Case Number: 19VECV01542    Hearing Date: March 13, 2020    Dept: W



Date of Hearing:          March 13, 2020                       Trial Date:

Department:   W                                                         Case No.:   19VECV01542

Moving Party: Defendants Strategic Realty Inc and DLI Properties LLC

Responding Party:       Plaintiff Kelley Todd Robinson


Plaintiff purchased her home in Agoura Hills on Passageway Place (subject property) from defendant DLI Properties.  DLI Properties and defendant Strategic Realty, the listing agent, and defendant Capstone Escrow, Inc are part of a vertically integrated real estate investment company Strategic Acquisitions, Inc. (SAI).  SAI is in the business of buying distressed real estate, repairing and remodeling and then reselling the property – flipping properties.

Defendant Stonecrest Patio Owners Association is the HOA for the community in which the property is located.  S.H. Chavin was the property management company for the common areas in the community where the subject property is located.

Defendant Coldwell Banker Residential Brokerage Company acted as the seller’s agent and the buyer’s broker agent and employed defendant Zoolalian, the buyers agent.

When plaintiff purchased the property it had certain problems and conditions affecting its value that were not revealed to plaintiff but allegedly were known by the defendants. Certain defendants allegedly ffirmatively concealed the issues.   Namely, the property was adjacent to the top of a southern slope that is suffering from common area soil movement.  Also, an addition to the property was built without a permit; water intrusion existed at the property; there were drywall tears, out of level foundation, binding doors, and other problems.  DLI defendants covered up these issues cosmetically.

Plaintiff filed the complaint on October 24, 2019, alleging:

  1. Breach of Fiduciary Duty
  2. Negligence
  3. Failure to Disclose Pursuant to CC § 1102
  4. Negligence – Failure to Disclose
  5. Fraud, Concealment, & Deceit
  6. Negligent Misrepresentation
  7. Breach of Contract
  8. Breach of Fiduciary Duty
  9. Breach of Association Operating Documents
  10. Breach of Fiduciary Duty
  11. Injunctive Relief
  12. Nuisance
  13. Negligence
  14. Negligence

Defendants demur to the fifth cause of action for fraud and seek to strike claims for punitive damages and investigative costs.




  1. misrepresentation;
  2. knowledge of falsity (or “scienter”);
  3. intent to defraud (induce reliance);
  4. justifiable reliance; and,
  5. resulting damage.

Fraud actions are subject to strict requirements of particularity in pleading.  Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Fraud must be pleaded with specificity rather than with general and conclusory allegations. Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.  Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.

The elements of concealment are:

  1. Defendant concealed or suppressed a material fact;
  2. defendant was under a duty to disclose the fact to the plaintiff;
  3. defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff;
  4. plaintiff was unaware of the fact and would not have acted in the same way knowing of the concealed or suppressed fact;
  5. causation;  and
  6. the plaintiff sustained damage.

Fraud by nondisclosure or concealment involves the failure to make a full and fair disclosure of known facts connected with the matter about which a party has assumed to speak, under circumstances in which there is a duty to speak.  Generally speaking, there are four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.

“Where there is no fiduciary relationship, the duty to disclose generally presupposes a relationship grounded in ‘some sort of transaction between the parties. [Citations.] Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement. [Citation.]” (LiMandri, at p. 337.)

Here, plaintiff alleges that defendants had particular disclosure requirements and particular disclosure forms they were obliged to truthfully complete.  At paragraphs 133 through 142 plaintiff details the facts known to defendants that they failed to state in the required disclosure forms.  Plaintiff states she justifiably relied on the statements and omissions and that had she known the truth she would not have purchased the property.  Defendants assert in their demurrer that the reliance requirement is not well pleaded because plaintiff failed to state she read any of the disclosure forms.

This court disagrees.  Plaintiff expressly states she relied on defendants’ statements and omissions.  She is not obliged to use the exact wording defendants want (“Plaintiff read the TDS/AVID/ESD reports.”)  She states that defendant delivered the statements to her and says she relied on them.  It is a fair inference to make from these facts that she read the reports or had someone read them on her behalf.

Defendants also argue that plaintiff fails to state the name of the corporate employee who made the representations.  However most of the communications described were in the nature of written forms.  It is plausible that those names are unknown to plaintiff but surely defendant knows who filled out the forms.  Less specificity as to fraud claims is required if it appears from the nature of allegations that defendant must necessarily possess full information, or if the facts lie more in the knowledge of opposing parties. Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal. App. 4th 1356, 1384-85 (“it does not appear necessary to require each of the 38 plaintiffs to allege each occasion on which an agent of either defendant could have disclosed …. Surely defendants have records of their dealings with the plaintiffs.”.)

Demurrer to the fifth cause of action overruled.

Motion to Strike

Regarding punitive damages, plaintiff has pleaded fraud adequately and accordingly meets the requirement that she plead conduct showing fraud oppression or malice.

Regarding investigative costs, according to defendant such costs are barred by CCP § 1033.5 which bars recovery of investigations as a cost of litigation for the prevailing party.  By contrast, plaintiff is asking for the cost for experts to discover and analyze defects to be able to remedy the defects.  This type of investigative costs are sometimes referred to as Stearman fees.  Case law supports the claim that expert investigative costs can be awarded as an element of damages. As noted in El Escorial Owners’ Ass’n v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, 1361:

In Stearman, the court held that prevailing tort plaintiffs in a construction defect case who incurred fees for hiring experts are “entitled to be made whole.” (Stearman v. Centex Homes, supra, 78 Cal.App.4th at p. 625, 92 Cal.Rptr.2d 761.) It ruled that expert fees incurred for repair or expert investigative services, that were not litigation costs, may be awarded as part of the tort damages.

That is the type of damages at issue here.  The damages are simply those available under CC § 3333.  Further such fees are within those damages that were proximately caused by the breach of the contract.  See CC § 3300.  In short, the investigative costs are not in the nature of costs to a prevailing party but rather damages suffered as a result of defendant’s alleged conduct.

Motion to strike is denied.