On 09/14/2017 GENE J KORAK filed a Property - Other Property Fraud lawsuit against BETTER BUILDING CONSTRUCTION INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are SAMANTHA P. JESSNER and YOLANDA OROZCO. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
SAMANTHA P. JESSNER
HOLLAND DELORES F.
KORAK GENE J.
MENDOZA FREDERICO MENDEZ
MENDOZA FRDERICO MENDEZ
G.D. BACA INC
MENDOZA FEDERICO MENDEZ
BETTER BUILDING CONSTRUCTION INC
COUNTERPOINT PUBLIC ADJUSTING
DOES 1 TO 200
G.D. BACA INC DBA COUNTERPOINT ADJUSTING
BETTER BUILDING CONSTRUCTION INC.
G.D. BACA INC. DBA COUNTERPOINT PUBLIC ADJUSTING
MENDOZA FEDERICO MENDEZ AKA FREDERICO MENDEZ MENDEZ AKA FRDERICO MENDEZ MENDEZ
D. BACA GARY
ADJUSTING COUNTERPOINT PUBLIC
JOHNSON EINAR ESQ.
JOHNSON EINAR WM.
JOHNSON EINAR WILLIAM ESQ.
BREMER KEITH G. ESQ.
SOFRIS MICHAEL N. ESQ.
SOFRIS MICHAEL NOEL ESQ.
BREMER KEITH GLENN ESQ.
12/21/2018: Notice of Case Reassignment and Order for Plaintiff to Give Notice
3/11/2019: Status Report
3/18/2019: Status Report
3/20/2019: Case Management Order
3/20/2019: Minute Order
3/20/2019: Minute Order
7/12/2018: Minute Order
7/27/2018: DECLARATION RE: EX PARTE NOTICE
7/27/2018: Minute Order
1/11/2018: CIVIL DEPOSIT
10/25/2017: BETTER BUILDING CONSTSRUCTION, INC.'S ANSWER TO THE COMPLAINT OF GENE J. KORAK AND DOLORES F. HOLLAND
11/1/2017: DEFENDANT G.D. BACA INC''S ANSWER TO UNVERIFIED COMPIAINT
9/14/2017: COMPLAINT 1. STATUTORY CLAIM FOR FAILURE TO COMPLY WITH B & P.C. 7159 ;ETC
Notice (Of prior entry of jury fees); Filed by BETTER BUILDING CONSTRUCTION INC (Defendant); STEVEN MENDOZA (Defendant); FEDERICO MENDEZ MENDOZA (Defendant)Read MoreRead Less
Notice (of entry of judgment or order); Filed by BETTER BUILDING CONSTRUCTION INC (Defendant); STEVEN MENDOZA (Defendant); FEDERICO MENDEZ MENDOZA (Defendant)Read MoreRead Less
Stipulation and Order (Joint Stipulation and Proposed Order); Filed by BETTER BUILDING CONSTRUCTION INC (Defendant); STEVEN MENDOZA (Defendant); FEDERICO MENDEZ MENDOZA (Defendant)Read MoreRead Less
Answer (by G.D. Baca, Inc's andGary Baca's First Amended Answer to pltf's Verified Complaint); Filed by Gary D. Baca (Defendant); G.D. Baca Inc. (Defendant)Read MoreRead Less
Notice of Rejection - Pleadings; Filed by ClerkRead MoreRead Less
Answer (OF DEFENDANTS, BETTER BUILDING CONSTRUCTION, INC.; STEVEN MENDOZA; AND FEDERICO MENDE MENDOZA); Filed by Better Building Construction, Inc. (Defendant); Frederico Mendez Mendoza (Defendant); Steven Mendoza (Defendant)Read MoreRead Less
at 08:30 AM in Department 31, Yolanda Orozco, Presiding; Court OrderRead MoreRead Less
at 08:30 AM in Department 31, Yolanda Orozco, Presiding; Status Conference - HeldRead MoreRead Less
Certificate of Mailing for (Minute Order (Court Order) of 03/20/2019); Filed by ClerkRead MoreRead Less
Case Management Order; Filed by ClerkRead MoreRead Less
Answer; Filed by FEDERICO MENDEZ MENDOZA (Defendant)Read MoreRead Less
STEVEN MENDOZA'S ANSWER TO THE COMPLAINT OF GENE J. KORAK AND DELORES F. HOLLANDRead MoreRead Less
BETTER BUILDING CONSTSRUCTION, INC.'S ANSWER TO THE COMPLAINT OF GENE J. KORAK AND DOLORES F. HOLLANDRead MoreRead Less
Notice of Case Management Conference; Filed by ClerkRead MoreRead Less
NOTICE OF CASE MANAGEMENT CONFERENCERead MoreRead Less
ORDER TO SHOW CAUSE HEARINGRead MoreRead Less
OSC-Failure to File Proof of Serv; Filed by ClerkRead MoreRead Less
SUMMONSRead MoreRead Less
COMPLAINT 1. STATUTORY CLAIM FOR FAILURE TO COMPLY WITH B & P.C. 7159 ;ETCRead MoreRead Less
Complaint; Filed by GENE J. KORAK (Plaintiff); DELORES F. HOLLAND (Plaintiff)Read MoreRead Less
Case Number: BC675971 Hearing Date: January 08, 2020 Dept: 31
DEFENDANTS' MOTION FOR SUMMARY ADJUDICATION IS DENIED.
The Court having taken this matter under submission, now hereby issues its final Order.
On September 14, 2017, Plaintiffs Gene J. Korak and Delores F. Holland filed the instant action against Defendants Better Building Construction (“Better Building”); Steven Mendoza (“Steven”); Federico Mendez Mendoza aka Frederico Mendez Mendoza aka Frderico Mendez Mendoza (“Federico”); G.D. Baca, Inc. dba CounterPoint Public Adjusting; and Does 1 through 200. The Complaint asserts causes of action for:
Statutory Claim for Failure to Comply with B & P.C. § 7159;
Breach of Fiduciary Duty;
Breach of Contract; and
Common Count – Money Had and Received.
On April 25, 2019, the instant action was consolidated with LASC Case No. 18STCV01317 entitled Korak, et al. v. Better Building Construction, Inc., et al. (the “Consolidated Case”) for all purposes. The Consolidated Case was brought by all Plaintiffs against all Defendants named in the instant case and additionally added Gary D. Baca as a defendant. The Complaint in the Consolidated Case asserts a cause of action for:
In the instant motion, Defendants Better Building, Steven, and Federico (hereinafter “Defendants”) seek summary adjudication of the fraud cause of action, the elder abuse cause of action, the breach of fiduciary duty cause of action, the claim for punitive damages, and the claim for attorney fees.
In reviewing a motion for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)
“A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if that party contends that the cause of action has no merit or that there is no affirmative defense thereto, or that there is no merit to an affirmative defense as to any cause of action, or both, or that there is no merit to a claim for damages . . . or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code of Civ. Proc., § 437c, subd. (f)(1).) A motion for summary adjudication shall proceed in all procedural respects as a motion for summary judgment. (Code of Civ. Proc., § 437c, subd. (f)(2).)
“[T]he initial burden is always on the moving party to make a prima facia showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (Code of Civ. Proc., § 437c, subd. (p)(2).) A moving defendant need not conclusively negate an element of plaintiff’s cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854.)
To meet this burden of showing a cause of action cannot be established, a defendant must show not only “that the plaintiff does not possess needed evidence” but also that “the plaintiff cannot reasonably obtain needed evidence.” (Aguilar, supra, 25 Cal.4th at 854.) It is insufficient for the defendant to merely point out the absence of evidence. (Gaggero v. Yura (2003) 108 Cal.App.4th 884, 891.) The defendant “must also produce evidence that the plaintiff cannot reasonably obtain evidence to support his or her claim.” (Ibid.) The supporting evidence can be in the form of affidavits, declarations, admissions, depositions, answers to interrogatories, and matters of which judicial notice may be taken. (Aguilar, supra, 25 Cal.4th at 855.)
“Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code of Civ. Proc., § 437c, subd. (p)(2).) The plaintiff may not merely rely on allegations or denials of its pleadings to show that a triable issue of material fact exists, but instead, “shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action.” (Ibid.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)
Plaintiffs submit a number of objections to the Declarations of Steven Mendoza and Abigail Mendoza. The Court notes at the outset that Plaintiffs have failed to consecutively number their objections and to provide a proposed order in violation of California Rules of Court Rule 3.1354. The Court admonishes Plaintiffs and expects all parties to strictly comply with all rules and statutes moving forward.
Objection to Declaration of Steven Mendoza, ¶ 11 is SUSTAINED.
Defendants submit a number of objections to the Declarations of Dolores Holland, Gene Korak, and Darren Morrow.
Objection No. 17 is OVERRULED.
The Court finds that the remaining objections are immaterial to the Court’s disposition of the motion. The Court therefore declines to rule upon them. All objections not ruled upon are preserved for appeal. (Code Civ. Proc. § 437c(q).)
Fraud Cause of Action
“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)
The Complaint alleges that “Defendant S. Mendoza . . . represented on behalf of the Better Building Defendants that Defendant S. Mendoza would assure the house was repaired to new condition, that it would have improvements beyond its original design including, among other things, a larger living room and central heating and air, and that it would also include handicap access into the Hoover Residence and handicap friendly features inside the Hoover Residence and that all of the foregoing would be accomplished solely through use of the proceeds from the insurance carried by Plaintiffs on the Hoover Residence.” (Complaint ¶ 11.)
Defendants move for summary adjudication of the fraud cause of action arguing that Plaintiffs cannot prove that Defendants intended to defraud Plaintiffs nor can Plaintiffs prove that they suffered damages as a result of the alleged fraud.
Intent to Defraud
“[T]he only intent by a defendant necessary to prove a case of fraud is the intent to induce reliance. Moreover, liability is affixed not only where the plaintiff's reliance is intended by the defendant but also where it is reasonably expected to occur.” (Lovejoy v. AT&T Corp. (2001) 92 Cal.App.4th 85, 93.) “Defendant's intent to induce plaintiffs to alter their position can be inferred from the fact that he made the representations with knowledge that plaintiffs would act in reliance on them. [Citations.]” (Gagne v. Bertran (1954) 43 Cal.2d 481, 488.)
Defendants first argue that Plaintiffs cannot prove that Defendants intended to defraud Plaintiffs. Defendants present evidence that Plaintiff Korak admitted in his deposition that Better Building “had done the majority of the work.” Defendants assert that specifically, Plaintiff Korak was asked about his understanding of the work done on the Hoover Residence, to which he responded that a majority of the work was done. (Solomon Decl., Exh. C (Korak Depo.) 32:16:33-12.) Defendants contend that when asked follow-up questions regarding changes from the original scope of work in the Home Improvement Contract, Korak confirmed that the only item of which he knew was the placement of bars in the shower to make it more handicap accessible. (Solomon Decl., Exh. C (Korak Depo.) 34:17-25.) Defendants assert that the crux of Plaintiff Korak’s testimony consists of complaints about Better Building’s attention to detail and quality of work performed, which effectively makes this a case of construction defect and negligence, not one consisting of intentional misrepresentations of fact intended to induce reliance on such statements.
As to Plaintiff Holland, Defendants argue that she testified in a similar manner at her deposition. Defendants present evidence that Plaintiff Holland testified that Better Building was hired through Defendant Steven to rebuild the home back to its original size. (Undisputed Material Fact (“UMF”) 8.) Plaintiff Holland testified that she chose to hire Defendant Steven because she felt that he was concerned about them during the aftermath of the fire. (Solomon Decl., Exh. D (Holland Depo.) 26:9-19.) Defendants assert that Plaintiff Holland confirmed, and acknowledged, that work had been done on her home for a whole year and went on to state that Defendant Steven promised her a gorgeous home, but instead gave her “a dump.” (Solomon Decl., Exh. D (Holland Depo.) 29:23-32:14; 63:2-64:3; 59:10-16.) Defendants contend that while it is clear that subjectively, Plaintiff Holland did not like the way her home looked after it was rebuilt by Defendant Steven, one’s subjective opinion about the quality of construction work does not mean that the contractor engaged in fraud. Defendants argue that Better Building was contracted to do work and performed the work, which is evidenced by photographs from before the project began and near the time when Better Building was terminated. (Steven Mendoza Decl. ¶ 17, Exh. E; Abigail Mendoza Decl., ¶ 1, Exh. G.) Defendants assert that Plaintiffs’ entire case is simple dissatisfaction with the work that was performed and that deposition testimony clearly indicates that there is no specific evidence of fraud.
Defendants contend that Plaintiffs’ assertion that a failure to comply with statutory requirements suggests that Better Building was engaged in fraud is misplaced. Defendants assert that whether or not Better Building complied with statutory requirements is not a false representation of material fact that was made in order to induce reliance by the Plaintiffs. Defendants contend that it is therefore immaterial to a fraud cause of action.
Finally, Defendants argue that the evidence demonstrates that there have been no “false representations” of fact that were made to Plaintiffs with the intent to induce Plaintiffs’ reliance.
In opposition, Plaintiffs argue that Defendants take Plaintiff Korak’s deposition statements out of context. Plaintiffs point out that Plaintiff Korak’s full statement was:
Well, the house, they had done the majority of the work. A lot of it wasn’t the way it was supposed to be. He told us that he had to give up the central air and heating because he needed the money to finish the rest of the property. After we done that, he just disappeared. We never seen him after that.
There was one instance that we called Mr. Baca and told him, “You know what’s going on?” And we were told “Well, Steve probably ran out of money and this is what he does.” He was gone for a month, but after that he showed up once to fix the heater that he put in the wrong place which never worked and then after that he just sort of walked away from the whole thing.
(Solomon Decl., Exh. C (Korak Depo.) 32:23-33:12.)
Plaintiffs assert that the complaint, depositions, and now filed declarations all set forth more than sufficient evidence for the trier of fact to find all parties committed fraud by promising one thing and delivering another.
In reply, Defendants argue that Plaintiffs’ declarations in opposition merely set forth a laundry list of complaints and grievances regarding the work performed by Defendant Steven and his subsequent handling of the complaints after he was informed of them. Defendants assert that these boil down to construction defect items, not fraud.
The Court finds that Defendants have failed to carry their burden showing that there are no disputed material facts and that Plaintiffs cannot establish that Defendants intended to defraud them. The undisputed material facts set forth by Defendants do not establish that Defendant Steven never represented to Plaintiffs that the work to be done by Better Building would include a larger living room, central heating and air, and handicap accessibility nor do they establish that Defendant Steven never represented that the insurance proceeds would cover the aforementioned work. Plaintiffs present evidence that Defendant Steven did make those representations to Plaintiffs, including representations that the property would be rebuilt and repaired to new or better than new condition. (Holland Decl. ¶’s 23, 24.) As noted above, a defendant’s intent to induce a plaintiff to alter his or her position can be inferred from the fact that the defendant made the representations with knowledge that the plaintiff would act in reliance on them. (Gagne, supra, 43 Cal.2d at 488.) Because Defendants’ arguments and evidence fail to address all the allegations set forth in the pleadings, the Court cannot grant summary adjudication on this ground.
While Defendants present evidence of the terms of the contract and how they performed according to those terms, the claim for fraud alleges that Plaintiffs would not have entered into the contract nor would they have “relied upon or sought the assistance of any of the Defendants” had they known that Defendant Steven’s representations were false. (Complaint ¶ 22.) Accordingly, Defendants’ purported substantial performance of the contract does not show that Plaintiffs cannot establish Defendants’ intent to defraud them.
Based on the foregoing, Defendants’ motion for summary adjudication of the fraud cause of action is DENIED on this ground.
Defendants next argue that Plaintiffs’ fraud cause of action fails as a matter of law because Plaintiffs suffered no damages as a result of the alleged fraud. Defendants present evidence that Plaintiffs’ homeowner’s policy did not entitle them to a home that was greater than the condition it was in immediately prior to the November 24, 2014 fire. (Solomon Decl., Exh. D (Holland Depo.) 57:20-23; 19:6-18.) Defendants assert that any additions or enhancements to the home that did not exist prior to the fire were to be paid for by the Plaintiffs themselves, and not through a homeowner’s policy affording coverage for fire events.
Plaintiffs allege that they suffered damages insofar as they did not receive the home in the condition they believed they were “promised” by Better Building. Defendants argue that the fact that Plaintiffs did not eventually receive central air and heating or a larger living room does not amount to “damages” because they were not entitled to a central air and heating system or a larger living room through proceeds provided by the policy in the first place. Defendants assert that, in fact, any attempt to receive damages for work performed on the Hoover Residence that would bring it to a condition superior to that of its condition prior to the fire would unjustly enrich the Plaintiffs.
Defendants contend that Plaintiffs’ argument that they were damaged by fraudulent conduct on behalf of Better Building is without basis. Defendants argue that Better Building performed the work pursuant to the Home Improvement Contract, and was in the process of addressing “punch-list” items that were within its scope of work when it was terminated by Plaintiff’s counsel. (Steven Mendoza Decl. ¶ 21.) Defendants assert that Plaintiffs were not damaged by any conduct because they received exactly what they contracted for.
In opposition, Plaintiffs argue that the Defendants are not insurance carriers and this is not an insurance policy case. Plaintiffs again assert that the complaint, depositions, and now filed declarations all set forth more than sufficient evidence for the trier of fact to find all parties committed fraud by promising one thing and delivering another.
In reply, Defendants argue that missing in Plaintiffs’ opposition is a discussion of the scope of work that Plaintiffs were entitled to under the homeowner’s policy. Defendants assert that the reason for this is because Plaintiffs cannot prove that they were damaged by not receiving central heating and air conditioning since they did not have it in their home prior to the fire. Defendants contend that Plaintiffs are not entitled to any improvements in the home beyond what originally existed at the time of the fire and were therefore not damaged.
The Court finds that Defendants have failed to carry their burden showing that there are no triable issues of material fact and that Plaintiffs cannot establish that they suffered damages. Defendants’ argument regarding what Plaintiffs were entitled to under the homeowner’s policy is irrelevant to whether Plaintiffs suffered damages under their fraud cause of action. Here, the Complaint alleges that Plaintiffs were damaged through, among other things, “the expenditure of funds that should have been paid by the insurance company, the loss of personal property, the cost to address deficient work, inconvenience, emotional distress, and physical problems and risks associate with the use of charred lumber, all in an amount in excess of $400,000 and according to proof.” (Complaint ¶ 23.) Nothing indicates that Plaintiffs’ damages under this cause of action are limited to what they would have been afforded under their homeowner’s policy and Defendants do not cite to case law holding otherwise. Because Defendants’ arguments and evidence fail to address all the allegations as set forth in the pleadings, the Court cannot grant summary adjudication on this ground.
Based on the foregoing, Defendants’ motion for summary adjudication of the fraud cause of action is DENIED.
Elder Abuse Cause of Action
“The Elder Abuse Act makes certain enhanced remedies available to a plaintiff who proves abuse of an elder, i.e., a ‘person residing in this state, 65 years of age or older.”’ (Carter v. Prime Healthcare Paradise Valley LLC (2011) 198 Cal.App.4th 396,403-404; Welf. & Inst. Code § 15610.27.) A plaintiff who proves “‘by clear and convincing evidence’ both that a defendant is liable for physical abuse, neglect or financial abuse (as these terms are defined in the Act) and that the defendant is guilty of ‘recklessness, oppression, fraud, or malice’ in the commission of such abuse may recover attorney fees and costs.” (Carter, supra, 198 Cal.App.4th at 404; Welf. & Inst. Code § 15657(a).)
Welfare & Institutions Code section 15610.30 provides:
(a) “Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following:
(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.
(Welf. & Inst. Code § 1561.30(a).)
Defendants seek summary adjudication of the elder abuse cause of action arguing that Plaintiffs cannot establish that Defendants intended to defraud Plaintiffs and that the insurance proceeds are not “property” of Plaintiffs.
Intent to Defraud
Defendants assert that Plaintiffs cannot prove that Defendants intended to do anything other than complete the work for which they were contractually obligated to complete. Defendants contend that the evidence in the record demonstrates Defendant Steven, through Better Building, contracted with Plaintiffs to restore their home to its condition before the November 24, 2014 fire. Defendants argue that the contract price was being paid through insurance proceeds tendered by Plaintiffs’ homeowner’s insurance policy to Defendant Baca, who would periodically release funds as the job progressed towards completion.
Defendants assert that a conspiracy to take, secrete, or appropriate funds from an elderly couples makes no logical sense if Better Building completed multiple projects at the Hoover Residence over the course of the better part of a year. (Steven Mendoza Decl. ¶ 16.) Defendants contend that Better Building provided goods and services in the form of extensive work in exchange for monetary compensation, which was not even paid for by the Plaintiffs out of their own pocket but rather through their insurance company’s money. Defendants argue that this arrangement was not fraudulent or to intended to take property of Plaintiffs, rather it was to compensate Defendants for the work they performed.
Defendants also assert that Plaintiffs fail to mention that their adult children and their adult son-in-law Darren Morrow, were also living at the Hoover Residence and were highly involved in the day-to-day activities of Better Building. Defendants contend that these adults had also lived at the property, and were more than capable of overseeing any “abuse and custodial neglect” allegedly perpetrated by Better Building and none was reported.
Defendants contend that Better Building and Defendant Baca returned the remainder of the unused insurance funds back to Plaintiffs’ counsel upon learning that they were being terminated from the job. (UMF 15, 30, 55, 70.) Defendants argue that an intent to take, secrete, appropriate, obtain, or retain the property of the Plaintiffs cannot be true if money, the very object Plaintiffs allege Better Building took from them, was returned to them.
Defendants finally assert that Plaintiffs admit that Better Building was working on the home for almost one year, and that they had done “most of the work.” (Solomon Decl., Exh. C. (Korak Depo.), 32:16-33:12; Exh. D (Holland Depo.), 63:2-64:3.) Defendants contend that it is clear through the course of Better Building’s extensive work that there was no abuse and custodial neglect of the type the legislature intended to protect against.
In opposition, Plaintiffs argue that Defendants committed elder abuse by committing fraud against Plaintiffs.
In reply, Defendants argue that Plaintiffs do not refute the fact that it makes no sense for unused funds to be remitted back to Plaintiffs’ counsel if the intent was to take, secrete, or appropriate funds from an elderly couple. Defendants argue that neither Defendant Steve or Defendant Federico were in a custodial role that would allow them to abuse or neglect the Plaintiffs during the pendency of the construction activities on Plaintiffs’ home.
The Court finds that Defendants have failed to carry their burden showing that there are no disputed material facts and that Plaintiffs cannot establish that Defendants intended to defraud them. As discussed above, Defendants’ undisputed material facts again fail to establish that Plaintiffs cannot prove that Defendants intended to defraud Plaintiffs. As held by our Supreme Court, “[d]efendant's intent to induce plaintiffs to alter their position can be inferred from the fact that he made the representations with knowledge that plaintiffs would act in reliance on them. [Citations.]” (Gagne v. Bertran (1954) 43 Cal.2d 481, 488.) Here, Plaintiffs present evidence that Defendant Steve represented to Plaintiffs that the work to be done by Better Building would include a larger living room, central heating and air, handicap accessibility and that all structures would be rebuilt and repaired to new or better than new condition, all covered by the insurance proceeds. (Holland Decl. ¶’s 23, 24.) Accordingly, Plaintiffs have created a triable issue of material fact as to whether Defendants intended to defraud Plaintiffs.
Insurance Proceeds as Property
The Complaint alleges that “Defendants appropriated and obtained from Plaintiffs their insurance funds in a manner which they knew or should have known would damage Plaintiffs and did so for their own enrichment and benefit at Plaintiffs’ expense.” (Consolidated Case Complaint ¶ 27.)
Plaintiffs allege that Better Building committed financial elder abuse by appropriating and obtaining from Plaintiffs, through the acts of fraud and undue influence, Plaintiffs’ insurance funds. Defendants assert that Plaintiffs cannot allege that the insurance proceeds are their property. Defendants contend that, rather, the insurance proceeds are the property of the insurance company. Defendants argue that the insurance company is the entity that ultimately decides how much to pay and who to pay. Plaintiffs were not in possession of the funds at any point in time, as Defendant Baca was holding the funds while monitoring the progress of the work. Defendants contend that any proceeds paid by the insurance company on a claim made by an insured is not, per se, an insured’s property since those funds are to be utilized and spent in accordance with the instructions from the insurance company. Defendants assert that the insureds did not have a right to do whatever they wanted with the proceeds like they would their own money. Defendants contend that this is because the “property” that Plaintiffs allege was appropriated is not truly their property.
In opposition, citing to Wood v. Jamison ((2008) 167 Cal.App.4th 156), Plaintiffs argue that Defendant’s argument is undermined by the Court of Appeal. Plaintiffs assert that in Wood, an attorney was found liable for financial elder abuse for improperly taking loan proceeds from an elderly woman. Plaintiffs contend that the loan proceeds were found to be the elderly woman’s property even though paid from the lender directly to the attorney.
In reply, Defendants argue that Plaintiffs’ reliance on Wood is unpersuasive because the funds in Wood were not insurance proceeds but a loan where the alleged abuser, an attorney, lied to the plaintiff about being her relative. The loan proceeds were distributed directly to the alleged abuser, and not through a third party, such as Defendant Baca in this case, and could be used for whichever purpose the plaintiff wished. Here, the insurance proceeds were for the sole purpose of rebuilding Plaintiffs’ home.
The Court finds that Defendants have failed to carry their burden showing that there are no triable issues of material fact and that they are entitled to judgment as a matter of law based on the issue of whether Defendants appropriated Plaintiffs’ property. In their motion and reply, Defendants fail to cite to any case law holding that insurance proceeds remitted to an insured are not considered the property of the insured. Assertions unsupported by legal authority are presumed to lack merit. (Atchley v. City of Fresno (1984) 151 Cal.App.3d 635, In Re Marriage of Nichols (1994) 27 Cal.App.4th 661, 673; Utz v. Aureguy (1952) 109 Cal.App.2d 803, 807.) Accordingly, the Court cannot grant summary adjudication of the elder abuse cause of action on this basis.
Based on the foregoing, Defendant’s motion for summary adjudication of the elder abuse cause of action is DENIED.
Breach of Fiduciary Duty Cause of Action
“The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Tribeca Companies, LLC v. First American Title Insurance Company (2015) 239 Cal.App.4th 1088, 1114.) Before a party can be charged with the breach of a fiduciary obligation, the party must knowingly undertake to act on behalf and for the benefit of another or enter into a relationship which imposes this undertaking as a matter of law. (City of Hope Nat. Med. Ctr. v. Genentech, Inc. (2008) 43 Cal.4th 375, 386; see also GAB Business Services. Inc. v. Lindsey & Newsom Claim Services. Inc. (2000) 83 Cal.App.4th 409, 416 (fiduciary duties are imposed by law or undertaken by agreement) disapproved of on other grounds by Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1154.) “Whether a fiduciary duty exists is generally a question of law. [Citation.]” (Marzec v. California Public Employees Retirement System (2015) 236 Cal.App.4th 889, 915.)
“In the commercial context, traditional examples of fiduciary relationships include those of trustee/beneficiary, corporate directors and majority shareholders, business partners, joint adventurers, and agent/principal. [Citation.] “Inherent in each of these relationships is the duty of undivided loyalty the fiduciary owes to its beneficiary, imposing on the fiduciary obligations far more stringent than those required of ordinary contractors.” [Citation.] Absent such a relationship, a plaintiff cannot turn an ordinary breach of contract into a breach of fiduciary duty based solely on the breach of the implied covenant of good faith and fair dealing contained in every contract. [Citation.]” (Gilman v. Dalby (2009) 176 Cal.App.4th 606, 614.)
Defendants move for summary adjudication of the breach of fiduciary duty cause of action arguing that they do not owe Plaintiffs a fiduciary duty. Defendants assert that they were not fiduciaries of Plaintiffs and that they merely entered into a Home Improvement Contract with Plaintiffs to remediate Plaintiffs’ home after a fire loss. Defendants contend that they have not “accepted the confidence” and were nothing more than ordinary contractors during the project.
In opposition, Plaintiffs argue that creating and maintaining a trust fund through which the Baca Defendants controlled the insurance proceeds, made them fiduciaries. In addition, Plaintiffs have alleged a conspiracy between the Baca Defendants and Defendants. Plaintiffs attach Exhibit C, a copy of a document Plaintiffs signed at Defendant Baca’s request and argue that it demonstrates that Better Building did sign off on fiduciary duties owed to Plaintiffs.
In reply, Defendants correctly note that Exhibit C does not contain any express provision whereby Defendants assumed a fiduciary duty.
The Court finds that Defendants have failed to carry their burden showing that there are no triable issues of material fact and that Plaintiffs cannot establish that Defendants owed them a fiduciary duty. Pursuant to Code of Civil Procedure section 437c(c), “[i]n determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court. . .” Plaintiffs’ reference to Exhibit C as the document that “readily reveals that Better Building did sign off on fiduciary duties as to Plaintiffs,” is not considered by the Court as Exhibit C does not make such a showing.
Still, having reviewed all the evidence before the Court for which an objection was not made and sustained, the Court notes that Plaintiffs have attached as Exhibit D to their compendium of evidence a copy of a document entitled “Authorization of the Insured,” which states in relevant part:
The property owner named above, hereinafter referred to as “Insured,” hereby appoints, directs, and authorizes Better Building Construction, Inc., hereinafter referred to as “Contractor,” to act for and on behalf of Insured in all matters relative to the restoration and renovation of damages sustained to Insured’s real property whose location is described above. . . . It is understood and agreed that Contractor is empowered to contact the Insurance Carrier named above and meet their representative in order to assist Insured in determining the fair replacement cost value of the losses included in the claim.
(Holland Decl., Exh. D.)
Plaintiffs have thus created a triable issue of material fact as to whether Defendants owed Plaintiffs a fiduciary duty, as it appears that Exhibit D could be seen by a reasonable trier of fact as creating an agent/principal relationship whereby a fiduciary duty may be owed by Defendants to Plaintiffs.
Based on the foregoing, Defendants’ motion for summary adjudication of the breach of fiduciary duty cause of action is DENIED.
Punitive Damages & Attorney Fees
Civil Code section 3294, subdivision (a) authorizes punitive damages “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” (Civ. Code, § 3294, subd. (a).) “[A]lthough the “clear and convincing” evidentiary standard is a stringent one, it does not impose on a plaintiff the obligation to ‘prove’ a case for punitive damages at summary judgment. However, where the plaintiff's ultimate burden of proof will be by clear and convincing evidence, the higher standard of proof must be taken into account in ruling on a motion for summary judgment or summary adjudication, since if a plaintiff is to prevail on a claim for punitive damages, it will be necessary that the evidence presented meet the higher evidentiary standard.” (Am. Airlines v. Sheppard (2002) 96 Cal. App. 4th 1017, 1049 [internal citations omitted].)
“In ruling on a summary judgment or summary adjudication motion, “the judge must view the evidence presented through the prism of the substantive [clear and convincing] evidentiary burden.... [¶] [This] holding that the clear-and-convincing standard of proof should be taken into account in ruling on summary judgment motions does not denigrate the role of the jury. It by no means authorizes trial on affidavits. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, whether he is ruling on a motion for summary judgment or for a directed verdict.” [Citations.]” (Id. at 1049.)
“Malice” is conduct intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on with a willful and conscious disregard of the rights or safety of others. (Civ. Code, § 3294, subd. (c)(1).) Despicable conduct is “conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people. Such conduct has been described as ‘having the character of outrage frequently associated with crime.’” (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287.) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. (Civ. Code, § 3294, subd. (c).) “‘Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff’s rights, a level which decent citizens should not have to tolerate.’ [Citation.]” (Lackner v. North (2006) 135 Cal.App.4th 1188, 1210.)
A plaintiff who proves “‘by clear and convincing evidence’ both that a defendant is liable for physical abuse, neglect or financial abuse (as these terms are defined in the Act) and that the defendant is guilty of ‘recklessness, oppression, fraud, or malice’ in the commission of such abuse may recover attorney fees and costs.” (Carter, supra, 198 Cal.App.4th at 404; Welf. & Inst. Code § 15657(a).)
Defendants move for summary adjudication of Plaintiffs’ punitive damages claim arguing that Defendants did not intend with malice to cause harm to Plaintiffs and there is no clear and convincing evidence demonstrating otherwise. Defendants assert that there is no evidence that Defendants did anything to vex, annoy, or injure Plaintiffs or others. Defendants contend that, rather, the evidence demonstrates that a Home Improvement Contract was entered into between Plaintiffs and Better Building, upon which Better Building performed its duties and obligations according thereto. Defendants argue that Plaintiffs’ dissatisfaction with the progress and workmanship does not amount to a conscious, deliberate intent on the part of Better Building to harm Plaintiffs. Defendants assert that Defendant Steven made a good faith effort to correct the issues that were within his scope of work, and within approved building plans. Defendants contend that similarly, Defendant Steven’s desire to address the complaints brought forth in the “punch-list” is hardly “despicable” conduct that would warrant an award of punitive damages.
As to the prayer for attorney fees, Defendants move for summary adjudication arguing that Plaintiffs cannot muster evidence to support their elder abuse claim at all, let alone by a standard of clear and convincing evidence. Defendants assert that Better Building’s performance on the contract, regardless of the legal validity of the same, does not amount to elder abuse by any standard, let alone by clear and convincing evidence. Defendants assert that customer dissatisfaction is not tantamount to abuse and custodial neglect.
In opposition, Plaintiffs argue that they can easily satisfy the standards for punitive damages and attorney fees under the elder abuse statutes.
The Court finds that Defendants have failed to carry their burden showing that there are no triable issues of material fact and that Plaintiffs cannot prove by clear and convincing evidence that Defendants are guilty of fraud, oppression, or malice such that they are entitled to punitive damages and attorney fees. Given the Court’s ruling that there are disputed issues of material fact as to Plaintiffs’ causes of action for fraud and elder abuse, the Court finds that Plaintiffs have raised a triable issue of material fact as to their claim for punitive damages and attorney fees. As noted above, while the higher standard of “clear and convincing” should be taken into account on a motion for summary adjudication, credibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge. Here, Plaintiffs have presented evidence that Defendant Steven made false representations to Plaintiffs. (Holland Decl. ¶ 23.) From those representations, it can be reasonably inferred that Defendants intended to defraud Plaintiffs. (Gagne, supra, 43 Cal.2d at 488.) Additionally, Plaintiffs have raised a triable issue of material fact as to whether Defendants appropriated Plaintiffs’ property. Moreover, Defendants have failed to provide evidence to dispute the evidence offered by Plaintiffs. Because punitive damages and attorney fees may be awarded when it is shown by clear and convincing evidence that Defendants are guilty of financial abuse and fraud, the Court finds that Plaintiffs have raised a triable issue of material fact as to their claims for punitive damages and attorney fees.
Based on the foregoing, Defendants’ motion for summary adjudication of the punitive damages claim and prayer for attorney fees is DENIED.
Defendants’ motion for summary adjudication is DENIED in its entirety.
Moving party to give notice.
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