Jeffrey Nugent, et al., v. Michael R. Turner, et al.
Jeffrey Nugent, et al., v. Michael R. Turner, et al.
Case Number
21CV03012
Case Type
Hearing Date / Time
Mon, 09/11/2023 - 10:00
Nature of Proceedings
Motion by Nugent Cross-defendants for summary adjudication of the cause of action for breach of contract contained in the Turner Cross-complaint
Tentative Ruling
# 21CV03012 Jeffrey Nugent, et al., v. Michael R. Turner, et al.,
Hearing Date: 9/11/2023
HEARING: Motion by Nugent cross-defendants for summary adjudication of the cause of action for breach of contract contained in the Turner’s cross-complaint
ATTORNEYS:
David M. Grokenberger / Jason W. Wansor / R. Scott Mullen of Rogers,
Sheffield & Campbell, LLP for plaintiffs and cross-defendants
Jeffrey Nugent, Carla Gervasio-Nugent, and Patrik Nugent, a
minor, by and through his guardian ad litem, Jeffrey Nugent
John O’Meara / Caitlin M. Salata of Bremer Whyte Brown & O’Meara
LLP for defendants and cross-complainants Michael R. turner and
Lynn J. Turner
Jana S. Johnston / Andrew M. Cox of Mullen & Henzell LLP for
defendants Coldwell Banker Residential Brokerage Company, Lori
Bowles, Dana Zertuche, and Crysta Metzger
TENTATIVE RULING: The motion is denied.
Background: Plaintiffs Jeffrey Nugent, Carla Gervasio-Nugent, and Patrik Nugent, a minor, by and through his guardian ad litem, Jeffrey Nugent (the Nugents) filed their complaint on July 29, 2021. It named as defendants Michael R. Turner and Lynn J. Turner, both individually and as Trustees of the Michael R. Turner and Lynn J. Turner Revocable Trust, dated February 26, 2010 (the Turners), Coldwell Banker Residential Brokerage Company (Coldwell Banker), Lori Bowles (Bowles), Dana Zertuche (Zertuche), and Crysta Metzger (Metzger). The complaint alleged causes of action for breach of contract, negligence, rescission, breach of fiduciary duty/negligence, intentional misrepresentation, negligent misrepresentation, and concealment. Their claims arose from their lease of premises at 6965 Shepard Mesa Road in Carpinteria, from the Nugents, for a fixed term lease which commenced on April 1, 2019, and was to extend through July 15, 2020. Coldwell Banker acted as agent for both the Turners (through agent Crysta Metzger) and for the Nugents (through agents Lori Bowles and Dana Zertuche) in the transaction.
The Turners answered the complaint on September 24, 2021, and filed a cross-complaint back against Jeffrey Nugent and Carla Gervasio-Nugent on October 22, 2021. The cross-complaint alleged a single cause of action for breach of contract, alleging that the Nugents had vacated the premises four and one-half months prior to the termination of the lease, and refused to pay rent for the remaining period of the lease.
Taken from the evidence provided by the various parties to the action: The Turners own real property at 6956 Shepard Mesa Road in Carpinteria (the property). They entered into a Lease Listing Agreement for the property with Coldwell Banker, a licensed broker, through agent Metzger, on February 11, 2019. Metzger remains a real estate salesperson for Coldwell Banker. The listing agreement granted to Coldwell Banker the exclusive and irrevocable right to lease the property beginning December 10, 2018, and ending October 15, 2020, at a rental amount of $15,000 per month, with a security deposit for 1.5 times the monthly rent.
Prior to that time, in June 2018, Bowles agreed to help the Nugents find a residence to lease for their family. Bowles was and is a real estate salesperson for Coldwell Banker. Bowles first shared a listing for the property with the Nugents on December 17, 2018. Carla Gervasio-Nugent expressed interest, and believed the rent was in a good amount. Jeffrey Nugent personally visited the property with Bowles and Metzger on January 24, 2019, at which time Bowles told him that she and Metzger worked in the same office. As the parties worked to finalize a lease, Jeffrey Nugent said he was glad that Bowles and Metzger with both Coldwell Banker agents working out of the same office, because he believed it would make the Nugents more likely to obtain a lease of the property, as opposed to potential tenants who were not represented by a Coldwell Banker agent. Jeffrey Nugent now denies that Bowles ever told him that she and Metzger both worked for Coldwell Banker, or that any Coldwell Banker agent ever told him about the dual agency.
On January 27, 2019, Bowles emailed the Nugents to confirm their request that Bowles make an offer to the Turners to lease the Property, transmitting to the Nugents a blank California Association of Realtors Residential Lease or Month-to-Month Rental Agreement. Bowles then communicated the offer to Metzger, who expressed that the offer appeared to be one that would be acceptable to the Turners, subject to a rental application form the Nugents and negotiation of a final lease.
The original term of the lease discussed by the Nugents and the Turners was to begin on March 1, 2019. On February 12, 2019, however, the Nugents requested that the start date of the lease be changed to April 1, 2019. The Turners agreed to the request. Jeffrey Nugent again visited the property on February 16, 2019.
On February 17, 2019, Metzger sent to Bowles a draft lease for the property. Bowles then forwarded it to the Nugents. The draft lease had a term commencing April 1, 2019, and terminating March 31, 2020 [Coldwell Banker Exhibit 7]—a lease term which did not exceed one year. At ¶ 40, the draft lease identified Coldwell Banker as the agent for the Landlord, separately identified Coldwell Banker as the agent for the Tenant, and the appropriate boxes were checked to indicate that Coldwell Banker was the agent for both the Landlord and the Tenant. In the boxed section of the CAR form following ¶50, the draft lease also reflected that Coldwell Banker was the Leasing Real Estate Broker Firm, through agents Lori Bowles and Dana Zertuche, and that Coldwell Banker was the Listing Real Estate Broker Firm, through agent Crysta Metzger. The section set forth the same address for Coldwell Banker within the information for the Leasing Real Estate Broker Firm, as within the information for the Listing Real Estate Broker Firm.
Bowles sent an updated draft lease [Coldwell Banker Exhibit 17] to the Nugents on February 25, 2019. The updated lease contained the same lease term, the same information within ¶ 40, and the same information within the boxed section which follows ¶50. This version had been electronically signed by the Turners, and by Bowles, Zertuche, Metzger, and Barbara Koutnik. Jeffrey Nugent replied that he would forward it to his attorney to look over. On February 27, 2019, Bowles emailed the Nugents, and advised that the Turners would like an executed copy by March 1, and inquired whether there would be any problems in doing so.
On March 1, 2019, Jeffrey Nugent emailed Bowles and explained his “last minute thought for which I apologize profusely” with respect to the 12-month lease’s relationship to his son’s school year, and requested that the lease term be extended to 18 months to get his son through his school year. He noted that he was excited and ready to sign the lease. The Turners countered with a termination date of July 15, 2020, which the Nugents accepted.
The Nugents signed the final lease on March 5, 2019. The information in ¶ 40 remained unchanged from the February 17 draft lease, except that it was signed by the agents. It reflected a lease term from April 1, 2019 to July 15, 2020. Although the lease was now for a term beyond one year, the box in ¶40(B) was not checked, and the CAR Form AD containing language from Civil Code section 2079.16 was not attached. None of the agents or parties to the lease noticed the need to check the box and provide Form AD. Both Bowles and Metzger have declared that they did not intentionally withhold the form, and that the failure to check the box and attach the form was an oversight.
The Nugents declared that the Coldwell agents did not explain the dual agency role of the individual agents, and did not obtain their “informed consent” “in writing or by oral advisement as to the nature and consequences of the dual agency representation” prior to the execution of the lease. The Nugents also declared they were unaware of the dual agency role prior to execution of the lease.
On January 14, 2020, Carla Gervasio-Nugent emailed Bowles, complaining about spiders in the house, construction in the area, highway construction and traffic travel times to Patrik’s school, the lack of teens in the neighborhood, and that rent amount was overpriced for a property that was not a luxury property. She indicated they wished to move out prior to July, since they wanted to take Patrik to Switzerland for medical treatments.
Bowles communicated to Metzger that the Nugents wanted to vacate the property and terminate the lease early. On February 1, 2020, Metzger sent a response to Bowles, on behalf of the Turners, offering options other than the Nugents’ immediate vacation of the property and the lease.
Ultimately, the Nugents sent an email to Bowles on February 3, 2020, explaining that they were leaving the property for medical and health reasons for their son and family. Bowles clarified that the Nugents wished to give their 30-day notice to the Turners, and the Nugents responded affirmatively. By email dated February 5, 2020, the Nugents advised that they had moved out, and had arranged for the cleaning of the house.
The Nugents contend that they advised the Turners of their election to rescind and cancel the lease effective on or about March 1, 2020. They vacated the property, and did not pay any further rent for the last four and a half months of the lease.
Motion: The Nugents have now filed a motion which they entitle as being for summary adjudication, which contends they are entitled to judgment as a matter of law on the Turner’s breach of contract cause of action. The motion is based on only 11 “material facts,” including that the Turners executed a Listing Agreement with Coldwell Banker, under which “all” Coldwell agents undertook their representation with respect to leasing the property. The Nugents leased the premises on March 5, 2019 pursuant to the lease, which provides for a term in excess of 12 months. It provides further that if the lease term exceeds 12 months, the “statutorily required disclosure form on agency relationships” be provided and the Tenants acknowledge receipt, but the form was not provided to them either before signing the lease, or at any time during the lease term. The Lease confirmed that Coldwell Banker was agent for both the tenant and landlord, but did not disclose the agency relationship of the individual agents who represented the Nugents or Turners. The Coldwell agents acted as dual agents in negotiation and preparation of the lease, prior to its execution, but did not explain the dual agency role of the individual agents who were involved, nor did anyone advise the Nugents of the “nature and consequences of the dual agency representation” at any time. The Nugents were unaware of the dual agency role of the agents. On March 1, 2020, the Nugents elected to cancel and rescind the lease.
The motion first asserts that a dual agent must disclose dual agency on a mandatory form, citing Civil Code section 2079.17(a) for a buyer’s agent, and 2079.17(b) for a seller’s agent, and 20079.17(c) for usage of the required form. They assert that the disclosure requirement applies in lease transactions which exceed one year in duration, citing Civil Code section 2079.13(b), (j), (m), and (n). [The Court notes that the proper citation is to Section 2079.14, not Section 2079.13.] The assert this form was never provided to them.
The Nugents cite Huijers v. DeMarrais (1992) 11 Cal.App.4th 676, 685-686, for the proposition that it is not enough to disclose dual agency, and an agent is “not allowed to simply put form in front of a client after a transaction is well on its way.” Rather, they contend that Huijers requires that the dual agent explain the nature of the dual agency and the consequences thereof, in disclosing “all facts which would reasonably affect the judgment of each party in permitting the dual agency representation.” They further cite Brown v. FSR Brokerage, Inc. (1998) 62 Cal.App.4th 766, 778, for the proposition that an agent must call attention to the fact of dual agency as soon as practicable prior to presenting the seller with an offer to purchase, and Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 782, for the proposition that an agent must disclose all material facts that might influence their principal’s decision to enter into a transaction. The Nugents cite the Miller & Starr treatise alone, for the principle that the duties owed to the principal by a dual agent are unwaivable.
The Nugents then conclude that the failure to obtain their informed consent to the dual agency is ground for them to rescind the lease, again citing Huijers, supra [regarding the remedy for a real estate agent’s breach of duty to disclose dual representation may be that the principal can avoid the transaction]; Price v. Eisan (1961) 194 Cal.App.2d 363, 366 [a sale effected through a dual agent may be rescinded unless both parties knew of the double agency at the time of the transaction]; and Wilson v. Southern Pac. Land Co. (1923) 61 Cal.App. 545, 547 [where an agent has acted in a double capacity without the assent of his principal, the transaction will be held constructively fraudulent and voidable at the election of the principal]. They contend the reason for the rule is that the dual agency is put in the position of being a fiduciary to parties with directly competing interests, citing Glenn v. Rice (1917) 174 Cal. 269, 272, and Boulenger v. Morison (1928) 88 Cal.App. 664, 668.
Because Coldwell failed to provide the Nugents with the disclosure form, failed to adequately explain the nature and consequences of dual agency during the showing of the property and negotiation of the lease, and failed to obtain their informed consent to dual agency at any time prior to execution of the lease, the Nugents contend they are “entitled to—and did—rescind the Lease.” Therefore, they contend that summary adjudication of their affirmative defense to the Turner’s cross-complaint for rescission, and summary adjudication of the Turner’s cause of action for breach of contract, are required.
Each provides a statement of additional undisputed material facts, which set forth many of the facts articulated above, in terms of the more detailed history of the events and communications leading up to the consummation of the lease. They included Mr. Nugents’ expressed pleasure that his agent and the Turners’ agent worked out of the same Coldwell Banker office, the last-minute nature of the Nugents’ request to extend the term beyond one year (which was not made until multiple drafts of the lease documents had been prepared), the facts that the Box in Lease ¶40(B) was not checked and the form AD was not provided were inadvertent oversights which resulted from that last-minute request, that neither agent had ever intentionally withheld any information from the Nugents, that Nugent advised Bowles that he was having the lease reviewed by his attorney, and that while the Nugents provided many reasons why they wished to terminate the lease early, none of them had anything to do with the dual agency issue.
The opposing parties assert that the Nugents are not entitled to rescission because the dual agency was disclosed. The Coldwell defendants note that the motion was made only under the authority of Civil Code section 2079.17, with which they complied. The inadvertently omitted checkmark and Form AD are required by Sections 2079.14 and 2079.16, which are not a basis for the Nugents’ motion, and summary adjudication cannot therefore be granted on that basis. They add that the information specific to dual agency set forth in Section 2079.16 that would have been included in Form AD is limited, and says “vanishingly little” about the “nature and consequences of dual agency.”
Both sets of opposing parties also note that the cases upon which the Nugents’ motion relied do not support rescission of the lease. None provide that rescission is mandatory. Further, the Huijers case is distinguishable in many ways, including (a) there was no confirmation of any dual agency at all, (b) when the seller wished to raise the price the agent refused to do so, (c) when the buyer presented an offer for the original lower price the buyer misrepresented to the seller—in the presence of the agent—that he would still have to pay the commission even if he rejected the offer, (d) the seller agreed to sell at the lower price because of the (false) representation that he would have to pay the commission regardless, and (e) the dual agency disclosure was not provided until the purchase agreement was being signed. The day after the purchase agreement was signed, the seller tried to rescind both the listing and purchase agreements. The Huijers court noted that the dual agent had played an integral role in causing damage to the seller, by failing to disclose the dual agency before the seller signed the listing agreement, imposing the expense of her commission at the lower price, and then failing to correct the buyer’s affirmative misrepresentation about the liability for the commission. Here, there was no misrepresentation about the agency, and the specific facts regarding the dual agency relationships were disclosed in writing (through the draft leases) in advance of execution of the lease. Further, the listing agreement is irrelevant to the Nugents, who not seeking to rescind the listing agreement, but rather the lease itself.
Similarly, Brown v. FSR Brokerage, Inc. (1998) 62 Cal.App.4th 766, 778, did not involve any written disclosure of dual agency until the signing of escrow instructions, involved evidence of specific actions taken by the dual agent to plaintiff’s detriment, including disclosing his confidential price information to the buyer, and haranguing him to lower his price. Wilson v. Southern Pacific Land Co. (1920) 46 Cal.App. 738, involved a secret commission agreement between the agents, with the implication that the two agents were working both sides simultaneously; the court permitted the agreement to be rescinded. Price v. Eisen (1961) 194 Cal.App.2d 363 was not a dual agency case. Vice v. Thacker (1947) 30 Cal.3d 84, involved the dual agent’s fraudulent preparation of a bill of sale that included more property than plaintiff had authorized, and any statements it made about avoiding a transaction where there was no knowledge of the dual agency was unnecessary to the decision. Gordon v. Beck (1925) 196 Cal. 768 involved a dual agency unknown to either principal, and distinguished a case denying rescission where the express terms of the contract disclosed a dual agency. Glenn v. Rice (1917) 174 Cal. 269 does not discuss the ability to rescind as a result of dual agency. Boulenger v. Morison (1928) 88 Cal.App. 664, involved an undisclosed dual agent who had a secret agreement to sell the property at a higher price and make additional profit, and the case contained issues of adequate consideration for specific property. Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, is not a dual agency case, instead involving affirmative misrepresentations by agents.
The Coldwell Banker parties assert plaintiffs are not entitled to rescission because they have no evidence of bad faith. They cite Roberts v. Lomanto (2003) 112 Cal.App.4th 1553, 1570, in which the court declined to grant summary judgment for a seller to return a broker’s commission, where the broker purchased property directly from the seller, assigned the purchase agreement to a third party, and refused to disclose the assignment fee or the third party’s price to the seller, because there was no evidence the broker was deliberately deceptive or fraudulent. In Zisswasser v. Cole & Cowan (1985) 164 Cal.App.3d 417, 425, the court found a broker’s negligent breach of fiduciary duty did not warrant forfeiture of his commission. In Tackett v. Croonquist (1966) 244 Cal.App.2d 572, 578, the court distinguished the case of a secret duel agent earning commissions from both sides of a transaction from mere negligence in the performance of his duties, where there is no disloyalty, fraud, or bad faith, finding the former forfeits the commission, but the latter does not. Coldwell Banker notes that the Nugents presented no evidence of disloyalty, fraud, or bad faith, are not seeking return of any commission (which they did not pay), but are seeking rescission of the underlying transaction itself. The dual agency was disclosed in advance of execution of the lease, and plaintiffs provide no explanation or showing how dual agency adversely affected them, do not identify any fact that should have been disclosed to them, do not identify any provision of the lease that should have been different, and do not explain how the failure to receive the CAR AD statement adversely affected their interests. Until the lease term was extended at the very last minute, Section 2079.16 did not apply to the transaction at all. They are not entitled to rescind the transaction where there is no evidence of the agents’ breach of a fiduciary duty with disloyalty, fraud, or bad faith.
The Coldwell Banker parties also assert there is no right to rescission, because the Nugents accepted the benefits of the lease, and delayed seeking rescission, citing Gill v. Rich (2005) 128 Cal.App.4th 1254, 1264 [A party may not derive all possible benefit from the transaction and then claim the right to rescind]; Palmquist v. Palmquist (1963) 212 Cal.App.2d 322, 331 [where a party has full knowledge of facts which would warrant his rescinding an agreement but nevertheless accepts and receives benefits accruing thereunder, waiver of the right to rescind will be presumed]. The Nugents do not identify any facts of which they were unaware at the time they entered into the lease, and did not cite dual agency as a reason they wished to terminate the lease early. They should not be able to use the technical absence of a generic statement about dual agency as a get-out-of-lease-free card to play at their convenience.
Finally, Coldwell Banker contends there are triable issues of material fact which preclude summary adjudication. First, the extent of their knowledge regarding the dual agency is disputed, given that Bowles talked with Jeffrey Nugent about the fact she and Metzger worked in the same office, and he said he was glad they did, since it would make him more likely to obtain the lease. Second, while the Nugents claim they would not have accepted the dual agency representation had they known of its nature and consequences, they never identify any fact that would have been different if there had been no dual agency, and in fact the only negotiations on lease provisions were with respect to its term. Third, the Nugents have repeatedly consented to dual agency arrangements since executing the lease. Fourth, the Nugents concede they were aware that Coldwell Banker was a dual agent, but seem to argue they were unaware of the agency relationships of the salesperson defendants, and none of that would have been corrected by the missing form.
The Turners conclude that there are several triable issues of material fact with respect to whether the Nugents were informed of and agreed to the dual agency representation by the Coldwell Banker agents. They were aware of the dual agency of the two agents, the exclusion of the Form AD was an oversight arising from the last-minute alteration in the term of the lease, the parties were not harmed by its exclusion, it was not mentioned as a reason for breaching the lease agreement and terminating early, and the Nugents were not entitled to rescind the lease nine months’ into its term.
The Nugents next contend that the opposition arguments contradict public policy and the explicit provisions of the Code. Form AD explains that it is essential for a principal to understand the nature of a representation in a real estate transaction, that dual agency is only appropriate with knowledge and consent of both parties, and advises that a professional should be consulted if legal or tax advice is desired. This is consistent with public policy considerations codified in California law and leading treatises.
The Nugents contend further that Coldwell’s “innocent omission,” lack of intent, and the Nugents’ purported comparative fault are viable defense to the lack of disclosure. It admitted its mistake in failing to provide the mandatory form, but offers no authority why innocence or omission excuses their conduct; an omission by a fiduciary can constitute constructive fraud by the fiduciary in the absence of fraudulent intent. Further, Coldwell attempts to add an extra intent or bad faith element to the analysis, but where allegations are premised on a fiduciary’s failure to disclose a material fact to the principal, the principal need not prove a false representation. Additionally, Coldwell tries to assign blame to the Nugents for their failure to understand “the nature and consequences” of dual agency, but the breach of fiduciary duty claim is not based on negligence, and there is no comparative fault defense.
Finally, the Nugents assert that case law and rules of statutory interpretation dictate the rescission is “a proper remedy.” They contend that cases confirming that a party who fails to give informed consent to dual agency “is entitled” to rescind the transaction are legion. Second, the disclosure obligations imposed on a dual agent are mandatory and, as a result of Coldwell’s failure to comply with them, the Nugents “are entitled to” the remedies available under the statutory scheme, including that the principal may avoid the transaction, citing Huijers. Third, Coldwell’s arguments that the Nugents accepted the benefits of the lease are just a rehash of its attempts to blame the Nugents for their own failures. Fourth, defendants’ efforts to distinguish the case law cited in the motion are “ineffective.”
ANALYSIS: For the reasons more fully articulated below, the motion is denied.
1. Summary judgment standards.
A defendant’s motion for summary judgment asks the court to determine that the entire action has no merit, and to terminate the action without the necessity of a trial. (Code Civ. Proc., § 437c(a).) The procedure enables the court to look behind the pleadings to determine whether the party against whom the motion is directed has evidence to back up the claims. The court must determine from the evidence presented that there is no triable issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c(c).)
The pleadings play a key role in a summary judgment motion. (Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 493.) It is the allegations of the complaint to which the summary judgment must respond (Todd v. Dow (1993) 19 Cal.App.4th 253, 258), and the pleadings serve as the measure of materiality for the motion. (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258.) The moving party’s evidence must therefore be directed to the claims or defenses raised in the pleadings. (Keniston v. American National Insurance Co. (1973) 31 Cal.App.3d 803, 812.) The moving party bears the burden of persuasion that that there is no triable issue of material fact, and that it is entitled to judgment as a matter of law. (Aguilar v. Atlantic Richfield Co. (2001) 235 Cal.4th 826, 850.) Consequently, 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.) The motion must be supported by evidentiary facts, not merely the ultimate facts. Further, conclusions of fact or law are not sufficient to support a motion for summary judgment. (Snider v. Snider (1962) 200 Cal.App.2d 741, 751.)
All facts that could make a difference in the disposition of the motion must be set forth in the separate statement of material facts which is required to accompany the motion. (Cal. Rules of Court, rule 3.1350(c)(2) and (d)(1)(B) and (C).) “Material facts” are facts that relate to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion and that could make a difference in the disposition of the motion. (Cal. Rules of Court, rule 3.1350(a)(2).) Facts which are stated in a place other than the separate statement need not be considered by the court in resolving the motion. (Fleet v. CBS, Inc. (1996) 50 Cal.App.4th 1911, 1916, fn. 3.)
Once a moving defendant meets its initial burden, the burden shifts to the plaintiff to produce evidence to prove the existence of a triable issue of fact regarding that element of its cause of action or the defense at issue in the motion, and if plaintiff is unable to do so, defendant will be entitled to judgment as a matter of law. (Saelzler v. Advanced Group 400 (2001) 35 Cal.4th 763, 780-781.) However, the moving party’s burden of making a prima facie showing that there are no triable issues of material fact (Aguilar v. Atlantic Richfield Co., supra), is not affected by the opposing party’s failure to oppose the motion or controvert the facts set forth in the motion, since there is no obligation by the opposing party to establish anything unless and until the moving party has by affidavit stated facts establishing every element necessary to sustain a judgment in his favor. (Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 468.)
In ruling on a motion for summary judgment, the trial court must consider all of the evidence and all of the inferences reasonably drawn therefrom (Code Civ. Proc., § 437c, subd. (c)), and must view the evidence and inferences in the light most favorable to the opposing party. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at 843.) In examining the sufficiency of the affidavits filed in connection with a summary judgment motion, those filed by the moving party are strictly construed, and those of the opposing party are liberally construed. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 20-21.)
In resolving the motion, the court may not weigh the evidence. (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840.) Rather, the role of the trial court in resolving a summary judgment motion is to determine whether issues of fact exist, not to decide the merits of the issues. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107; see also Weil & Brown, Civil Procedure Before Trial (The Rutter Group) § 10:270.) A triable issue of material fact exists only if the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar v. Atlantic Richfield, supra, 25 Cal.4th at 850.) Any doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. (Molko v. Holy Spirit Assn., supra.)
2. Statutory requirements where parties to a lease for a term longer than one year are represented by dual agents.
Civil Code section 2079.14 requires that a disclosure form regarding the real estate agency relationship be provided to the parties in a real property transaction. For purposes of Section 2079.14 and other relevant sections, “real property transaction” is defined to include the sale of real property in which an agent is retained by a buyer, seller, or both. (Civ. Code, § 2079.13, subd. (k).) Further, “sale” is defined as including transactions for the creation of a leasehold exceeding one year’s duration. (Civ. Code, § 2079.13, subd. (m).) A “dual agent” is defined to mean an agent acting, either directly or through a salesperson or broker associate, as agent for both the seller and the buyer in a real property transaction. (Civ. Code, § 2079.13, subd. (d).) A “buyer” is defined to include a vendee or lessee of real property. (Civ. Code, § 2079.13, subd. (b)), and a “seller” is defined to include a lessee of real property. (Civ. Code, § 2079.13, subd. (n).) Finally, “agent” is defined to mean a person acting under the provisions of Title 9 (commencing with Section 2295) in a real property transaction, and includes a person who is licensed as a real estate broker, and under whose license a listing is executed or an offer to purchase is obtained. (Civ. Code, § 2079.13, subd. (a).)
With respect to a seller (or lessor of property under a lease exceeding one year’s duration), the disclosure form regarding the agency relationship must be provided prior to entry into the listing agreement. (Civ. Code, § 2079.14, subd. (a)(1).) With respect to the buyer (or lessee of property under a lease exceeding one year’s duration), it must be provided as soon as practicable before execution of the buyer’s offer to purchase or, if the buyer’s agent does not prepare the offer, no later than the next business day after receiving the offer from the buyer. (Civ. Code, § 2079.14, subd. (a)(2).)
Civil Code section 2079.16 sets forth the required contents of the disclosure form, and generically describes the duties owed by a seller’s agent, by a buyer’s agent, and by an agent representing both seller and buyer. With respect to the duties owed by an agent representing both seller and buyer, the statute requires that the form contain the following language:
“A real estate agent, either acting directly or through one or more salespersons and broker associates, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer.
In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer:
(a) A fiduciary duty of utmost care, integrity, honesty, and loyalty in the dealings with either the Seller or the Buyer.
(b) Other duties to the Seller and the Buyer as stated above in their respective sections.
In representing both Seller and Buyer, a dual agent may not, without the express permission of the respective party, disclose to the other party confidential information, including, but not limited to, facts relating to either the Buyer's or Seller's financial position, motivations, bargaining position, or other personal information that may impact price, including the Seller's willingness to accept a price less than the listing price or the Buyer’s willingness to pay a price greater than the price offered.
Civil Code section 2079.17 provides further, in relevant parts:
(a) As soon as practicable, the buyer's agent shall disclose to the buyer and seller whether the agent is acting in the real property transaction as the buyer's agent, or as a dual agent representing both the buyer and the seller. This relationship shall be confirmed in the contract to purchase and sell real property or in a separate writing executed or acknowledged by the seller, the buyer, and the buyer's agent prior to or coincident with execution of that contract by the buyer and the seller, respectively.
(b) As soon as practicable, the seller's agent shall disclose to the seller whether the seller's agent is acting in the real property transaction as the seller's agent, or as a dual agent representing both the buyer and seller. This relationship shall be confirmed in the contract to purchase and sell real property or in a separate writing executed or acknowledged by the seller and the seller's agent prior to or coincident with the execution of that contract by the seller. [Emphasis added.]
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(d) The disclosures and confirmation required by this section shall be in addition to the disclosure required by Section 2079.14. An agent's duty to provide disclosure and confirmation of representation in this section may be performed by a real estate salesperson or broker associate affiliated with that broker.
3. No absolute entitlement to rescission exists for failure to strictly comply with the dual agency disclosure requirements.
The Nugents’ motion contends that the failure to explain to them the existence of the dual agency, the nature and consequences of the dual agency, and the failure to provide them with the CAR Form AD, entitles them to rescind the lease and, as a result, the Turners cannot prevail on their action against the Nugent for breach of the lease as a result of their vacation of the premises, and failure to pay for the final 4.5 months of the rental amount due under the lease. Their motion relies heavily on the case of Huijers v. DeMarrais (1992) 11 Cal.App.4th 676.
In the Huijers case—which involved the sale of real property, and not a lease of more than a year—a prospective purchaser of property retained a real estate broker to help him find a replacement property for his business, which he wished to relocate. The broker, Larson, called the owners of property she had looked at (the DeMarraises), who told her they were willing to talk about selling their land. When she met with them, she advised that she had a client interested in buying their property. The DeMarraises signed an exclusive right to sell listing agreement with her, in which they set a $325,000 price for the property. Larson advised them they would ow a 6% commission if she found a buyer who would pay the listing price; she did not provide them with an agency disclosure statement prior to or at the time the listing agreement was signed. Several days later, she told the DeMarraises that her client would make an offer within a week. Prior to having received any offer, the DeMarraises told Larsen they wanted to increase the asking price to $375,000. Larsen did not agree to do so. When Huijers learned the DeMarraises wanted to raise the price, he instructed Larsen to prepare an offer that met the $325,000 list price. Huijers and Larson met with the DeMarraises to present the offer. During negotiations, one of the DeMarraises asked why they could not increase the asking price, and Huijers told them that under California law, once a broker found a ready, willing and able buyer, they would have to pay the commission regardless. The DeMarraises then agreed to sign a contract, one saying that he had to pay the commission anyway. Only at the time of signing the purchase contract were the DeMarraises provided with the agency disclosure statement that was required to be given to them prior to the signing of the listing agreement.
The next morning, the DeMarraises’ attorney informed Huijers and Larson and told them the DeMarraises had rescinded. Huijers filed a complaint for specific performance and damages against the DeMarraises, and the DeMarraises cross-complained against Huijers and Larson for fraud, negligent misrepresentation, breach of fiduciary duty, rescission and declaratory relief. After a court trial, the trial court found Huijers’ statement about the commission to be a correct statement of law, the contract was valid, and specific performance was the proper remedy.
The Court of Appeal reversed the trial court judgment. It found that the failure to provide the seller with the disclosure prior to entering into the listing agreement relieved the DeMarraises from the obligation of paying the agent’s commission, but that the failure to disclose would not necessarily relieve them from their obligation under the purchase contract. The court noted that the statement that the commission would have to be paid regardless was incorrect, and remanded the case to the trial court for further findings on whether the circumstances of the misrepresentation constituted grounds for rescission. The Huijers court stated:
“We do not mean to say that the failure to provide a disclosure form will always result in a voidable listing agreement. A seller, for example, who has sufficient knowledge concerning the information contained in the disclosure form may be held to the listing agreement even though he or she did not receive the disclosure form.” (Huijers, supra, 11 Cal.App.4th at p. 686.)
The Nugents did not cite, and the Court is not aware of, any case which finds that the failure to provide the written disclosure form absolutely entitles a party to rescind the sales or lease agreement. Rather, the authorities before the Court require the trier of fact to examine the circumstances surrounding the transaction to determine whether rescission is an appropriate remedy under all of those circumstances. Considering that this issue is before the Court on the Nugents’ summary judgment motion, such circumstances must be such that the right to rescind the lease agreement is absolute as a matter of law on undisputed facts. If the motion fails to meet that burden, or if there are any triable issues as to any fact relevant to the propriety of rescission as a remedy under all of the facts and circumstances surrounding the transaction, the motion must be denied.
Consequently, the Court must examine the facts and circumstances present here, including the existence of any triable issues of material fact with respect to those facts and circumstances, before it could possibly conclude that the Nugents were “entitled to” rescind the lease agreement, and in that manner avoid any liability for their breach of the lease which occurred when they vacated the premises prior to the termination of the lease term, and refused to make any further rent payments.
4. The motion both fails to meet its initial burden, and there exist multiple triable issues of material fact, requiring that it be denied.
As a prefatory matter, the Court notes that the Nugents have entitled their motion as one for summary adjudication of the Turners’ breach of contract cause of action against them. However, because the cross-complaint is a one-cause-of-action pleading, any motion contending that the Nugents have no liability under that sole cause of action is properly denominated as a motion for summary judgment on the cross-complaint. The Court will treat it as such.
First, in failing to establish the parameters of when rescission is or is not appropriate, the motion fails to meet its burden of establishing entitlement to judgment as a matter of law, on the Turners’ claim for breach of contract. It is not this Court’s obligation, on the Nugents’ motion for summary judgment, to independently conduct such legal research and determine what facts and circumstances might entitle a party to rescind a contract, and what facts and circumstances might be insufficient to justify rescission as a remedy. The Nugents’ own cited authorities do not establish that rescission is a necessary, or even proper, remedy in every case in which a dual agent failed to provide the form.
The Nugents repeatedly assert that Coldwell breached its fiduciary toward them in failing to provide them with the CAR AD form, and in failing to explain “the nature and consequences” of the dual agency to them. The court in Huijers, supra, found that a dual agent had a duty was to disclose all facts which would reasonably affect the judgment of each party in permitting the dual representation. (Huijers, supra, 11 Cal.App.4th at p. 686.) The Huijers court then specifically articulated the concealed/misrepresented facts which might have reasonably affected the DeMarraises judgment in permitting the dual representation. Even after doing so, however, while the Huijers court found that the express misrepresentations about the inability to raise the price and the obligation to pay the commission would permit their rescission of the listing agreement they entered into with the dual agent, which would relive them of the obligation of paying the commission, those facts would not necessarily permit them to rescind the underlying purchase agreement.
Indeed, in each of the cases upon which they rely, there was some fact which the dual agent either concealed or misrepresented, which caused harm to the party to the agreement. It was clear in each of those cases, that had the party known the concealed fact, or had the party known the true fact which was misrepresented to them, they would not have proceeded to enter into the agreement and thereby been damaged by the dual agent’s conduct.
By contrast, while the Nugents repeatedly protest that no one explained the “nature and consequences of the dual agency” to them, they do not—anywhere—identify even a single fact which was not disclosed to them by the Coldwell agents, which would have reasonably affected their judgment either in permitting the dual representation, or in entering into the lease agreement itself. Indeed, the fact of the dual agency does not appear to have had any impact on the Nugents. Rather, based upon the evidence currently before the Court, the fact of the dual agency only appears to have significance in providing the Nugents with an after-the-fact argument to justify not paying rent for the entire lease term, after they vacated the leased premises early, apparently for reasons unrelated to the dual agency issue. Certainly, their email communications with Bowles set forth a host of reasons why they wished to terminate the lease prior to the expiration of its contractual term (spiders, neighborhood construction, highway construction and its impacts on travel time to their son’s school, lack of teens in the neighborhood, and rental amount; subsequently summarized as leaving the property “for MEDICAL and HEALTH reasons for our son and our family”), they never once mentioned the dual agency circumstance, their alleged lack of consent to such dual agency, or any impact it had on their decision to enter into either a dual agency or the lease itself.
Here, the Nugents, as tenants, are seeking to rescind the contract they entered into with the lessor (the Turners), not based upon conduct committed by the Turners, but rather based upon a failing of the dual agents—to which they have not attributed any prejudicial impacts. Under those circumstances, the Court cannot find that the Nugents have established on undisputed facts an absolute entitlement to rescission as a matter of law, which in itself requires that the motion be denied.
Additionally, there exist triable issues of material fact which preclude entry of summary judgment in the Nugents’ favor. Such triable issues include the fact that Bowles contends that she told Jeffrey Nugent that she and Metzger worked in the same Coldwell Banker office, and that Nugent had expressed pleasure at having that situation, because of the perceived advantage that it provided the Nugents in being chosen by the Turners as the tenants for the property. On the other hand, Nugent denies that Bowles ever told him that she and Metzger worked out of the same Coldwell Banker office, and denies that any Coldwell Banker agent ever told him about the dual agency. The level of the Nugents’ knowledge and understanding of the dual agency position of the Coldwell Banker agents is a fact that could be directly relevant to the issue of whether rescission of the underlying lease agreement would be an appropriate remedy for the failure of the agents to provide the Nugents with the disclosure form.
Further, particularly after not articulating any fact that might have reasonably affected their judgment in permitting a dual agency situation, or in entering into the lease, that was not disclosed to them by the agents, a triable issue of material fact exists with respect to whether rescission might be an appropriate remedy, given that the Nugents waited to vacate the premises and attempt any rescission of the lease until some eleven months after the lease term had commenced (they contend they paid rent through February, 2020, for the lease term which had commenced on April 1, 2019), and even then failed to articulate the failure to provide the full disclosure with respect to the dual agency as one of the many reasons they gave for wishing to terminate the lease term early. The tremendous delay, the long period during which they fully accepted the benefits of the lease, and the failure to base their early vacation of the premises upon the lack of disclosure would mitigate against rescission being among the appropriate remedies for the disclosure issues.
While additional triable issues appear to exist, the issues articulated above by the Court suffice to require that the motion be denied.
The Nugents make many arguments in their reply papers, which attempt to support their contention that the disclosure was mandatory, and they were entitled to rescind the lease based upon the failure to provide the mandatory form. The nature of the arguments which were made, however, would require the Court to weigh evidence and resolve the conflicting facts in their favor—something which this Court is prohibited from doing on summary judgment.
Because the Court has found both that the Nugents’ motion has failed to meet its initial burden, and that triable issues of material fact exist with respect to the ultimate issue of whether rescission would be an appropriate remedy for whatever failures to disclose the dual agency circumstance might have existed, the motion must be denied.
5. Evidentiary objections
The Turners have objected to certain evidence submitted by the Nugents in support of their motion. Objection Nos. 1-4, 7, 9, 13, and 15 are sustained. Objection Nos. 5, 8, 10-11, 14, and 16 are overruled.