notes on the two MLS
printouts (copies of the first and second MLS listings) regarding the question of whether the property could be
split. In those notes, Fowler wrote on the copy of the first MLS listing, "The [s]plit has been approved to what extent
need to go to County & see─how far." (Italics added.) On the copy of the second MLS listing that indicated the lot
could be split, Fowler wrote, "Splitable." At the end of her telephone conversation with Clark, Fowler made copies
of her notes and gave them to the Rinears.
What Clark told Fowler during their telephone conversation is in dispute. Rick Rinear testified during his
deposition that Fowler told him that Clark said to her the lot could be split, and this led him (Rick Rinear) to believe
Buyers could build one house per acre. Rick Rinear stated he understood the second MLS listing meant "[t]he
County states the lot could be split."
During her deposition, Fowler testified that although she did not have a specific recollection of Clark telling her the
lot split had been approved, she believed Clark told her during the telephone conversation that the split has been
approved because she would not have written in her notes "The [s]plit has been approved" unless Clark had made
that statement. Fowler indicated Clark had lied to her: "I feel like he . . . lied by omission, by not telling me that . . .
there was only a split potential, that─not that it could be split. That he didn't . . . retract his statement that it could
be split."
In a declaration supporting Brokers' summary judgment motion at issue in this appeal, Clark stated he did not tell
Fowler during her inquiry that a split had been approved or that the property could be split, and he told her only
that "the County" had told him that it could be split. He testified, "At no time did I agree with [Fowler], or any other
person, to represent that the property had been split, or approved for a split, or that it could be split, except to the
extent I repeated in the [second] MLS listing what the County had told me."
When asked whether the issue of "splitability" of the property arose during his telephone conversation with Fowler,
Clark testified, "No, not that I recall." He denied mentioning the words "split" or "splitability" during the
conversation, but acknowledged that Fowler asked him, "Can you build two houses on this property[?]," and he
answered, "[Y]es." Clark also testified he told Fowler that her clients could build two houses on the property
without splitting it, but then changed that testimony and stated: "There was a potential she could do it. Didn't tell
her she could do it. 'You need to go down to the County before you write an offer. And, here, I'll fax you over all
the information,' and I faxed her over all the information, whether it was 52 pages or whatever pages, I had. I faxed
them all to her. She came back some two or three days later with an offer and said, 'My clients are satisfied based
on that information.'" (Italics added.)
C. The California Association of Realtors (CAR) Form Agreement
CAR is an association of licensed realtors and realtor-associates that "develops and publishes standard forms and
publications for use and reference by the real estate industry." (2 Miller & Starr, Cal. Real Estate (3d ed. 2000) §
4:62, pp. 201-202.)
On June 24, 2002, two days after Fowler's June 22 call to Clark, Clark received from Fowler on behalf of Buyers an
offer in the amount of $235,000 to purchase the property. Buyers made the offer in a standard CAR purchase
agreement form titled "Vacant Land Purchase Agreement and Joint Escrow Instructions (and Receipt for Deposit)"
(hereafter the CAR form agreement or the agreement).
Paragraph 7 of the CAR form agreement2 stated that Buyers had the "right" to conduct inspections and
investigations, and strongly advised Buyers to investigate the condition and suitability of all aspects of the
property, as well as all matters affecting the value or desirability of the property, including ordinances affecting the
future development and zoning of the property. Paragraph 7 also indicated that Buyers and Sellers were aware
that Brokers did not guarantee and in no way assumed responsibility for the "condition" of the property.
Paragraph 15 provided that Buyers had 21 days after acceptance of their offer to "complete all inspections,
investigations and review of reports and other applicable information for which [Buyers are] responsible."
Paragraph 26 contained the following integration clause: "All understandings between the parties are
incorporated in this Agreement. Its terms are intended by the parties as a final, complete and exclusive expression
of their Agreement with respect to its subject matter and may not be contradicted by evidence of any prior
agreement or contemporaneous oral agreement." The CAR form agreement also incorporated the following
handwritten term set forth in paragraph 1(C) of Sellers' counter offer No. 1: "Buyer[s] to satisfy themselves to use
of property with warranties or representation to use."
D. Buyers' Investigation: "Property Project Profile," "Zoning Information," and "Notice of Negative Declaration"
During discovery and the summary judgment proceeding at issue here, Buyers admitted that prior to the close of
escrow they received from Clark, and reviewed, what Brokers referred to as a "disclosure package," which
contained a copy of (1) a property project profile sheet, which indicated the existing zoning of the property was
"RR-1" and the minimum lot size was one acre, but also indicated that the general plan designator number of the
property was "24"; (2) a 1999 zoning information sheet prepared by the County's Department of Planning and
Land Use listing the zone use regulations applicable to the property as "RR1" and the lot size as one acre, but
indicating the general plan designation was "24"; and (3) a 1987 notice of negative declaration on the County's
Department of Planning and Land Use letterhead specifying an "RR1 Use Regulation" for the property followed by
the terms "Rural Residential" and "1du/1 acre," but also stating "Valle de Oro Subregional/Comm. Plan" followed
by the terms "(24) Impact Sensitive" and "1 du/4, 8, 20 acres." Buyers also admitted that prior to the close of
escrow, they conducted an investigation of laws and ordinances affecting the potential for splitting the property. In
their summary judgment motion, Brokers asserted that Buyers' admissions established that they (Buyers) had
"investigate[d] the specific representations . . . concern[ing] the ability to get County approval of a lot split."
E. Buyers' Discovery that the Property Could Not Be Split
After the close of escrow, Buyers hired William A. Snipes, a civil engineer, to submit to the County on their behalf
an application for permission to split the property. Snipes reported to Buyers that he had learned from his
research at the County that the property could not be split because of its designation as "(24) Impact Sensitive"
under the County's general plan, which specified a minimum lot size of four acres. Snipes explained to Buyers in a
letter that "[t]he research at the County revealed some unfortunate information. The zoning allows a minimum lot
size of 1.0 acres, but the general plan has a slope dependent lot size criteria and the minimum lot size is 4.0
acres. To subdivide this property both elements have to be met. The property is too small to meet all the
elements. This is the first time I have seen such a discrepancy between the zoning and the general plan."
PROCEDURAL BACKGROUND
In their operative first amended complaint (the complaint), Buyers alleged three counts of deceit against Brokers:
(1) intentional misrepresentation of facts, (2) negligent misrepresentation of facts, and (3) suppression of facts. All
three counts were based on Buyers' allegations that (1) although the property in fact could not be split, Brokers
stated in the second MLS listing "ALL USEABLE 2.62 ACRES COUNTY STATES 1 ACRE MIN. LOT SIZE COULD
BE SPLIT," thereby falsely representing that the property could be split; (2) in reasonable diligence to confirm that
the property could be split, Buyers met with their agent Fowler, showed her the second MLS listing, and caused
her to verify that the property could be split; (3) Fowler responded to Buyers' inquiry by contacting Clark, who
represented that the property could be split and that the split had already been approved; and (4) after her
communication with Clark, Fowler represented to Buyers that the property could be split and was already approved
for splitting. Buyers further alleged in all three fraud counts that they were ignorant of the falsity of Brokers'
representations, they purchased the property in reliance on those false representations, and they would not have
purchased the property had they known the actual facts.
A. Brokers' Summary Judgment Motion and Buyers' Opposition
Brokers filed a motion for summary judgment, asserting two principal arguments: (1) there was no triable issue of
material fact as to representations they made because the declarations of Clark and Norberg established that
Brokers did not make a statement that the property could be split or that a lot split had been approved, and
Fowler's deposition testimony showed that she was told, and then conveyed to Buyers, that the extent to which
there had been an approval of a lot split was not clear and thus there was a need to go to County to investigate
the possibility of getting a lot split; and (2) there was no fraud under any theory because Buyers contractually
assumed the obligation to investigate and verify land use and future development of the property, they admitted
they received and reviewed a disclosure package, they failed to diligently perform an investigation that would have
revealed that splitting the property was inconsistent with the County's ordinance (general plan designator 24)
requiring a minimum of four acres per dwelling unit, and thus they did not justifiably or reasonably rely on the
statements Brokers allegedly made.
In their written opposition, Buyers argued that Brokers undertook the obligation to list and sell the property after it
had been "sitting" on the market for a period "in excess of [300] days" under the first MLS listing. Buyers also
argued there was no dispute that when Brokers undertook this obligation, Brokers had information showing the
property was placed in a "general plan designator" that required a minimum of four acres per dwelling, and thus
the Brokers knew at that time that splitability of the property was "uncertain," yet they changed the MLS listing to
make the property more marketable and desirable by including the statement that it "could be split."
Buyers also asserted Brokers had a duty to investigate whether the statement that the property could be split was
true when they changed the MLS listing. In addition, Buyers asserted that Brokers induced their reliance by
affirming the representation in the second MLS listing by telling Fowler the property was splitable and the lot split
had been approved, and thus triable issues of material fact existed as to "what Brokers knew, what they were told
and by whom, what was said to the Buyers' agent [Fowler], and whether the Buyers justifiably relied on the
representations of Brokers." Buyers further asserted that based on the second MLS listing and the conversation
between Fowler and Clark, they relied on Clark's statements and believed they were buying a property that could
be split, and that the split would be approved.
B. Order Granting Summary Judgment
The court issued a tentative ruling granting Brokers' summary judgment motion on the grounds Buyers
contractually assumed a duty to investigate zoning and land use limits on the future development of the property,
and as a matter of law Buyers could not show they justifiably relied on statements Brokers made in connection with
their listing of the property.
Specifically, the court's tentative ruling stated in part:
"[A] fact-finder in the circumstances of this case could conclude [Brokers'] MLS Listing was a knowing or negligent
misrepresentation when it stated 'ALL USEABLE 2.62 ACRES COUNTY STATES 1 ACRE MIN. LOT SIZE COULD
BE SPLIT.' A fact-finder could conclude [Clark] knowingly or negligently misrepresented the split had been
approved. A fact-finder could also conclude [Buyers] reasonably relied on these misrepresentations and were not
put on notice by the realty profile provided to them or their agent prior to making the first offer to buy. However,
the final contract (Paragraph 7) among the parties and brokers provides that the buyer has been advised to
investigate the property condition including limits placed on the future development and use of the property and
that [Brokers] do not guarantee and in no way assume responsibility for the condition of the property and have not
and will not verify zoning and land use. It also includes the handwritten language adopted in the final contract
'Buyer[s] to satisfy themselves to use of property with warranties or representation to use.' (Counter Offer No. 1.)
This same contract also states 'All understandings between the parties are incorporated in this Agreement. Its
terms are intended by the parties as a final, complete and exclusive expression of their Agreement with respect to
its subject matter and may not be contradicted by evidence of any prior agreement or contemporaneous oral
agreement.' (Paragraph 26.) [¶] [Brokers] have met their initial burden of showing the absence of 'justifiable
reliance', and therefore [Buyers] must make a prima facie showing that a triable issue of material fact exists. The
Court finds, putting the evidence in the light most favorable to [Buyers], that as a matter of law no 'justifiable
reliance' can be shown." (Italics added.)
Following oral arguments on the tentative ruling, the court granted the parties leave to submit supplemental
briefing on the issues of (1) whether a contract provision stating that all representations are contained in the
contract bars an action for fraud, and (2) whether a defrauded party's negligence in investigating the accuracy of
the defendants' representations is a defense to a claim for intentional fraud. The court thereafter confirmed its
tentative ruling and entered summary judgment in favor of Brokers. Buyers appealed.
STANDARD OF REVIEW
On an appeal from a grant of summary judgment, we independently examine the record to determine whether
triable issues of material fact exist. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767.) In performing
our de novo review, we view the evidence in a light favorable to the losing parties (here the Buyers), liberally
construing their evidentiary submission while strictly scrutinizing the prevailing parties' (here the Brokers') own
showing, and resolving any evidentiary doubts or ambiguities in favor of the losing parties. (Id. at pp. 768-769.)
"[T]he part[ies] moving for summary judgment bear[] the burden of persuasion that there is no triable issue of
material fact and that [they are] entitled to judgment as a matter of law." (Aguilar v. Atlantic Richfield Co. (2001) 25
Cal.4th 826, 850, fn. omitted.) "A defendant [moving for summary judgment] bears the burden of persuasion that
'one or more elements of' the 'cause of action' in question 'cannot be established,' or that 'there is a complete
defense' thereto." (Ibid.; Code Civ. Proc., § 437c, subd. (o).) In such a case, the moving defendants "bear[] an
initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material
fact." (Aguilar, supra, 25 Cal.4th at p. 850.)
If the moving defendants meet their burden of production, the burden shifts to the plaintiffs "to make [their own]
prima facie showing of the existence of a triable issue of material fact." (Aguilar v. Atlantic Richfield Co., supra, 25
Cal.4th at p. 850.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable
trier of fact to find the underlying fact in favor of the part[ies] opposing the motion in accordance with the
applicable standard of proof." (Ibid., fn. omitted.)
DISCUSSION
In support of their appeal, Buyers argue the summary judgment granted in favor of Brokers should be reversed
because (1) the integration clause in paragraph 26 of the CAR form agreement at issue in this appeal does not
bar Brokers' liability, (2) paragraph 7 of the agreement provided Buyers with the right, not the duty, to investigate
whether they could split the property; (3) the court erred by holding that the "as is" provisions3 in the agreement
prevented Buyers from justifiably relying on Brokers' misrepresentations that the property could be split and had
already received the County's approval for the split, and (4) there is a triable issue of material fact whether Buyers
acted reasonably. For reasons we shall discuss, we hold that neither the exculpatory clauses contained in the
CAR form agreement, nor Buyers' alleged lack of due diligence in exercising their right to investigate the zoning
and other laws restricting the development and use of the property, bars Buyers' cause of action against Brokers
for intentional misrepresentation as a matter of law.
A. Applicable Legal Principles (Element of Reliance)
In Buyers' complaint, the gravamen of which is the allegation that Brokers deceived and harmed them by falsely
representing both in the second MLS listing and during Fowler's June 22 call to Clark that the property could be
split, Buyers assert a claim for deceit based on intentional misrepresentation of facts.
To establish a claim for deceit based on intentional misrepresentation, the plaintiff must prove seven4 essential
elements: (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation
was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant
made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely
on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7)
the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the
plaintiff. (CACI No. 1900; see Sources and Authority foll. CACI No. 1900, supra, pp. 921-922, citing Civ. Code,5
§§ 1709 & 1710, & Engalla, supra, 15 Cal.4th at p. 974.)
The element of intentional misrepresentation at issue in this appeal is reasonable or justifiable reliance.6 The
California Supreme Court has explained that "[r]eliance exists when the misrepresentation or nondisclosure was an
immediate cause of the plaintiff's conduct which altered his or her legal relations, and when without such
misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the
contract or other transaction. [Citations.] 'Except in the rare case where the undisputed facts leave no room for a
reasonable difference of opinion, the question of whether a plaintiff's reliance is reasonable is a question of fact.'
[Citations.] 'However, whether a party's reliance was justified may be decided as a matter of law if reasonable
minds can come to only one conclusion based on the facts.' [Citation.]" (Alliance, supra, 10 Cal.4th at p. 1239.)
The Alliance court also explained that "'[n]egligence on the part of the plaintiff in failing to discover the falsity of a
statement is no defense when the misrepresentation was intentional rather than negligent.' [Citation.] 'Nor is a
plaintiff held to the standard of precaution or of minimum knowledge of a hypothetical, reasonable man.'
[Citation.] 'If the conduct of the plaintiff in the light of his own intelligence and information was manifestly
unreasonable, however, he will be denied a recovery.' [Citations.]" (Alliance, supra, 10 Cal.4th at pp. 1239-1240,
italics added.)
B. Analysis
1. Exculpatory Clauses
In support of its finding that Buyers could not make a prima facie showing of justifiable reliance as a matter of law,
the court relied on and cited the following exculpatory provisions in the CAR form agreement: (1) the integration
clause set forth in paragraph 26, providing that all understandings between the parties were incorporated in the
agreement; (2) paragraph 7, providing that Buyers had the "right" and were "strongly advised" to investigate the
laws limiting the development and use of the property, Buyers would be acting against Brokers' advice if they did
not exercise that right, Brokers had not and would not verify zoning and land use "unless otherwise agreed in
writing," and Buyers were aware that Brokers did not guarantee or assume responsibility for the "condition" of the
property; and (3) a handwritten term set forth in paragraph 1(C) of the sellers' counter offer, which Buyers
accepted, stating, "Buyer[s] to satisfy themselves to use of property with warranties or representation to use."
The court's finding that these clauses established that Buyers could not show justifiable reliance on Brokers'
alleged intentional misrepresentations as a matter of law was erroneous. Section 1668, which was enacted in
1872, provides: "All contracts which have for their object, directly or indirectly, to exempt anyone from
responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether
willful or negligent, are against the policy of the law." (Italics added.)
It is well-established in California that a party to a contract is precluded under section 1668 from contracting away
his or her liability for fraud or deceit based on intentional misrepresentation. In Simmons v. Ratterree Land Co.
(1932) 217 Cal. 201 (Simmons), the trial court entered a judgment of rescission in favor of a buyer of a subdivided
lot after finding the seller had fraudulently induced the sale by falsely representing to the buyer that the lot was
zoned for business purposes. (Id. at pp. 202, 206.) The seller appealed, relying on contractual provisions to the
effect that the buyer had viewed and investigated the property and did not rely upon any representations of the
seller or its agents except those mentioned in the contract of sale, and that the contract contained all the
representations, promises and statements made by the seller or its agents that had induced the buyer to enter into
the contract. (Id. at p. 203.) Citing section 1668 among other authorities, the California Supreme Court affirmed
the judgment of rescission. (Simmons, supra, 217 Cal. at pp. 204, 209.) The high court explained, "It is settled
beyond doubt, manifestly on sound grounds of justice, that a seller cannot escape liability for his own fraud or
false representations by the insertion of provisions such as are embodied in the contract of sale herein.
[Citations.]" (Id. at p. 204.)
In Smith v. Rickards (1957) 149 Cal.App.2d 648 (Smith), the trial court entered a judgment of rescission of a real
estate purchase contract in favor of the buyers after finding the seller had fraudulently induced the sale by means
of false representations the seller knew were false. (Id. at pp. 649-650.) The seller appealed, claiming the buyers
had disabled themselves from claiming fraud by agreeing to a provision in the contract that stated, "Buyer has
personally examined said property and is familiar with its location and condition and is not relying upon any
representation relating thereto." (Id. at pp. 653-654.) Citing section 1668 and Simmons, supra, 217 Cal. 201, the
Smith court rejected the seller's claim and affirmed the judgment of rescission, stating, "Such provisions have often
been held insufficient to protect a fraudulent vendor from being held responsible for his fraud." (Smith, supra, 149
Cal.App.2d at p. 654.)
More recently, the Court of Appeal in Blankenheim v. E. F. Hutton & Co. (1990) 217 Cal.App.3d 1463, 1471-1472
(Blankenheim) explained that "[u]nder [section 1668], a party may not contract away liability for fraudulent or
intentional acts or for negligent violations of statutory law." (Italics added.)
Citing section 1668 and numerous other authorities, Witkin explains that "[a] party to a contract who has been
guilty of fraud in its inducement cannot absolve himself or herself from the effects of his or her fraud by any
stipulation in the contract, either that no representations have been made, or that any right that might be
grounded upon them is waived. Such a stipulation or waiver will be ignored, and parol evidence of
misrepresentations will be admitted, for the reason that fraud renders the whole agreement voidable, including the
waiver provision. [Citations.]" (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 304, pp. 330-331,
italics added.)
Quoting section 1668, another commentator explains that "'[a]ll contracts which have for their objective, directly or
indirectly, to except anyone from responsibility for his own fraud . . . are against the policy of the law.' A provision
of a contract that unreasonably exempts a party from the legal consequences of a fraudulent . . .
misrepresentation is unenforceable on grounds of public policy. Therefore, . . . a party who has induced the other
party to enter into the contract based on . . . an intentional . . . misrepresentation cannot be relieved of liability by
any . . . exculpatory clause, or other clause waiving liability, contained in the contract. Because the fraud renders
the entire contract voidable, the clause intended to absolve the seller from liability is also voidable." (1 Miller &
Starr, Cal. Real Estate, supra, § 1:153, p. 632, fns. omitted, italics added.)
Here, the CAR form agreement expressly provides at page 9, following paragraph 35, that "Real Estate Brokers
are not parties to the Agreement between Buyer and Seller." (Boldface omitted.) All of the exculpatory clauses at
issue in this appeal are contained in the agreement between Buyers and the sellers, and are not part of any
agreement between Buyers and Brokers.
However, the fact that Brokers were not parties to the agreement between Buyers and the sellers does not
preclude application of section 1668 in this case in which Buyers allege Brokers induced them to enter into the
agreement by means of intentional misrepresentations. The plain language of section 1668 (discussed, ante)
shows that its provisions apply to "[a]ll contracts" the object of which is to directly or indirectly exempt "anyone"
from responsibility for his or her "own fraud."
Brokers implicitly claim the exculpatory clauses in the CAR form agreement exempted them from responsibility for
their alleged acts of intentional misrepresentation as a matter of law. We reject this claim. Assuming without
deciding that Brokers have standing to invoke or rely upon the provisions of those exculpatory clauses as a
defense to Buyers' cause of action for intentional misrepresentation, those provisions must be deemed to be
against the policy of the law within the meaning of section 1668, and are thus unenforceable. (See § 1668;
Simmons, supra, 217 Cal. at p. 204; Smith, supra, 149 Cal.App.2d at pp. 649-650, 654; and Blankenheim, supra,
217 Cal.App.3d at pp. 1471-1472.)
In Ron Greenspan Volkswagen, Inc. v. Ford Motor Land Development Corp. (1995) 32 Cal.App.4th 985, the Court
of Appeal, without citing section 1668, held that a contract clause stating the parties relied only on representations
contained in the contract does not bar, as a matter of law, a claim for intentional misrepresentation. (Ron
Greenspan Volkswagen, Inc., supra, 32 Cal.App.4th at pp. 987, 989, 992-993, citing Simmons, supra, 217 Cal.
201 & other case authorities.)
Applying the foregoing authorities, we conclude the exculpatory clauses in the CAR form agreement cannot and do
not support the trial court's erroneous decision that, as a matter of law, Buyers cannot make a prima facie showing
that they justifiably relied on Brokers' alleged intentional misrepresentations.
2. Buyers' Alleged Failure To Diligently Investigate Brokers' Representations
In a related claim, Brokers also assert on appeal, as they did in their memorandum of points and authorities in
support of their summary judgment motion, that the element of justifiable reliance is negated as a matter of law
because Buyers contractually undertook to, and did, investigate Brokers' representations concerning Buyers'
ability to obtain County approval of a lot split, but failed to diligently perform that investigation, and thus Buyers
must be "charged with all the knowledge [they] might have obtained had [they] pursued the inquiry to the end with
diligence and completeness." Brokers assert the central core of the court's ruling granting summary judgment in
their favor is that Buyers had no legal "right to rely" on Brokers' alleged misrepresentation because the CAR form
agreement assigned to Buyers the duty to investigate the condition of the property. In essence, Brokers assert
that Buyers could not justifiably rely on Brokers' alleged misrepresentations as a matter of law because Buyers
would have discovered through a more diligent investigation that splitting the property was inconsistent with
General Plan Designator 24, a County ordinance requiring a minimum of four acres per dwelling unit.
Brokers' claim is unavailing. It is well established in California that in an action for fraud or deceit, negligence on
the part of the plaintiff in failing to discover the falsity of the defendant's statement is no defense when the
misrepresentation was intentional. (Alliance, supra, 10 Cal.4th at pp. 1239-1240; Seeger v. Odell (1941) 18 Cal.
2d 409, 414; see also 5 Witkin, Summary of Cal. Law, supra, Torts, § 812, p. 1173.) In Seeger, a unanimous
decision of the California Supreme Court, Justice Traynor quoted an out-of-state case for the proposition that "'[n]
o rogue should enjoy his ill-gotten plunder for the simple reason that his victim is by chance a fool.' [Citation.]"
(Seeger, supra, 18 Cal.2d at p. 415.) The Seeger court also stated, "The fact that an investigation would have
revealed the falsity of the misrepresentation will not alone bar [the plaintiff's] recovery [citations], and it is well
established that he is not held to constructive notice of a public record which would reveal the true facts.
[Citations]." (Id. at pp. 414-415.)
Also, Brokers' claim is based on the false premise that Buyers contractually undertook to investigate Brokers'
representations concerning Buyers' ability to obtain County approval of a lot split. It is a well-settled principle of
contract interpretation that the language of a contract governs its interpretation if the language is clear and not
absurd. (§ 1638 ["[t]he language of a contract is to govern its interpretation, if the language is clear and explicit,
and does not involve an absurdity"]; 1 Witkin, Summary of Cal. Law, supra, Contracts, § 741, p. 827 ["[w]here the
language of a contract is clear and not absurd, it will be followed"] & case authorities cited therein.)
Here, the plain, unambiguous language of paragraph 7 of the CAR form agreement shows as a matter of law that
the agreement did not impose on Buyers a contractual duty to investigate whether the property could be split.
Paragraph 7 clearly states in part that (1) Buyers had the "right" to conduct investigations; and (2) Buyers were
"strongly advised" to investigate the "condition and suitability" of "all aspects" of the property and "all matters
affecting the value or desirability of the property," including ordinances affecting the future development and
zoning of the property, and they would be "acting against the advice" of Brokers if they "[did] not exercise these
rights." (Italics added.) Thus, paragraph 7 conferred upon Buyers the contractual right, not the contractual
obligation, to conduct such an investigation.
Brokers rely on Bank of America Nat. Trust & Sav. Ass'n v. Vannini (1956) 140 Cal.App.2d 120 (Vannini) for the
proposition that "when the duty to investigate is contractually assigned to the purchaser of real property, the
purchaser is precluded from later suing the seller for fraud because the purchaser has, as a matter of law, no legal
'right to rely' on any alleged material misrepresentations by the seller that predate the contract." (Italics added.)
Brokers' reliance on Vannini is misplaced. That case involved the purchase and sale of an abandoned gold mine
in which the purchasers entered into an option agreement to buy the mine, but expressly and specifically agreed to
investigate the property before exercising the option by clearing water and debris out of the mine and, at their
election, digging an exploratory tunnel within a specified period of time from the date of the agreement. (Vannini,
supra, 140 Cal.App.2d at pp. 122-123, 128, 130-131.) The purchasers did not clear the mine and complete the
investigation within the period specified in the agreement. (Id. at p. 132.) Years later, after exercising the option
to buy the mine, the purchasers discovered the falsity of the sellers' representation that ore in commercial
quantities existed in the mine. (Ibid.)
The sellers in Vannini brought an action against the purchasers to recover money they allegedly owed the sellers
under the option agreement, and the purchasers filed an amended answer and cross-complaint, both of which
were predicated on the theory that the sellers had fraudulently induced them to enter into the agreement.
(Vannini, supra, 140 Cal.App.2d. at pp. 124, 132.) The trial court sustained the sellers' demurrers to the
purchasers' amended answer and cross-complaint without leave to amend and entered judgment in favor of the
sellers. (Id. at p. 124.)
The Vannini court addressed the issue of whether the trial court properly sustained without leave to amend the
sellers' demurrer to the purchasers' amended answer, which (like the purchasers' cross-complaint) was based on
an allegation that the sellers had induced them to enter into the option agreement by means of an intentional
misrepresentation. (Vannini, supra, 140 Cal.App.2d at pp. 125-126, 130.) Noting that under the pleaded facts the
purchasers had obligated themselves under the option agreement to clear the mine and investigate the property
within 17 months of the date of the option agreement (id. at pp. 130, 132), the Court of Appeal stated that "the real
question [was] not whether [the purchasers] relied on the false representations, but whether they had the legal
right to rely upon them." (Id. at p. 131, italics added.) The court concluded that the purchasers' express
agreement to conduct their own investigation "amounted to an agreement [they] were not to rely on the
representations made by [the sellers], but were to rely on their own investigation." (Ibid.) The Vannini court held,
"as a matter of law, that [the purchasers] had no legal right to rely on the false representations at the time that
they exercised the option," and thus the trial court had properly sustained the demurrer to the purchasers'
amended answer. (Id. at p. 132, italics added.) The court reasoned that if the purchasers had performed their
contractual duty to clear the mine and investigate the property, "they would have gained full knowledge of the
falsity of the representations made to induce the contract." (Ibid.)
Vannini is factually and legally distinguishable. There, as already discussed, the purchasers expressly agreed to
clear the gold mine and investigate the property within a specified period of time before they exercised the option
agreement. Here, however, Buyers entered into a purchase agreement, not an option agreement, under which
they acquired the contractual right, not the contractual obligation, to investigate the condition of the property,
including whether they could obtain County approval to split the property into two parcels. Vannini is therefore
inapposite.
3. Buyers' Prima Facie Showing of Justifiable Reliance
Brokers do not challenge the court's express findings that (1) "[a] fact-finder could conclude [Brokers] knowingly . .
. misrepresented the split had been approved," and (2) "[a] fact-finder could also conclude [Buyers] reasonably
relied on these misrepresentations and were not put on notice by the realty profile provided to them or their agent
prior to making the first offer to buy." (Italics added.) Rather, their principal contentions are (1) the court "did not
commit error by ruling on the issue of 'justifiable reliance' as a matter of law" because the CAR form agreement
"assigned the duty to investigate the condition of the property to Buyers"; and (2) Buyers "admitted that they
conducted an investigation of the laws and ordinances affecting the potential for splitting the . . . property prior to
close of escrow," and thus they must be "charged with all the knowledge that [they] might have obtained had [they]
pursued the inquiry to the end with diligence and completeness."
Viewing the evidence in a light favorable to the losing parties (here, Buyers), liberally construing their evidentiary
submission while strictly scrutinizing the prevailing parties' (here, Brokers') own showing, and resolving any
evidentiary doubts or ambiguities in favor of the losing parties, as we must (Saelzler v. Advanced Group 400,
supra, 25 Cal.4th at pp. 768-769), we conclude the record demonstrates that Buyers met their burden of making a
prima facie showing that there are triable issues of material fact (1) whether Brokers intentionally misrepresented
that, according to County, the property could be split and the split had been approved; and (2) whether Buyers
justifiably relied on Brokers' alleged intentional misrepresentations. As discussed more fully in the factual
background, ante, the parties dispute what Clark told Fowler during their June 22 telephone
conversation, as shown by the deposition testimony of Rick Rinear, Fowler and Clark, and
Clark's declaration in support of Brokers' summary judgment motion. The issues of whether
Brokers intentionally misrepresented that the County had stated the property could be split and the split had been
approved, and whether Buyers' reliance on Brokers' statements was reasonable under all of the circumstances,
are questions of material fact that must be decided by the trier of fact.
DISPOSITION
The judgment is reversed and the matter is remanded for further proceedings.
Buyers shall recover their costs on appeal.
CERTIFIED FOR PUBLICATION
NARES, J.
WE CONCUR:
BENKE, Acting P. J.
HALLER, J.
Filed 1/24/07
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ANNE MANDERVILLE et al.,
Plaintiffs and Appellants,
v.
PCG&S GROUP, INC. et al.,
Defendants and Respondents.
D047285
(Super. Ct. No. GIE19680)
APPEAL from a judgment of the Superior Court of San Diego County, Lillian Y. Lim, Judge. Reversed and
remanded.
Stutz Artiano Shinoff & Holtz, Daniel R. Shinoff and Paul V. Carelli IV for Plaintiffs and
Appellants.
Asaro, Keagy, Freeland & McKinley, Steven A. McKinley and Charles F. Campbell for Defendants and
Respondents.
Do exculpatory clauses in standardized forms used in the purchase and sale of real estate bar
a claim for intentional misrepresentation brought by buyers of real property against the
sellers' brokers alleging the brokers intentionally misrepresented the property could be
subdivided, on the ground the buyers cannot show justifiable reliance as a matter of law? We conclude such
exculpatory clauses do not preclude, as a matter of law, the buyers' showing of justifiable reliance, and thus, for
purposes of the summary judgment proceeding at issue in this appeal, they do not bar the buyers' claim for
intentional misrepresentation against the brokers.
We further conclude that any lack of due diligence by the buyers in conducting an
investigation of the zoning and other laws restricting the development and use of the property
also does not preclude, as a matter of law, the buyers' showing of justifiable reliance as an
element of their claim for intentional misrepresentation. Therefore, we reverse the court's
grant of summary judgment in favor of the brokers on the buyers' claim for intentional
misrepresentation. Because the brokers did not seek summary adjudication of the buyers' remaining claims
for negligent misrepresentation and suppression of facts, we need not decide whether those claims are barred by
the exculpatory clauses and the buyers' alleged lack of investigatory due diligence.
FACTUAL BACKGROUND
This action for deceit arose out of the purchase and sale of a parcel of land located
in the City of El Cajon in San Diego County. The buyers were plaintiffs Anne and William
Manderville (together the Mandervilles), and coplaintiffs Roseann and Rick Rinear (together
the Rinears) (collectively Buyers). The Mandervilles are the parents of Roseann Rinear. The
two couples intended to subdivide the property and build adjacent homes on the subdivided
property.
A. The Two MLS Listings
During their search for a suitable property they could subdivide into two lots, Buyers, through their agent Marilyn
Fowler, found a multiple listing service (MLS) advertisement (the second MLS listing) for a property located in El
Cajon, California (the property). In describing the property, the second MLS listing stated in part: "ALL USEABLE
2.62 ACRES COUNTY STATES 1 ACRE MIN. LOT SIZE COULD BE SPLIT." (Italics added.) This listing was placed
by the sellers of the property, Robert and Georgia Uecker (together the Ueckers or Sellers),1 through their
brokers, defendants Russ Clark, David Norberg and PCG&S Group, Inc. (collectively Brokers).
Clark prepared the language, "COUNTY STATES 1 ACRE MIN[IMUM] LOT SIZE COULD BE SPLIT," that was
placed in the second MLS listing. He testified during his deposition that in so doing he had relied on the County of
San Diego (County). Clark indicated that during his telephone conversation with "the County," he asked about the
zoning for the property, and "they" told him the zoning was "RR1," which meant "[r]ural residential one acre per
dwelling," and the property could be split. When asked to identify the person at the County with whom he spoke,
Clark testified he had "[n]o idea" who it was, and he did not know why he did not write down the person's name.
When asked whether that person was a male or female, Clark stated, "I don't recall."
Buyers and Fowler had seen a previous MLS listing of the same property (the first MLS listing) that did not contain
the statement in the second MLS listing that "COUNTY STATES 1 ACRE MIN[IMUM] LOT SIZE COULD BE SPLIT."
During his deposition, Clark stated that as of May 25, 2002─before he obtained the listing─an MLS listing
prepared by a prior listing agent showed that the property had been listed for 347 days. Clark also stated that this
prior MLS listing did not say the property "could be split." 420:25-421:4)!
B. Fowler's Confirming Telephone Call to Clark on Behalf of Buyers
The parties acknowledge that "[s]ubdividing [real property] in rural San Diego County is a heavily regulated
process, requiring the preparation and submission of a parcel map by a professional civil engineer, compliance
with a 'labyrinth' of federal, state, and local regulations, and discretionary approval by a public body."
On June 22, 2002, as a result of the discrepancy in the two MLS listings, Fowler telephoned Clark on behalf of
Buyers to confirm that the property could be split. During that call (the June 22 call), Fowler asked Clark whether
the lot could be split. The Rinears were present during the call and observed Fowler write notes on the two MLS
printouts (copies of the first and second MLS listings) regarding the question of whether the property could be
split. In those notes, Fowler wrote on the copy of the first MLS listing, "The [s]plit has been approved to what extent
need to go to County & see─how far." (Italics added.) On the copy of the second MLS listing that indicated the lot
could be split, Fowler wrote, "Splitable." At the end of her telephone conversation with Clark, Fowler made copies
of her notes and gave them to the Rinears.
What Clark told Fowler during their telephone conversation is in dispute. Rick Rinear testified during his
deposition that Fowler told him that Clark said to her the lot could be split, and this led him (Rick Rinear) to believe
Buyers could build one house per acre. Rick Rinear stated he understood the second MLS listing meant "[t]he
County states the lot could be split."
During her deposition, Fowler testified that although she did not have a specific recollection of Clark telling her the
lot split had been approved, she believed Clark told her during the telephone conversation that the split has been
approved because she would not have written in her notes "The [s]plit has been approved" unless Clark had made
that statement. Fowler indicated Clark had lied to her: "I feel like he . . . lied by omission, by not telling me that . . .
there was only a split potential, that─not that it could be split. That he didn't . . . retract his statement that it could
be split."
In a declaration supporting Brokers' summary judgment motion at issue in this appeal, Clark stated he did not tell
Fowler during her inquiry that a split had been approved or that the property could be split, and he told her only
that "the County" had told him that it could be split. He testified, "At no time did I agree with [Fowler], or any other
person, to represent that the property had been split, or approved for a split, or that it could be split, except to the
extent I repeated in the [second] MLS listing what the County had told me."
When asked whether the issue of "splitability" of the property arose during his telephone conversation with Fowler,
Clark testified, "No, not that I recall." He denied mentioning the words "split" or "splitability" during the
conversation, but acknowledged that Fowler asked him, "Can you build two houses on this property[?]," and he
answered, "[Y]es." Clark also testified he told Fowler that her clients could build two houses on the property
without splitting it, but then changed that testimony and stated: "There was a potential she could do it. Didn't tell
her she could do it. 'You need to go down to the County before you write an offer. And, here, I'll fax you over all
the information,' and I faxed her over all the information, whether it was 52 pages or whatever pages, I had. I faxed
them all to her. She came back some two or three days later with an offer and said, 'My clients are satisfied based
on that information.'" (Italics added.)
C. The California Association of Realtors (CAR) Form Agreement
CAR is an association of licensed realtors and realtor-associates that "develops and publishes standard forms and
publications for use and reference by the real estate industry." (2 Miller & Starr, Cal. Real Estate (3d ed. 2000) §
4:62, pp. 201-202.)
On June 24, 2002, two days after Fowler's June 22 call to Clark, Clark received from Fowler on behalf of Buyers an
offer in the amount of $235,000 to purchase the property. Buyers made the offer in a standard CAR purchase
agreement form titled "Vacant Land Purchase Agreement and Joint Escrow Instructions (and Receipt for Deposit)"
(hereafter the CAR form agreement or the agreement).
Paragraph 7 of the CAR form agreement2 stated that Buyers had the "right" to conduct inspections and
investigations, and strongly advised Buyers to investigate the condition and suitability of all aspects of the
property, as well as all matters affecting the value or desirability of the property, including ordinances affecting the
future development and zoning of the property. Paragraph 7 also indicated that Buyers and Sellers were aware
that Brokers did not guarantee and in no way assumed responsibility for the "condition" of the property.
Paragraph 15 provided that Buyers had 21 days after acceptance of their offer to "complete all inspections,
investigations and review of reports and other applicable information for which [Buyers are] responsible."
Paragraph 26 contained the following integration clause: "All understandings between the parties are
incorporated in this Agreement. Its terms are intended by the parties as a final, complete and exclusive expression
of their Agreement with respect to its subject matter and may not be contradicted by evidence of any prior
agreement or contemporaneous oral agreement." The CAR form agreement also incorporated the following
handwritten term set forth in paragraph 1(C) of Sellers' counter offer No. 1: "Buyer[s] to satisfy themselves to use
of property with warranties or representation to use."
D. Buyers' Investigation: "Property Project Profile," "Zoning Information," and "Notice of Negative Declaration"
During discovery and the summary judgment proceeding at issue here, Buyers admitted that prior to the close of
escrow they received from Clark, and reviewed, what Brokers referred to as a "disclosure package," which
contained a copy of (1) a property project profile sheet, which indicated the existing zoning of the property was
"RR-1" and the minimum lot size was one acre, but also indicated that the general plan designator number of the
property was "24"; (2) a 1999 zoning information sheet prepared by the County's Department of Planning and
Land Use listing the zone use regulations applicable to the property as "RR1" and the lot size as one acre, but
indicating the general plan designation was "24"; and (3) a 1987 notice of negative declaration on the County's
Department of Planning and Land Use letterhead specifying an "RR1 Use Regulation" for the property followed by
the terms "Rural Residential" and "1du/1 acre," but also stating "Valle de Oro Subregional/Comm. Plan" followed
by the terms "(24) Impact Sensitive" and "1 du/4, 8, 20 acres." Buyers also admitted that prior to the close of
escrow, they conducted an investigation of laws and ordinances affecting the potential for splitting the property. In
their summary judgment motion, Brokers asserted that Buyers' admissions established that they (Buyers) had
"investigate[d] the specific representations . . . concern[ing] the ability to get County approval of a lot split."
E. Buyers' Discovery that the Property Could Not Be Split
After the close of escrow, Buyers hired William A. Snipes, a civil engineer, to submit to the County on their behalf
an application for permission to split the property. Snipes reported to Buyers that he had learned from his
research at the County that the property could not be split because of its designation as "(24) Impact Sensitive"
under the County's general plan, which specified a minimum lot size of four acres. Snipes explained to Buyers in a
letter that "[t]he research at the County revealed some unfortunate information. The zoning allows a minimum lot
size of 1.0 acres, but the general plan has a slope dependent lot size criteria and the minimum lot size is 4.0
acres. To subdivide this property both elements have to be met. The property is too small to meet all the
elements. This is the first time I have seen such a discrepancy between the zoning and the general plan."
PROCEDURAL BACKGROUND
In their operative first amended complaint (the complaint), Buyers alleged three counts of deceit against Brokers:
(1) intentional misrepresentation of facts, (2) negligent misrepresentation of facts, and (3) suppression of facts. All
three counts were based on Buyers' allegations that (1) although the property in fact could not be split, Brokers
stated in the second MLS listing "ALL USEABLE 2.62 ACRES COUNTY STATES 1 ACRE MIN. LOT SIZE COULD
BE SPLIT," thereby falsely representing that the property could be split; (2) in reasonable diligence to confirm that
the property could be split, Buyers met with their agent Fowler, showed her the second MLS listing, and caused
her to verify that the property could be split; (3) Fowler responded to Buyers' inquiry by contacting Clark, who
represented that the property could be split and that the split had already been approved; and (4) after her
communication with Clark, Fowler represented to Buyers that the property could be split and was already approved
for splitting. Buyers further alleged in all three fraud counts that they were ignorant of the falsity of Brokers'
representations, they purchased the property in reliance on those false representations, and they would not have
purchased the property had they known the actual facts.
A. Brokers' Summary Judgment Motion and Buyers' Opposition
Brokers filed a motion for summary judgment, asserting two principal arguments: (1) there was no triable issue of
material fact as to representations they made because the declarations of Clark and Norberg established that
Brokers did not make a statement that the property could be split or that a lot split had been approved, and
Fowler's deposition testimony showed that she was told, and then conveyed to Buyers, that the extent to which
there had been an approval of a lot split was not clear and thus there was a need to go to County to investigate
the possibility of getting a lot split; and (2) there was no fraud under any theory because Buyers contractually
assumed the obligation to investigate and verify land use and future development of the property, they admitted
they received and reviewed a disclosure package, they failed to diligently perform an investigation that would have
revealed that splitting the property was inconsistent with the County's ordinance (general plan designator 24)
requiring a minimum of four acres per dwelling unit, and thus they did not justifiably or reasonably rely on the
statements Brokers allegedly made.
In their written opposition, Buyers argued that Brokers undertook the obligation to list and sell the property after it
had been "sitting" on the market for a period "in excess of [300] days" under the first MLS listing. Buyers also
argued there was no dispute that when Brokers undertook this obligation, Brokers had information showing the
property was placed in a "general plan designator" that required a minimum of four acres per dwelling, and thus
the Brokers knew at that time that splitability of the property was "uncertain," yet they changed the MLS listing to
make the property more marketable and desirable by including the statement that it "could be split."
Buyers also asserted Brokers had a duty to investigate whether the statement that the property could be split was
true when they changed the MLS listing. In addition, Buyers asserted that Brokers induced their reliance by
affirming the representation in the second MLS listing by telling Fowler the property was splitable and the lot split
had been approved, and thus triable issues of material fact existed as to "what Brokers knew, what they were told
and by whom, what was said to the Buyers' agent [Fowler], and whether the Buyers justifiably relied on the
representations of Brokers." Buyers further asserted that based on the second MLS listing and the conversation
between Fowler and Clark, they relied on Clark's statements and believed they were buying a property that could
be split, and that the split would be approved.
B. Order Granting Summary Judgment
The court issued a tentative ruling granting Brokers' summary judgment motion on the grounds Buyers
contractually assumed a duty to investigate zoning and land use limits on the future development of the property,
and as a matter of law Buyers could not show they justifiably relied on statements Brokers made in connection with
their listing of the property.
Specifically, the court's tentative ruling stated in part:
"[A] fact-finder in the circumstances of this case could conclude [Brokers'] MLS Listing was a knowing or negligent
misrepresentation when it stated 'ALL USEABLE 2.62 ACRES COUNTY STATES 1 ACRE MIN. LOT SIZE COULD
BE SPLIT.' A fact-finder could conclude [Clark] knowingly or negligently misrepresented the split had been
approved. A fact-finder could also conclude [Buyers] reasonably relied on these misrepresentations and were not
put on notice by the realty profile provided to them or their agent prior to making the first offer to buy. However,
the final contract (Paragraph 7) among the parties and brokers provides that the buyer has been advised to
investigate the property condition including limits placed on the future development and use of the property and
that [Brokers] do not guarantee and in no way assume responsibility for the condition of the property and have not
and will not verify zoning and land use. It also includes the handwritten language adopted in the final contract
'Buyer[s] to satisfy themselves to use of property with warranties or representation to use.' (Counter Offer No. 1.)
This same contract also states 'All understandings between the parties are incorporated in this Agreement. Its
terms are intended by the parties as a final, complete and exclusive expression of their Agreement with respect to
its subject matter and may not be contradicted by evidence of any prior agreement or contemporaneous oral
agreement.' (Paragraph 26.) [¶] [Brokers] have met their initial burden of showing the absence of 'justifiable
reliance', and therefore [Buyers] must make a prima facie showing that a triable issue of material fact exists. The
Court finds, putting the evidence in the light most favorable to [Buyers], that as a matter of law no 'justifiable
reliance' can be shown." (Italics added.)
Following oral arguments on the tentative ruling, the court granted the parties leave to submit supplemental
briefing on the issues of (1) whether a contract provision stating that all representations are contained in the
contract bars an action for fraud, and (2) whether a defrauded party's negligence in investigating the accuracy of
the defendants' representations is a defense to a claim for intentional fraud. The court thereafter confirmed its
tentative ruling and entered summary judgment in favor of Brokers. Buyers appealed.
STANDARD OF REVIEW
On an appeal from a grant of summary judgment, we independently examine the record to determine whether
triable issues of material fact exist. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767.) In performing
our de novo review, we view the evidence in a light favorable to the losing parties (here the Buyers), liberally
construing their evidentiary submission while strictly scrutinizing the prevailing parties' (here the Brokers') own
showing, and resolving any evidentiary doubts or ambiguities in favor of the losing parties. (Id. at pp. 768-769.)
"[T]he part[ies] moving for summary judgment bear[] the burden of persuasion that there is no triable issue of
material fact and that [they are] entitled to judgment as a matter of law." (Aguilar v. Atlantic Richfield Co. (2001) 25
Cal.4th 826, 850, fn. omitted.) "A defendant [moving for summary judgment] bears the burden of persuasion that
'one or more elements of' the 'cause of action' in question 'cannot be established,' or that 'there is a complete
defense' thereto." (Ibid.; Code Civ. Proc., § 437c, subd. (o).) In such a case, the moving defendants "bear[] an
initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material
fact." (Aguilar, supra, 25 Cal.4th at p. 850.)
If the moving defendants meet their burden of production, the burden shifts to the plaintiffs "to make [their own]
prima facie showing of the existence of a triable issue of material fact." (Aguilar v. Atlantic Richfield Co., supra, 25
Cal.4th at p. 850.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable
trier of fact to find the underlying fact in favor of the part[ies] opposing the motion in accordance with the
applicable standard of proof." (Ibid., fn. omitted.)
DISCUSSION
In support of their appeal, Buyers argue the summary judgment granted in favor of Brokers should be reversed
because (1) the integration clause in paragraph 26 of the CAR form agreement at issue in this appeal does not
bar Brokers' liability, (2) paragraph 7 of the agreement provided Buyers with the right, not the duty, to investigate
whether they could split the property; (3) the court erred by holding that the "as is" provisions3 in the agreement
prevented Buyers from justifiably relying on Brokers' misrepresentations that the property could be split and had
already received the County's approval for the split, and (4) there is a triable issue of material fact whether Buyers
acted reasonably. For reasons we shall discuss, we hold that neither the exculpatory clauses contained in the
CAR form agreement, nor Buyers' alleged lack of due diligence in exercising their right to investigate the zoning
and other laws restricting the development and use of the property, bars Buyers' cause of action against Brokers
for intentional misrepresentation as a matter of law.
A. Applicable Legal Principles (Element of Reliance)
In Buyers' complaint, the gravamen of which is the allegation that Brokers deceived and harmed them by falsely
representing both in the second MLS listing and during Fowler's June 22 call to Clark that the property could be
split, Buyers assert a claim for deceit based on intentional misrepresentation of facts.
To establish a claim for deceit based on intentional misrepresentation, the plaintiff must prove seven4 essential
elements: (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation
was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant
made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely
on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7)
the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the
plaintiff. (CACI No. 1900; see Sources and Authority foll. CACI No. 1900, supra, pp. 921-922, citing Civ. Code,5
§§ 1709 & 1710, & Engalla, supra, 15 Cal.4th at p. 974.)
The element of intentional misrepresentation at issue in this appeal is reasonable or justifiable reliance.6 The
California Supreme Court has explained that "[r]eliance exists when the misrepresentation or nondisclosure was an
immediate cause of the plaintiff's conduct which altered his or her legal relations, and when without such
misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the
contract or other transaction. [Citations.] 'Except in the rare case where the undisputed facts leave no room for a
reasonable difference of opinion, the question of whether a plaintiff's reliance is reasonable is a question of fact.'
[Citations.] 'However, whether a party's reliance was justified may be decided as a matter of law if reasonable
minds can come to only one conclusion based on the facts.' [Citation.]" (Alliance, supra, 10 Cal.4th at p. 1239.)
The Alliance court also explained that "'[n]egligence on the part of the plaintiff in failing to discover the falsity of a
statement is no defense when the misrepresentation was intentional rather than negligent.' [Citation.] 'Nor is a
plaintiff held to the standard of precaution or of minimum knowledge of a hypothetical, reasonable man.'
[Citation.] 'If the conduct of the plaintiff in the light of his own intelligence and information was manifestly
unreasonable, however, he will be denied a recovery.' [Citations.]" (Alliance, supra, 10 Cal.4th at pp. 1239-1240,
italics added.)
B. Analysis
1. Exculpatory Clauses
In support of its finding that Buyers could not make a prima facie showing of justifiable reliance as a matter of law,
the court relied on and cited the following exculpatory provisions in the CAR form agreement: (1) the integration
clause set forth in paragraph 26, providing that all understandings between the parties were incorporated in the
agreement; (2) paragraph 7, providing that Buyers had the "right" and were "strongly advised" to investigate the
laws limiting the development and use of the property, Buyers would be acting against Brokers' advice if they did
not exercise that right, Brokers had not and would not verify zoning and land use "unless otherwise agreed in
writing," and Buyers were aware that Brokers did not guarantee or assume responsibility for the "condition" of the
property; and (3) a handwritten term set forth in paragraph 1(C) of the sellers' counter offer, which Buyers
accepted, stating, "Buyer[s] to satisfy themselves to use of property with warranties or representation to use."
The court's finding that these clauses established that Buyers could not show justifiable reliance on Brokers'
alleged intentional misrepresentations as a matter of law was erroneous. Section 1668, which was enacted in
1872, provides: "All contracts which have for their object, directly or indirectly, to exempt anyone from
responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether
willful or negligent, are against the policy of the law." (Italics added.)
It is well-established in California that a party to a contract is precluded under section 1668 from contracting away
his or her liability for fraud or deceit based on intentional misrepresentation. In Simmons v. Ratterree Land Co.
(1932) 217 Cal. 201 (Simmons), the trial court entered a judgment of rescission in favor of a buyer of a subdivided
lot after finding the seller had fraudulently induced the sale by falsely representing to the buyer that the lot was
zoned for business purposes. (Id. at pp. 202, 206.) The seller appealed, relying on contractual provisions to the
effect that the buyer had viewed and investigated the property and did not rely upon any representations of the
seller or its agents except those mentioned in the contract of sale, and that the contract contained all the
representations, promises and statements made by the seller or its agents that had induced the buyer to enter into
the contract. (Id. at p. 203.) Citing section 1668 among other authorities, the California Supreme Court affirmed
the judgment of rescission. (Simmons, supra, 217 Cal. at pp. 204, 209.) The high court explained, "It is settled
beyond doubt, manifestly on sound grounds of justice, that a seller cannot escape liability for his own fraud or
false representations by the insertion of provisions such as are embodied in the contract of sale herein.
[Citations.]" (Id. at p. 204.)
In Smith v. Rickards (1957) 149 Cal.App.2d 648 (Smith), the trial court entered a judgment of rescission of a real
estate purchase contract in favor of the buyers after finding the seller had fraudulently induced the sale by means
of false representations the seller knew were false. (Id. at pp. 649-650.) The seller appealed, claiming the buyers
had disabled themselves from claiming fraud by agreeing to a provision in the contract that stated, "Buyer has
personally examined said property and is familiar with its location and condition and is not relying upon any
representation relating thereto." (Id. at pp. 653-654.) Citing section 1668 and Simmons, supra, 217 Cal. 201, the
Smith court rejected the seller's claim and affirmed the judgment of rescission, stating, "Such provisions have often
been held insufficient to protect a fraudulent vendor from being held responsible for his fraud." (Smith, supra, 149
Cal.App.2d at p. 654.)
More recently, the Court of Appeal in Blankenheim v. E. F. Hutton & Co. (1990) 217 Cal.App.3d 1463, 1471-1472
(Blankenheim) explained that "[u]nder [section 1668], a party may not contract away liability for fraudulent or
intentional acts or for negligent violations of statutory law." (Italics added.)
Citing section 1668 and numerous other authorities, Witkin explains that "[a] party to a contract who has been
guilty of fraud in its inducement cannot absolve himself or herself from the effects of his or her fraud by any
stipulation in the contract, either that no representations have been made, or that any right that might be
grounded upon them is waived. Such a stipulation or waiver will be ignored, and parol evidence of
misrepresentations will be admitted, for the reason that fraud renders the whole agreement voidable, including the
waiver provision. [Citations.]" (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 304, pp. 330-331,
italics added.)
Quoting section 1668, another commentator explains that "'[a]ll contracts which have for their objective, directly or
indirectly, to except anyone from responsibility for his own fraud . . . are against the policy of the law.' A provision
of a contract that unreasonably exempts a party from the legal consequences of a fraudulent . . .
misrepresentation is unenforceable on grounds of public policy. Therefore, . . . a party who has induced the other
party to enter into the contract based on . . . an intentional . . . misrepresentation cannot be relieved of liability by
any . . . exculpatory clause, or other clause waiving liability, contained in the contract. Because the fraud renders
the entire contract voidable, the clause intended to absolve the seller from liability is also voidable." (1 Miller &
Starr, Cal. Real Estate, supra, § 1:153, p. 632, fns. omitted, italics added.)
Here, the CAR form agreement expressly provides at page 9, following paragraph 35, that "Real Estate Brokers
are not parties to the Agreement between Buyer and Seller." (Boldface omitted.) All of the exculpatory clauses at
issue in this appeal are contained in the agreement between Buyers and the sellers, and are not part of any
agreement between Buyers and Brokers.
However, the fact that Brokers were not parties to the agreement between Buyers and the sellers does not
preclude application of section 1668 in this case in which Buyers allege Brokers induced them to enter into the
agreement by means of intentional misrepresentations. The plain language of section 1668 (discussed, ante)
shows that its provisions apply to "[a]ll contracts" the object of which is to directly or indirectly exempt "anyone"
from responsibility for his or her "own fraud."
Brokers implicitly claim the exculpatory clauses in the CAR form agreement exempted them from responsibility for
their alleged acts of intentional misrepresentation as a matter of law. We reject this claim. Assuming without
deciding that Brokers have standing to invoke or rely upon the provisions of those exculpatory clauses as a
defense to Buyers' cause of action for intentional misrepresentation, those provisions must be deemed to be
against the policy of the law within the meaning of section 1668, and are thus unenforceable. (See § 1668;
Simmons, supra, 217 Cal. at p. 204; Smith, supra, 149 Cal.App.2d at pp. 649-650, 654; and Blankenheim, supra,
217 Cal.App.3d at pp. 1471-1472.)
In Ron Greenspan Volkswagen, Inc. v. Ford Motor Land Development Corp. (1995) 32 Cal.App.4th 985, the Court
of Appeal, without citing section 1668, held that a contract clause stating the parties relied only on representations
contained in the contract does not bar, as a matter of law, a claim for intentional misrepresentation. (Ron
Greenspan Volkswagen, Inc., supra, 32 Cal.App.4th at pp. 987, 989, 992-993, citing Simmons, supra, 217 Cal.
201 & other case authorities.)
Applying the foregoing authorities, we conclude the exculpatory clauses in the CAR form agreement cannot and do
not support the trial court's erroneous decision that, as a matter of law, Buyers cannot make a prima facie showing
that they justifiably relied on Brokers' alleged intentional misrepresentations.
2. Buyers' Alleged Failure To Diligently Investigate Brokers' Representations
In a related claim, Brokers also assert on appeal, as they did in their memorandum of points and authorities in
support of their summary judgment motion, that the element of justifiable reliance is negated as a matter of law
because Buyers contractually undertook to, and did, investigate Brokers' representations concerning Buyers'
ability to obtain County approval of a lot split, but failed to diligently perform that investigation, and thus Buyers
must be "charged with all the knowledge [they] might have obtained had [they] pursued the inquiry to the end with
diligence and completeness." Brokers assert the central core of the court's ruling granting summary judgment in
their favor is that Buyers had no legal "right to rely" on Brokers' alleged misrepresentation because the CAR form
agreement assigned to Buyers the duty to investigate the condition of the property. In essence, Brokers assert
that Buyers could not justifiably rely on Brokers' alleged misrepresentations as a matter of law because Buyers
would have discovered through a more diligent investigation that splitting the property was inconsistent with
General Plan Designator 24, a County ordinance requiring a minimum of four acres per dwelling unit.
Brokers' claim is unavailing. It is well established in California that in an action for fraud or deceit, negligence on
the part of the plaintiff in failing to discover the falsity of the defendant's statement is no defense when the
misrepresentation was intentional. (Alliance, supra, 10 Cal.4th at pp. 1239-1240; Seeger v. Odell (1941) 18 Cal.
2d 409, 414; see also 5 Witkin, Summary of Cal. Law, supra, Torts, § 812, p. 1173.) In Seeger, a unanimous
decision of the California Supreme Court, Justice Traynor quoted an out-of-state case for the proposition that "'[n]
o rogue should enjoy his ill-gotten plunder for the simple reason that his victim is by chance a fool.' [Citation.]"
(Seeger, supra, 18 Cal.2d at p. 415.) The Seeger court also stated, "The fact that an investigation would have
revealed the falsity of the misrepresentation will not alone bar [the plaintiff's] recovery [citations], and it is well
established that he is not held to constructive notice of a public record which would reveal the true facts.
[Citations]." (Id. at pp. 414-415.)
Also, Brokers' claim is based on the false premise that Buyers contractually undertook to investigate Brokers'
representations concerning Buyers' ability to obtain County approval of a lot split. It is a well-settled principle of
contract interpretation that the language of a contract governs its interpretation if the language is clear and not
absurd. (§ 1638 ["[t]he language of a contract is to govern its interpretation, if the language is clear and explicit,
and does not involve an absurdity"]; 1 Witkin, Summary of Cal. Law, supra, Contracts, § 741, p. 827 ["[w]here the
language of a contract is clear and not absurd, it will be followed"] & case authorities cited therein.)
Here, the plain, unambiguous language of paragraph 7 of the CAR form agreement shows as a matter of law that
the agreement did not impose on Buyers a contractual duty to investigate whether the property could be split.
Paragraph 7 clearly states in part that (1) Buyers had the "right" to conduct investigations; and (2) Buyers were
"strongly advised" to investigate the "condition and suitability" of "all aspects" of the property and "all matters
affecting the value or desirability of the property," including ordinances affecting the future development and
zoning of the property, and they would be "acting against the advice" of Brokers if they "[did] not exercise these
rights." (Italics added.) Thus, paragraph 7 conferred upon Buyers the contractual right, not the contractual
obligation, to conduct such an investigation.
Brokers rely on Bank of America Nat. Trust & Sav. Ass'n v. Vannini (1956) 140 Cal.App.2d 120 (Vannini) for the
proposition that "when the duty to investigate is contractually assigned to the purchaser of real property, the
purchaser is precluded from later suing the seller for fraud because the purchaser has, as a matter of law, no legal
'right to rely' on any alleged material misrepresentations by the seller that predate the contract." (Italics added.)
Brokers' reliance on Vannini is misplaced. That case involved the purchase and sale of an abandoned gold mine
in which the purchasers entered into an option agreement to buy the mine, but expressly and specifically agreed to
investigate the property before exercising the option by clearing water and debris out of the mine and, at their
election, digging an exploratory tunnel within a specified period of time from the date of the agreement. (Vannini,
supra, 140 Cal.App.2d at pp. 122-123, 128, 130-131.) The purchasers did not clear the mine and complete the
investigation within the period specified in the agreement. (Id. at p. 132.) Years later, after exercising the option
to buy the mine, the purchasers discovered the falsity of the sellers' representation that ore in commercial
quantities existed in the mine. (Ibid.)
The sellers in Vannini brought an action against the purchasers to recover money they allegedly owed the sellers
under the option agreement, and the purchasers filed an amended answer and cross-complaint, both of which
were predicated on the theory that the sellers had fraudulently induced them to enter into the agreement.
(Vannini, supra, 140 Cal.App.2d. at pp. 124, 132.) The trial court sustained the sellers' demurrers to the
purchasers' amended answer and cross-complaint without leave to amend and entered judgment in favor of the
sellers. (Id. at p. 124.)
The Vannini court addressed the issue of whether the trial court properly sustained without leave to amend the
sellers' demurrer to the purchasers' amended answer, which (like the purchasers' cross-complaint) was based on
an allegation that the sellers had induced them to enter into the option agreement by means of an intentional
misrepresentation. (Vannini, supra, 140 Cal.App.2d at pp. 125-126, 130.) Noting that under the pleaded facts the
purchasers had obligated themselves under the option agreement to clear the mine and investigate the property
within 17 months of the date of the option agreement (id. at pp. 130, 132), the Court of Appeal stated that "the real
question [was] not whether [the purchasers] relied on the false representations, but whether they had the legal
right to rely upon them." (Id. at p. 131, italics added.) The court concluded that the purchasers' express
agreement to conduct their own investigation "amounted to an agreement [they] were not to rely on the
representations made by [the sellers], but were to rely on their own investigation." (Ibid.) The Vannini court held,
"as a matter of law, that [the purchasers] had no legal right to rely on the false representations at the time that
they exercised the option," and thus the trial court had properly sustained the demurrer to the purchasers'
amended answer. (Id. at p. 132, italics added.) The court reasoned that if the purchasers had performed their
contractual duty to clear the mine and investigate the property, "they would have gained full knowledge of the
falsity of the representations made to induce the contract." (Ibid.)
Vannini is factually and legally distinguishable. There, as already discussed, the purchasers expressly agreed to
clear the gold mine and investigate the property within a specified period of time before they exercised the option
agreement. Here, however, Buyers entered into a purchase agreement, not an option agreement, under which
they acquired the contractual right, not the contractual obligation, to investigate the condition of the property,
including whether they could obtain County approval to split the property into two parcels. Vannini is therefore
inapposite.
3. Buyers' Prima Facie Showing of Justifiable Reliance
Brokers do not challenge the court's express findings that (1) "[a] fact-finder could conclude [Brokers] knowingly . .
. misrepresented the split had been approved," and (2) "[a] fact-finder could also conclude [Buyers] reasonably
relied on these misrepresentations and were not put on notice by the realty profile provided to them or their agent
prior to making the first offer to buy." (Italics added.) Rather, their principal contentions are (1) the court "did not
commit error by ruling on the issue of 'justifiable reliance' as a matter of law" because the CAR form agreement
"assigned the duty to investigate the condition of the property to Buyers"; and (2) Buyers "admitted that they
conducted an investigation of the laws and ordinances affecting the potential for splitting the . . . property prior to
close of escrow," and thus they must be "charged with all the knowledge that [they] might have obtained had [they]
pursued the inquiry to the end with diligence and completeness."
Viewing the evidence in a light favorable to the losing parties (here, Buyers), liberally construing their evidentiary
submission while strictly scrutinizing the prevailing parties' (here, Brokers') own showing, and resolving any
evidentiary doubts or ambiguities in favor of the losing parties, as we must (Saelzler v. Advanced Group 400,
supra, 25 Cal.4th at pp. 768-769), we conclude the record demonstrates that Buyers met their burden of making a
prima facie showing that there are triable issues of material fact (1) whether Brokers intentionally misrepresented
that, according to County, the property could be split and the split had been approved; and (2) whether Buyers
justifiably relied on Brokers' alleged intentional misrepresentations. As discussed more fully in the factual
background, ante, the parties dispute what Clark told Fowler during their June 22 telephone
conversation, as shown by the deposition testimony of Rick Rinear, Fowler and Clark, and
Clark's declaration in support of Brokers' summary judgment motion. The issues of whether
Brokers intentionally misrepresented that the County had stated the property could be split and the split had been
approved, and whether Buyers' reliance on Brokers' statements was reasonable under all of the circumstances,
are questions of material fact that must be decided by the trier of fact.
DISPOSITION
The judgment is reversed and the matter is remanded for further proceedings.
Buyers shall recover their costs on appeal.
CERTIFIED FOR PUBLICATION
NARES, J.
WE CONCUR:
BENKE, Acting P. J.
HALLER, J.
| "As discussed more fully in the factual background, ante, the parties dispute what Clark told Fowler during their June 22 telephone conversation, as shown by the deposition testimony of Rick Rinear, Fowler and Clark, and Clark's declaration in support of Brokers' summary judgment motion..." |
| An "Action for Deceit" Is Rick Rinear a pot calling the kettle black? Rick Rinear has made a living by damaging and defrauding students, employees and the public when they make legitimate claims. Rick Rinear and his boss, Diane Crosier, accomplish this through the use of specially-chosen lawyers who tell school districts and their employees to hide the truth, destroy or hide evidence and commit perjury. And who is representing Mr. Rinear in this case? One of those specially-chosen lawyers, Daniel Shinoff. |
| What exactly does it mean when someone like Rick Rinear swears to tell the truth under penalty of perjury, after he's spent his work life relying on clients perjuring themselves in order to make a living? What is left of a person's integrity when their job is to make sure victims don't get justice? |
| Did Daniel Shinoff give Rick Rinear a break on legal fees in return for keeping Shinoff on the list of JPA lawyers? Would Rick Rinear or Daniel Shinoff know a conflict of interest if they tripped over it and broke their noses? |
| SAN DIEGO EDUCATION REPORT |
| mauralarkins.com |
| PRECISE WORDING OF THE DIRECTIVE FROM SDCOE: "If a claim is submitted in letter format and is sufficient (in compliance), per the Government Code, the claim should be handled as if submitted on the district’s Claim Form; i.e., returned as insufficient, late or rejected. |
The enclosed sample letter should only be used to forward a claim form to
those claimants who request a form from the district.
A sample Tort Claim Form complying with Government Code 910.4 (a) is
also enclosed. Please continue to forward claims when received to San
Diego County Schools Risk Management JPA, 6401 Linda Vista Road, Room
505, San Diego, CA. 92111, Attention: Rodger Hartnett, Property
& Liability JPA Claims Coordinator. Rodger or Lisa Adriance-Jensen will
recommend what action to take. Rodger’s telephone number is 858-569-
5428; Lisa’s telephone number is 858-569-5453. Please call me @ 858-
292-3871 with questions.
RR:st
| School districts are told to reject a claim if it is insufficient > > > |
| School districts are ALSO told to reject the claim if it is SUFFICIENT! > > > |
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| Superintendents |
| San Diego County Office of Education - Joint Powers Authority |
| REVISED CLAIMS PROCEDURE January 22, 2004 To: JPA Representatives From: Rick Rinear, JPA Risk Management Subject: Tort Claim Reporting Form – Revised We would like to clarify the Tort Claim Reporting procedure, as there has been some confusion about requiring all potential claimants to use a district-written Claim Form. Effective April 1, 2003, Government Code Section 910.4 (a) requires public entities to provide a standardized Tort Claim Form that claimants use to file their claims for submission to districts. The standard Claim Form (sample attached), must include information specified in Government Code Section 910 and 910.2. Districts can still consider claims “submitted” without the required form. Districts may consider a written claim without requiring the referenced claim form. The referenced claim form must be available when requested. We are providing a sample Cover Letter for potential claimants who request the required form. Careful review of a claim is necessary for compliance or late filing. If considered insufficient (not in compliance), the claim must be returned to claimant within 20 days from receipt. If a claim is submitted in letter format and is sufficient (in compliance), per the Government Code, the claim should be handled as if submitted on the district’s Claim Form; i.e., returned as insufficient, late or rejected. [Emphasis added.] |
| San Diego County Office of Education (SDCOE) |
| Stutz, Artiano Shinoff & Holtz |
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