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This case was last updated from Los Angeles County Superior Courts on 07/07/2021 at 08:50:59 (UTC).

JON MERRIMAN, ET AL. VS ROBERT MUNDT

Case Summary

On 04/29/2020 JON MERRIMAN filed a Property - Other Property Fraud lawsuit against ROBERT MUNDT. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is JAMES C. CHALFANT. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******6381

  • Filing Date:

    04/29/2020

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Property - Other Property Fraud

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

JAMES C. CHALFANT

 

Party Details

Plaintiffs

MERRIMAN JON

MERRIMAN ODILE

Defendant

MUNDT ROBERT

Attorney/Law Firm Details

Plaintiff Attorneys

ROBINSON DAMION D

AFFELD DAVID WILLIAM

Defendant Attorney

DELAPLANE CHRISTOPHER EDWARD

 

Court Documents

Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE; ORDER TO SHOW CAUSE RE: FAILURE T...)

12/1/2020: Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE; ORDER TO SHOW CAUSE RE: FAILURE T...)

Notice - NOTICE NOTICE OF PLAINTIFF'S EX PARTE APPLICATION FOR TEMPORARY PROTECTIVE ORDER

9/17/2020: Notice - NOTICE NOTICE OF PLAINTIFF'S EX PARTE APPLICATION FOR TEMPORARY PROTECTIVE ORDER

Proof of Service (not Summons and Complaint)

9/17/2020: Proof of Service (not Summons and Complaint)

Memorandum of Points & Authorities

9/17/2020: Memorandum of Points & Authorities

Minute Order - MINUTE ORDER (HEARING ON EX PARTE APPLICATION OF PLAINTIFFS FOR TEMPORARY P...)

9/18/2020: Minute Order - MINUTE ORDER (HEARING ON EX PARTE APPLICATION OF PLAINTIFFS FOR TEMPORARY P...)

Memorandum of Points & Authorities - MEMORANDUM OF POINTS & AUTHORITIES PLAINTIFFS AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF WRIT OF ATTACHMENT

10/2/2020: Memorandum of Points & Authorities - MEMORANDUM OF POINTS & AUTHORITIES PLAINTIFFS AMENDED MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF WRIT OF ATTACHMENT

Notice of Application and Hearing for Writ of Attachment (CCP 484.040)

10/2/2020: Notice of Application and Hearing for Writ of Attachment (CCP 484.040)

Declaration - DECLARATION AMENDED COMPENDIUM OF DECLARATIONS IN SUPPORT OF PLAINTIFFS' APPLICATION FOR WRIT OF ATTACHMENT

10/2/2020: Declaration - DECLARATION AMENDED COMPENDIUM OF DECLARATIONS IN SUPPORT OF PLAINTIFFS' APPLICATION FOR WRIT OF ATTACHMENT

Answer

10/13/2020: Answer

Declaration - DECLARATION DECLARATION OF DEFENDANT ROBERT MUNDT IN SUPPORT OF HIS (1) OPPOSITION TO APPLICATION FOR RIGHT TO ATTACH ORDER AND (2) CLAIMS OF EXEMPTION

10/20/2020: Declaration - DECLARATION DECLARATION OF DEFENDANT ROBERT MUNDT IN SUPPORT OF HIS (1) OPPOSITION TO APPLICATION FOR RIGHT TO ATTACH ORDER AND (2) CLAIMS OF EXEMPTION

Proof of Service (not Summons and Complaint)

10/20/2020: Proof of Service (not Summons and Complaint)

Notice - NOTICE NOTICE OF WITHDRAWAL

10/21/2020: Notice - NOTICE NOTICE OF WITHDRAWAL

Order - DECISION ON APPLICATION FOR RIGHT TO ATTACH ORDER: DENIED

10/27/2020: Order - DECISION ON APPLICATION FOR RIGHT TO ATTACH ORDER: DENIED

Objection - OBJECTION PLAINTIFFS EVIDENTIARY OBJECTIONS TO OPPOSITION TO APPLICATION FOR WRIT OF ATTACHMENT

10/27/2020: Objection - OBJECTION PLAINTIFFS EVIDENTIARY OBJECTIONS TO OPPOSITION TO APPLICATION FOR WRIT OF ATTACHMENT

Minute Order - MINUTE ORDER (HEARING ON APPLICATION FOR WRIT OF ATTACHMENT AGAINST DEFENDA...)

10/27/2020: Minute Order - MINUTE ORDER (HEARING ON APPLICATION FOR WRIT OF ATTACHMENT AGAINST DEFENDA...)

Notice of Case Management Conference

5/8/2020: Notice of Case Management Conference

Civil Case Cover Sheet

4/29/2020: Civil Case Cover Sheet

Complaint

4/29/2020: Complaint

26 More Documents Available

 

Docket Entries

  • 08/29/2022
  • Hearing08/29/2022 at 11:30 AM in Department 16 at 111 North Hill Street, Los Angeles, CA 90012; Non-Jury Trial

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  • 08/19/2022
  • Hearing08/19/2022 at 11:30 AM in Department 16 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 12/01/2020
  • Docketat 09:00 AM in Department 16; Case Management Conference - Held

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  • 12/01/2020
  • Docketat 09:00 AM in Department 16; Order to Show Cause Re: Failure to File Proof of Service - Held

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  • 12/01/2020
  • DocketOrder (- Court's Case Management Order); Filed by Clerk

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  • 12/01/2020
  • DocketMinute Order ( (Case Management Conference; Order to Show Cause Re: Failure t...)); Filed by Clerk

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  • 11/19/2020
  • DocketCase Management Statement; Filed by Jon Merriman (Plaintiff); Odile Merriman (Plaintiff)

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  • 11/19/2020
  • DocketCase Management Statement; Filed by Robert Mundt (Defendant)

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  • 10/27/2020
  • Docketat 1:30 PM in Department 85, James C. Chalfant, Presiding; Hearing on Application for Writ of Attachment (CCP 484.040) - Not Held - Clerical Error

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  • 10/27/2020
  • Docketat 1:30 PM in Department 85, James C. Chalfant, Presiding; Hearing on Application for Writ of Attachment (CCP 484.040) - Held - Motion Denied

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26 More Docket Entries
  • 09/17/2020
  • DocketMemorandum of Points & Authorities; Filed by Jon Merriman (Plaintiff); Odile Merriman (Plaintiff)

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  • 09/17/2020
  • DocketProof of Service (not Summons and Complaint); Filed by Jon Merriman (Plaintiff); Odile Merriman (Plaintiff)

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  • 05/08/2020
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 05/08/2020
  • DocketOrder to Show Cause Failure to File Proof of Service; Filed by Clerk

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  • 04/30/2020
  • DocketNotice (Notice of Errata); Filed by Jon Merriman (Plaintiff); Odile Merriman (Plaintiff)

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  • 04/30/2020
  • DocketNotice (Second Notice of Errata); Filed by Jon Merriman (Plaintiff); Odile Merriman (Plaintiff)

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  • 04/29/2020
  • DocketComplaint; Filed by Jon Merriman (Plaintiff); Odile Merriman (Plaintiff)

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  • 04/29/2020
  • DocketSummons (on Complaint); Filed by Jon Merriman (Plaintiff); Odile Merriman (Plaintiff)

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  • 04/29/2020
  • DocketCivil Case Cover Sheet; Filed by Jon Merriman (Plaintiff); Odile Merriman (Plaintiff)

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  • 04/29/2020
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by Clerk

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Tentative Rulings

Case Number: 20STCV16381    Hearing Date: October 27, 2020    Dept: 85

Jon Merriman, et al., v. Robert Mundt, et al., 20STCV16381

Tentative decision on application for right to attach order: denied

Plaintiffs Jon Merriman (“Jon”) and Odile Merriman (“Odile”) (collectively the “Merrimans”) seek a right to attach order against Defendant Robert Mundt (“Mundt”) in the amount of $690,000.

The court has read and considered the moving papers[1], opposition,[2] and reply,[3] and renders the following tentative decision.

A. Statement of the Case

1. Complaint

Plaintiffs commenced this action on April 29, 2020, alleging causes of action for: (1) fraud; (2) negligent misrepresentation; (3) breach of contract; (4) breach of warranty; (5) construction defect (strict liability); (6) negligence; and (7) unfair business practices. The Complaint alleges in pertinent part as follows.

On December 26, 2017, the Merrimans agreed to buy what they believed was a $2,400,000 luxury home from Mundt located at 2353 Waring Drive in Agoura Hills (“Property”). Mundt, directly and through his real estate agent David McLaughlin (“McLaughlin”), represented to the Merrimans that the Property was “new” and “modular.” In reality, it consisted of four used mobile trailers Mundt attached together and concealed in a stucco façade. Mundt also built a central living structure in the middle of the four trailers. Mundt is not a licensed contractor.

Prior to closing, the Merrimans’ home inspection revealed a number of needed repairs. Mundt and McLaughlin continued to make fraudulent representations and false promises after the Merrimans raised questions about the condition of the home. McLaughlin reassured the Merrimans that they had nothing to worry about, and that Mundt would make all of the repairs.

Mundt actively concealed serious problems with the Property. Among other things, he failed to properly seal or weatherproof any of the doors or windows, resulting in water intrusion in every room, extensive water damage, and a risk of mold contamination. The roof is not designed or constructed properly, causing water to pool on the roofs of the trailers, which are not designed to accommodate the weight of standing water, causing a risk of collapse. Rather than run proper electrical wiring, Mundt hid household extension cords inside the walls.

Mundt and McLaughlin represented that Mundt owned a second parcel adjacent to the Property, APN No. 2063-040-141 (“Parcel”), which he purportedly sold to the Merrimans. Mundt did not own the second parcel and could not sell it to the Merrimans.

2. Course of Proceedings

On September 18, 2020, the court denied Plaintiffs’ ex parte application for a temporary protective order against Mundt.

According to a proof of service on file, Mundt was served with the moving papers for the instant application on September 17, 2020, via overnight mail and email. Mundt was personally served with amended moving papers on October 2, 2020.

On October 13, 2020, Mundt filed an Answer to the Complaint.

B. Applicable Law

Attachment is a prejudgment remedy providing for the seizure of one or more of the defendant’s assets to aid in the collection of a money demand pending the outcome of the trial of the action. See Whitehouse v. Six Corporation, (1995) 40 Cal.App.4th 527, 533. In 1972, and in a 1977 comprehensive revision, the Legislature enacted attachment legislation (CCP §481.010 et seq.) that meets the due process requirements set forth in Randone v. Appellate Department, (1971) 5 Cal.3d 536. See Western Steel & Ship Repair v. RMI, (12986) 176 Cal.App.3d 1108, 1115. As the attachment statutes are purely the creation of the Legislature, they are strictly construed. Vershbow v. Reiner, (1991) 231 Cal.App.3d 879, 882.

A writ of attachment may be issued only in an action on a claim or claims for money, each of which is based upon a contract, express or implied, where the total amount of the claim or claims is a fixed or readily ascertainable amount not less than five hundred dollars ($500). CCP §483.010(a). A claim is “readily ascertainable” where the amount due may be clearly ascertained from the contract and calculated by evidence; the fact that damages are unliquidated is not determinative. CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., (2004) 115 Cal.App.4th 537, 540-41 (attachment appropriate for claim based on rent calculation for lease of commercial equipment).

If the action is against a defendant who is a natural person, an attachment may be issued only on a commercial claim which arises out of the defendant’s conduct of a trade, business, or profession. CCP §483.010(c). Consumer transactions cannot form a basis for attachment. CCP §483.010(c); Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson, (1987) 197 Cal.App.3d 1, 4 (action involving trust property was a commercial, not a consumer, transaction).

The plaintiff may apply for a right to attach order by noticing a hearing for the order and serving the defendant with summons and complaint, notice of the application, and supporting papers any time after filing the complaint. CCP §484.010. Notice of the application must be given pursuant to CCP section 1005, sixteen court days before the hearing. See ibid.

The notice of the application and the application may be made on Judicial Council forms (Optional Forms AT-105, 115). The application must be supported by an affidavit showing that the plaintiff on the facts presented would be entitled to a judgment on the claim upon which the attachment is based. CCP §484.030.

Where the defendant is a natural person, the description of the property must be reasonably adequate to permit the defendant to identify the specific property sought to be attached. CCP §484.020(e). Although the property must be specifically described, the plaintiff may target for attachment everything the individual defendant owns. Bank of America v. Salinas Nissan, Inc., (1989) 207 Cal.App.3d 260, 268.

A defendant who opposes issuance of the order must file and serve a notice of opposition and supporting affidavit as required by CCP section 484.060 not later than five court days prior to the date set for hearing. CCP §484.050(e). The notice of opposition may be made on a Judicial Council form (Optional Form AT-155).

The plaintiff may file and serve a reply two court days prior to the date set for the hearing. CCP §484.060(c).

At the hearing, the court determines whether the plaintiff should receive a right to attach order and whether any property which the plaintiff seeks to attach is exempt from attachment. The defendant may appear the hearing. CCP §484.050(h). The court generally will evaluate the attachment application based solely on the pleadings and supporting affidavits without taking additional evidence. Bank of America, supra, 207 Cal.App.3d at 273. A verified complaint may be used in lieu of or in addition to an affidavit if it states evidentiary facts. CCP §482.040. The plaintiff has the burden of proof, and the court is not required to accept as true any affidavit even if it is undisputed. See Bank of America, supra, at 271, 273.

The court may issue a right to attach order (Optional Form AT-120) if the plaintiff shows all of the following: (1) the claim on which the attachment is based is one on which an attachment may be issued (CCP §484.090(a)(1)); (2) the plaintiff has established the probable validity of the claim (CCP §484.090(a)(2)); (3) attachment is sought for no purpose other than the recovery on the subject claim (CCP §484.090(a)(3); and (4) the amount to be secured by the attachment is greater than zero (CCP §484.090(a)(4)).

A claim has “probable validity” where it is more likely than not that the plaintiff will recover on that claim. CCP §481.190. In determining this issue, the court must consider the relative merits of the positions of the respective parties. Kemp Bros. Construction, Inc. v. Titan Electric Corp., (2007) 146 Cal.App.4th 1474, 1484. The court does not determine whether the claim is actually valid; that determination will be made at trial and is not affected by the decision on the application for the order. CCP §484.050(b).

Except in unlawful detainer actions, the amount to be secured by the attachment is the sum of (1) the amount of the defendant’s indebtedness claimed by the plaintiff, and (2) any additional amount included by the court for estimate of costs and any allowable attorneys’ fees under CCP section 482.110. CCP §483.015(a); Goldstein v. Barak Construction, (2008) 164 Cal.App.4th 845, 852. This amount must be reduced by the sum of (1) the amount of indebtedness that the defendant has in a money judgment against plaintiff, (2) the amount claimed in a cross-complaint or affirmative defense and shown would be subject to attachment against the plaintiff, and (3) the value of any security interest held by the plaintiff in the defendant’s property, together with the amount by which the acts of the plaintiff (or a prior holder of the security interest) have decreased that security interest’s value. CCP §483.015(b). A defendant claiming that the amount to be secured should be reduced because of a cross-claim or affirmative defense must make a prima facie showing that the claim would result in an attachment against the plaintiff.

Before the issuance of a writ of attachment, the plaintiff is required to file an undertaking to pay the defendant any amount the defendant may recover for any wrongful attachment by the plaintiff in the action. CCP §489.210. The undertaking ordinarily is $10,000. CCP §489.220. If the defendant objects, the court may increase the amount of undertaking to the amount determined as the probable recovery for wrongful attachment. CCP §489.220. The court also has inherent authority to increase the amount of the undertaking sua sponte. North Hollywood Marble Co. v. Superior Court, (1984) 157 Cal.App.3d 683, 691.

C. Statement of Facts

1. Plaintiff’s Evidence[4]

In late 2017, Mundt had the Property for sale. Merriman Decl., ¶2. The Merrimans received and relied upon a variety of statements and representations about the Property from Mundt and the dual agent on the transaction, McLaughlin. Merriman Decl., ¶3, Ex. 1. Mundt and McLaughlin described the Property as a “new,” “modular,” or “partially modular” home. The Merrimans also reviewed and relied upon a real estate listing for the Property that McLaughlin had posted. Id. McLaughlin stated that he had sold a number of properties for Mundt over the years and that Mundt did great work in building and renovating. Merriman Decl., ¶4. He showed the Merrimans a portfolio of properties built and sold by Mundt in the past and explained what work Mundt did. Id. Mundt and McLaughlin represented that the Parcel would be included in the purchase. Merriman Decl., ¶5.

The Merrimans placed an offer on the Property on December 26, 2017, which Mundt accepted. Merriman Decl., ¶6, Ex. 2.

Prior to closing, the Merrimans conducted a home inspection of the Property, which revealed several problems and the need for repairs. Merriman Decl., ¶7. McLaughlin said that the Merrimans had “nothing to worry about,” and that it was a “good thing” that the inspection report was so thorough. Merriman Decl., ¶8. McLaughlin assured the Merrimans that Mundt would make all of the repairs and that he did “great work.” Id. Odile prepared a list of the items that would need to be repaired per our pre-closing inspection. Id. This list was incorporated as Addendum No. 2 to the parties’ purchase agreement, through which Mundt agreed to make the repairs. Id., Ex. 3.

Based on Mundt’s agreement and McLaughlin’s representations that Mundt would do the repairs in Addendum 2, the Merrimans agreed to go forward with the purchase. Merriman Decl., ¶9. Shortly before the sale was set to close, McLaughlin called the Merrimans and said that the Parcel would have to be transferred separately from the main parcel for legal reasons. Merriman Decl., ¶10. He represented that the Parcel would be transferred by separate deed. Id. The Merrimans closed escrow on the sale on February 28, 2018, paying the final purchase price of $2,300,000. Merriman Decl., ¶11.

Despite repeated assurances by Mundt and McLaughlin, Mundt failed to properly complete the vast majority of the repairs specified in Addendum No. 2. Merriman Decl., ¶12. He patched up some issues with temporary fixes, which the Merrimans had to repair again later at their own cost. Id. He did not make all of the repairs listed in Addendum No. 2. He also failed to make certain improvements required by the Purchase Agreement and other addenda. Id.

The Merrimans later learned that the home was not a new, modular home. Merriman Decl., ¶13. When the Merrimans began making repairs, they learned that Mundt had built the home by attaching four used trailers together and then wrapping them in a stucco façade, building part of the structure between the trailers. Id. Mundt is not a licensed contractor. Id.

At present, the Property continues to have serious issues, including those identified in Addendum No. 2. Merriman Decl., ¶14, Exs. 4-1 - 4-3; Friedman Decl., ¶5, Ex. 1. Many of these problems were not disclosed and were concealed at the time the Merrimans purchased the home. Id. Some of the more serious problems include, but are not limited to, improperly weatherproofed doors and windows, resulting in water leaks and significant water damage, improper electrical installations, improperly installed plumbing, and defects in the electrical system. Id. The estimated repair costs amounted to $789,073.20. Friedman Decl., ¶8. The Merrimans have already spent in excess of $800,000 repairing the various issues. Merriman Decl., ¶14.

Although Mundt gave the Merrimans a deed to the Parcel, the County would not record their title. Merriman Decl., ¶16. Based on a review of public records, it appears that Mundt has never owned the Parcel. Id., Ex. 5. Had the Merrimans known the true facts regarding the Property and the Parcel, they would never have purchased the Property. Merriman Decl., ¶17.

Based discussions with Mundt and others, the Merrimans understand that Mundt is a professional “flipper” of homes. Merriman Decl., ¶19. McLaughlin told the Merrimans that Mundt had built and sold several homes in the past. Id. He provided a list of multiple new construction and remodeled houses that Mundt has sold in Oregon and California. The Merrimans are aware of other homes in their area that Mundt either built or renovated, which neighbors refer to as “Mundt homes.” Id. The people who bought one of these properties told the Merrimans that they had similar issues, and that Mundt did not make the necessary repairs to that property either. Id.

The current value of the Property, without considering the construction defects, is $2,400,000. Collins Decl., ¶7a. The value of the Property when accounting for the defects is $1,610,000. Collins Decl., ¶7b.

On February 22, 2019, the Merriman’s counsel, Damion Robinson, Esq. (“Robinson”), sent a demand letter and Notice of Claim to Mundt’s known mailing address, which is a Post Office box. Robinson Decl., ¶2, Ex. 1. Attorney Christopher F. Delaplane, Esq. (“Delaplane”) responded to the letter, purporting to represent Mundt. Robinson Decl., ¶3. Neither Mundt nor Delaplane have indicated that Mundt would repair the defects identified in the notice. Mundt has not made any repairs since this notice. Id.

On May 4, 2020, Robinson sent a Supplemental Written Notice of Claim to Mundt at his Post Office box, which supplemented the February 22, 2019 Notice of Claim described above and enumerated additional defects on the Merrimans’ property. Robinson Decl., ¶4, Ex. 2. Neither Mundt nor Delaplane responded to this Supplemental Written Notice. Robinson Decl., ¶5. On or March 28, 2019, Robinson’s partner David Affeld, Esq. sent Mundt’s counsel a rescission letter. Robinson Decl., ¶6, Ex. 3.

2. Defendant’s Evidence

Mundt’s profession can be defined as a flipper or investor in real property. Mundt Decl., ¶2. Mundt’s investments have included, among other things, purchasing and reselling real property, including vacant lots, remodeling and reselling homes, and developing and reselling vacant land. Id.

Mundt does not have a standard job and the sole source of income for himself and his family are the profits realized from the sales of properties. Mundt Decl., ¶3. Mundt generates necessary additional funds to support his family by refinancing and/or selling his primary residence to obtain a portion of the equity. Id. As a result, he is dependent on each sale to provide enough income in order to support his family until the next sale of real property. Id.

On February 14, 2014, Mundt purchased the Property, which at the time was a vacant parcel. Mundt Decl., ¶4. Upon purchasing the Property, he intended to build a home for himself and his family. Mundt Decl., ¶4. In 2016, Mundt commenced construction of a residence at the Property. Mundt Decl., ¶5. As part of the construction, Mundt purchased two modular buildings and incorporated them into the design. Id. The modular buildings were noted in the engineering plans prepared by a licensed engineer and approved by the County of Los Angeles (“County”). Id. The Certificate of Occupancy for the Property notes a “3,354 SQ FT Modular Home on Permanent Foundation with 1,842 SQ FT Attached Decks.” Id.

Certain requirements apply to the Property since it is located in a flood plain. Mundt Decl., ¶6. The residence was required to be built above flood level by being constructed on top of several large pillars, which served as the foundation of the property. Id. Additionally, inspectors would not permit Mundt to hardwire electrical wire on the exterior of the Property, so extension cords were used to power lighting in the exterior cabanas. Id. All work completed at the Property was approved by the County during the final inspection on December 20, 2017. Id.

At all relevant times, Mundt believed that the Property was constructed in accordance with applicable building codes and fully approved by the County. Mundt Decl., ¶¶ 7-8. Mundt’s family occupied the Property as their primary residence for several years. Id.

On December 27, 2017, Mundt accepted Plaintiffs’ offer to purchase the Property for $2,450,000. Mundt Decl., ¶10, Ex. A. As part of the transaction, Plaintiffs and Mundt executed a Residential Lease After Sale (Seller in Possession After Close of Escrow), dated December 26, 2017, which allowed Mundt’s family to stay in the property through May 31, 2018. Mundt Decl., ¶11, Ex. B. Mundt’s family vacated the Property on May 31, 2018. Mundt Decl., ¶9.

On January 12, 2018, Plaintiffs retained John Fleener of JDA Home Inspection to conduct an inspection of the Property. Mundt Decl., ¶12, Ex. C. Fleener’s inspection report details several defects and issues with the Property, including: the rear patio is elevated with water entry into residence being possible (Page 18); missing sealant at threshold jams around property with water entry into residence being possible (Page 23); issues with construction of roof and interior leaks (Page 32); staining and elevated moisture readings at window sills with evidence of water leaks (Page 37); leaks in bedrooms (Page 41); deflection of wood flooring when stepped upon (Page 42); and issues with water intrusion in all bathrooms and improper shower enclosures (Page 50). Id.

Plaintiffs conducted several additional inspections of the Property, including flying in a contractor from Northern California to inspect the Property. Mundt Decl., ¶13. During the inspection period, Plaintiffs had full access to the Property and were not prevented from conducting any inspections. Id.

On January 23, 2018, Mundt received a Request for Repair No. 1 (“RR”) from Plaintiffs which requested that Mundt repair an extensive list of defects with the Property and lower the purchase price of the Property to $2,400.000. Mundt Decl., ¶14, Ex. D. Additionally, Mundt received a letter from Plaintiffs, addressed to his real estate agent, that further detailed their concerns with the Property. Mundt Decl., ¶15, Ex. E.

On January 27, 2018, Mundt executed the Seller’s Response and Buyer Reply to Request for Repair No. 1 (“RRRR”). Mundt Decl., ¶16, Ex. F. In connection with the RRRR, Mundt provided a detailed response to a majority of Plaintiffs’ list of defects as well as receipts for the roof repairs at the Property. Id.

On February 14, 2018, Plaintiffs and Mundt came to an agreement to resolve the Plaintiffs’ requests for repairs and a price reduction. Mundt Decl., ¶17. To this end, Plaintiffs executed the RRRR noting that the terms of the agreement were memorized in Addendum No. 2. Id., Ex. G.

Addendum No. 2 contained the following relevant terms:

(1) The parcel adjoining the Property was to be removed from the purchase agreement and deeded separately to Plaintiffs. It was agreed that the small parcel “will have no price attached and will be deeded at no cost.” Mundt Decl., ¶18a.

(2) The purchase price was to be reduced from $2,450,000 to $2,300,000 “based on two appraisals by lender and based on Buyer’s due diligence and recommendation of Buyer’s contractors and inspectors regarding the deck and walls.” Mundt Decl., ¶18b.

(3) In addition to the price reduction, escrow was required to hold $60,000 for the completion of three items – (i) completion of loft area; (ii) mold repair and exploration proposed by Building Cleaning Services, Inc. at a cost of $3,754.00; and (iii) waterproofing of deck by Capital Deck & Stair Waterproofing at a cost of $25,464. Mundt Decl., ¶18c.

(4) Plaintiffs were to execute a “General Liability Release of Claims,” in which Plaintiffs were to release Mundt, the escrow company, and the real estate agents from any and all “claims, demands, damages, actions, causes of action…arising out of or in any way related to…the deck, deck walls and water and structural matters pertaining to the deck and deck walls at the Property.” Mundt Decl., ¶18d.

(5) All work noted in Mundt’s response to Plaintiffs’ RR was to be completed by April 20, 2018. Mundt Decl., ¶18e.

By executing the RRRR, Plaintiffs further agreed to release brokers and Mundt “from any loss, liability, expense, claim or cause of action regarding the disclosed condition of the Property.” Mundt Decl., ¶19.

Escrow on the sale of the Property closed on February 28, 2018. Mundt Decl., ¶20. The proceeds from the sale of the Property were $652,601.61. Mundt Decl., ¶21, Ex. H. Mundt used the proceeds from the sale as follows:

(1) The repayment of loans received from family members for the construction of the Property, totaling approximately $40,000 to $60,000. Mundt Decl., ¶22a.

(2) The purchase of the real property located at 5999 Trancas Canyon Road, Malibu, California (“Vacant Lot”) for $625,000. Mundt Decl., ¶22b. In connection with purchase, the sellers of the Vacant Lot carried back a loan in the amount of $465,000. Id. The remaining amount – approximately $160,000 – plus any related-escrow costs were paid from the Property’s proceeds. Id.

(3) The purchase of Mundt’s primary residence, located at 30009 Triunfo Canyon Road, Agoura Hills, California 91310 (“Triunfo Property”) for $1,000,000 on September 17, 2019. Mundt Decl., ¶22c. Approximately $200,000 from the Property’s proceeds was used as a down payment on Triunfo Property. Id. Mundt estimates approximately $275,000 from the Property’s proceeds has been used towards the Triunfo Property. Id. Presently, Mundt has encumbrances in the amount of at least $1,500,00 recorded against this property. Id.

(4) The remaining amount of the Property’s proceeds have been used for Mundt’s family’s living expenses, including housing, food, health, etc. Mundt estimates that the total amount used towards his family’s living expenses to be approximately $155,000. Mundt Decl., ¶22d.

D. Analysis

Plaintiffs seek a right to attach order against Defendant Mundt in the amount of $690,000. Mundt opposes.

1. The Claim Is Based on a Contract

Plaintiffs’ have a claim for breach of implied contract based on Mundt’s fraudulent or negligent misrepresentations to induce Plaintiffs’ to purchase the Property. App. at 8-10; Reply at 2. Plaintiffs assert they are entitled to rescission and properly demanded rescission in their Complaint.

Where the law implies an obligation to return money paid, an implied contract justifies attachment. 6 Witkin, California Procedure, (5th Ed. 2008) §60, p.71. Fraud furnishes a foundation upon which rests the rescission of a promise or obligation, resulting in an implied-in-law contract to repay the funds. Filipan v. The Television Mart, (1951) 105 Cal.App.2d 404 (attachment proper where plaintiff induced by the defendants’ false representations to buy one-half of their business, forming foundation for a promise or obligation to return the money on a contract theory). Misrepresentation or concealment of a material fact is ground for rescission. See Santa Clara Waste Water Co. v. Allied World Nat’l Assur. Co., (“Santa Clara Waste”) (2017) 18 Cal.App.5th 881, 886-87 Attachment is proper where the plaintiff is entitled to rescission. Id. The law implies a promise to return the consideration paid where a transaction is rescinded. Klein v. Benaron, (1967) 247 Cal.App.2d 607, 608-09 (finding attachment proper for plaintiff fraudulently induced to make loan).

Mundt argues that Plaintiffs have not demonstrated that rescission can serve as a basis for attachment in a transaction involving real property, as Santa Clara Waste was a claim for money, not real property. Opp. at 10. Mundt does not cite to any authority demonstrating that attachment is not available for rescission of a real property transaction.

Plaintiff’s claim is based on an implied contract for rescission.

2. The Amount Due is Fixed and Readily Ascertainable

A claim is “readily ascertainable” where the amount due may be clearly ascertained from the contract and calculated by evidence. CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., supra, 115 Cal.App.4th at 540-41.

Plaintiffs assert that the amount of their rescission claim is readily ascertainable. They reason as follows. When a buyer rescinds, the seller must refund all monies received in connection with the sale. Wong v. Stoler, (2015) 237 Cal.App.4th 1375, 1387 (citation and quotes omitted). It is undisputed that they paid $2,300,000 for the Property. App. at 7; Merriman Decl., Ex. 1; Mundt Decl., Ex. H; Reply at 6. A buyer who rescinds shall not be denied relief because of a delay in tendering restoration of benefits before judgment unless the delay is prejudicial. Civil Code §1693. One who pays any part of the purchase price for real property has a special lien on the property. Civil Code §3050. A rescinding buyer who timely seeks rescission of a real property sale is entitled to retain possession pending a judicial determination. Miller & Starr, (4th ed.) 12 Cal. Real Est. §40.9.

Plaintiffs acknowledge that attachment is not available for a claim secured by real property and the special lien in Civil Code section 3050 is such a security. See CCP §483.010(b). Plaintiffs note that there is an exception where the claim was originally so secured but, without any act of the plaintiff or the person to whom the security was given, the security has become valueless or has decreased in value to less than the amount owing on the claim. Id. In that event, the amount attachable shall not exceed the lesser of the amount of decrease or the difference between the value of the security and the amount owing on the claim. Id. Plaintiffs contend that the Property without defects is ($2,400,000) and the value taking the defects into account is $1,610,000, a difference of $690,000. Collins Decl., ¶7, Ex. 2. This amount, Plaintiffs claim, is readily ascertainable. App. at 7, 8; Reply at 6.

Mundt argues that the amount is not readily ascertainable because he is entitled to a credit for the reasonable rental value for the period of Plaintiffs’ occupancy pursuant to CCP section 1692. Opp. at 10. This is an argument for offset, as discussed post, and does not affect the ascertainability of the amount in question.

Mundt also argues (Opp. at 10-11) that Civil Code section 3050 is inapplicable because it applies only to land sales contracts to secure a buyer’s payments prior to the conveyance of title to the property. See Montgomery v. Meyerstein, (1921) 186 Cal. 459; See also 39 Op.Atty.Gen. 16, 1-12-62 (buyer under a conditional land sales contract acquires a special lien on the proper to the extent of his payments and, when he completes his payments he can bring an action in specific performance to have the title transferred). Whether or not Plaintiffs have a secured interest in the Property under Civil Code section 3050, Plaintiffs owned the Property and are entitled to possess it until the rescinded sale is completed through judgment. This is sufficient to constitute the “claim secured by any interest in real property” discussed in CCP section 483.010(b) such that Plaintiffs cannot obtain attachment on the full sales price rescinded.

However, problems remain with Plaintiffs’ approach. First, CCP section 483.010(b) requires: “[A]n attachment may be issued where the claim was originally so secured but, without any act of the plaintiff or the person to whom the security was given, the security has become valueless or has decreased in value to less than the amount then owing on the claim.” Thus, the diminution in value must occur (1) after the security was given and (2) through no act of either party. Plaintiffs do not meet either requirement. The diminution in value occurred because of Mundt’s acts and it always existed. The Property’s value did not decrease after the sale; it was always worth less than the sale price because of undisclosed defects.

Second, Plaintiffs rely on an appraisal which values the Property partly on the wrong date. Collins’ appraisal is dated October 2, 2020 and provides the values on that date, both considering the defects and without considering the defects. Collins Decl., ¶7. As stated, under CCP section 483.010(b) the February 28, 2018 date of sale is the proper date to value the Property without the consideration of the defects, not October 2, 2020.[5] Similarly, the “out of pocket” loss for fraud in the sale of real property is calculated by the diminution in value between the actual value received and the actual value conveyed on February 28, 2018, the date of the allegedly fraudulent transaction. Civil Code §3343; See Hancock v. Williams, (1950) 99 Cal.App.2d 80, 82.

Third, the appraisal is little more than a deduction of the construction expert’s cost of repair from the Property’s current market value without considering defects. Plaintiffs’ provide a general contractor’s declaration stating what the defects are and that it will cost $789,073.20 to repair them. Friedman Decl., ¶¶ 5-8. Collins’ appraisal is based on a “cost to cure” approach which estimates the impact on value of the repair of construction defects. Collins Decl., ¶8. Essentially, Collins found a current market value of $2.4 million based on comparable sales, deducted Friedman’s repair costs of $789,073, and valued the Property at $1,610,000. Collins Decl., ¶¶ 7-8. By Collins’ admission, the appraisal is hypothetical and “an extraordinary assumption.” Collins Decl., Ex. 2. As Plaintiffs note (Reply at 6), there is nothing wrong valuing the Property’s defects through the cost of repair, and Plaintiffs may rely on this at trial. But it is not an approach that is readily ascertainable from the Purchase Agreement, as Mundt notes. Opp. at 12.

Finally, Mundt is at least partly correct when he argues that some of the defects listed by Friedman were disclosed or known to Plaintiffs. Before purchasing, Plaintiffs sought repair of water damage and mold issues. Mundt Decl., Ex. D. Addendum 2 reduced the purchase price from $2,450,000 to $2,300,000 and held back $60,000 for (i) completion of loft area; (ii) mold repair and exploration, and (iii) waterproofing of the deck. Mundt Decl., ¶18c. Plaintiffs’ signed a release for the deck repair (Mundt Decl., ¶18d), and a release of Mundt “from any loss, liability, expense, claim or cause of action regarding the disclosed condition of the Property.” Mundt Decl., ¶19.

Plaintiffs show that the Property continues to have many repair issues, including those identified in Addendum No. 2. Merriman Decl., ¶14, Exs. 4-1 - 4-3; Friedman Decl., ¶5, Ex. 1. Many of these problems were not disclosed and were concealed when the Merrimans purchased the home. Id. Some of the more serious problems include, but are not limited to, improperly weatherproofed doors and windows, resulting in water leaks and significant water damage, improper electrical installations, improperly installed plumbing, and defects in the electrical system. Id. But if some of the problems were known at the time of sale and Plaintiffs released Mundt from the disclosed condition of the Property, those disclosed defects cannot be a source for recovery.

The amount due is not fixed and readily ascertainable.[6]

3. Probability of Success

Plaintiffs assert that they have shown a probability of success on its claims for rescission, because Mundt failed to disclose material facts affecting the value of the Property. App. at 9.

Where the seller knows of facts materially affecting the value or desirability of the property and also knows that such facts are not known to, or within the reach of the diligent attention and observation of the buyer, the seller is under a duty to disclose them. He is liable for the failure to disclose material facts because doing so “amounts to a representation of the nonexistence of the facts which he has failed to disclose. Calemine v. Samuelson, (2009) 171 Cal.App.4th 153, 161. A single misstatement as to a material fact, knowingly made with intent to induce another into entering the contract, will, if believed and relied on by that other, afford a complete ground for rescission. Stewart v. Crowley (1931) 213 Cal. 694, 700. A failure to disclose amounts to actionable fraud, supporting rescission. See Marketing West, Inc. v. Sanyo Fisher (USA) Corp., (1992) 6 Cal.App.4th 603, 613.

Plaintiffs argue that the evidence supports a claim for rescission and demonstrates that Mundt knew about yet failed to disclose numerous material facts regarding the Property, such as the fact that it was constructed from four used trailer and the various defects and hazards resulting from improper construction. App. at 9; Reply at 7-8. Plaintiffs assert they could not have discovered all the defects even with a thorough inspection, as many were hidden inside walls and behind fixtures. App. at 9; Reply at 8. Mundt also affirmatively represented that he could sell Plaintiffs the Parcel, despite knowing he did not own the Parcel. App. at 10.

Mundt disputes that Plaintiffs have shown a probability of success. Mundt notes that buyers of real property have, pursuant to Civ. Code section 2079.5, an affirmative duty to exercise reasonable care to protect himself or herself, including those facts which are known to or within the diligent attention and observation of the buyer. Opp. at 12. It is undisputed that Plaintiffs were made aware during their inspection period of several defects in the condition of the Property and requested and received a price reduction and other consideration from Mundt. Opp. at 12-13. Plaintiffs also agreed to release Mundt from any and all claims arising out of or in any way related to the deck, deck walls and water and structural matters pertaining to the deck and deck walls and from any loss, liability, expense, claim or cause of action regarding the disclosed condition of the Property. Opp. at 13. Mundt asserts that a majority of the defects claimed by Plaintiffs were known or should have been known by Plaintiffs prior to the close of escrow and Plaintiffs cannot establish the probable validity of their claim. Opp. at 13.

While Mundt’s arguments affect the amount of Plaintiffs’ recovery, they do not affect the probability of success determination. Plaintiffs only agreed to release Mundt from liability for claims arising from disclosed conditions of the Property. Mundt Decl., Ex. G. Mundt’s evidence establishes that the only defects of which Plaintiffs were aware when they executed the Second Addendum related to water leakage and mold damage (and the deck, which is not at issue). Mundt Decl. Exs. C, E. Plaintiffs subsequently learned of additional defects, including electrical wiring and plumbing. Merriman Decl., ¶14. These defects could not have discovered these latent defects while exercising reasonable care. Mundt does not deny that he knew about and failed to disclose these defects.

Plaintiffs have demonstrated a probability of success on their claim for rescission.

4. Offset

Mundt argues that he is entitled to offset the amount of Plaintiffs’ claim with a credit for the reasonable rental value of the Property for the period of their occupancy. Opp. at 10.

A defendant may raise a claim of offset for any indebtedness of the plaintiff to the defendant raised in a cross-complaint or affirmative defense in an answer. CCP §483.015(b)(2), (3). The defendant’s offset claim under CCP section 483.015(b)(2) or (3) must be supported by sufficient evidence to prove a prima facie case of attachment in its own right. Lydig Construction, Inc. v. Martinez Steel, (2015) 234 Cal.App.4th 937; Pos-A-Traction, Inc. v. Kelly Springfield, (C.D. Cal. (1999) 112 F.Supp.2d 1178, 1183.

It is true that Civil Code section 1692 provides that the court may require the rescinding party to compensate the other party as justice may require. This is an affirmative defense, and Mundt wrongly contends that Plaintiffs had the burden to address it. A defendant may raise a claim of offset for any indebtedness of the plaintiff to the defendant raised in a cross-complaint or affirmative defense in an answer. CCP §483.015(b)(2), (3). Mundt failed to raise this defense in his Answer, but an answer or cross-complaint is not essential for claim of offset.

However, a defendant’s offset claim under CCP section 483.015(b)(2) or (3) must be supported by sufficient evidence to prove a prima facie case of attachment in its own right. Lydig Construction, Inc. v. Martinez Steel, (2015) 234 Cal.App.4th 937; Pos-A-Traction, Inc. v. Kelly Springfield, (C.D. Cal. 1999) 112 F.Supp.2d 1178, 1183. Mundt’s claim for offset fails because he does not provide any evidence, documentary or otherwise, establishing the amount claimed.

5. Attachment is Based on a Commercial Claim

If the action is against a defendant who is a natural person, an attachment may be issued only on a commercial claim which arises out of the defendant’s conduct of a trade, business, or profession. CCP §483.010(c). Consumer transactions cannot form a basis for attachment. CCP §483.010(c); Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson, (1987) 197 Cal.App.3d 1, 4 (action involving trust property was a commercial, not a consumer, transaction).

Plaintiffs assert that their claim arises out of Mundt’s trade or business in “flipping” luxury homes for a living, which is his sole occupation. App. at 11; Reply at 3-4. Mundt does not deny that his profession is a flipper or investor in real property and argues that his sale of the Property specifically did not arise from his conduct of that trade. Opp. at 14. Mundt differentiates the Property from those he sells for a living, arguing that because the Property was his residence, he was selling it as a consumer transaction, rather than a commercial one. Opp. at 14-15.

Mundt relies on Nakasone v. Randall, (“Nakasone”) (1982) 129 Cal.App.3d 757, which is some support. There, an 86-year old woman who had been a real estate broker, sold one of five properties she and her deceased husband had held in joint tenancy for 30-35 years. Id. at 762-63. The court that, notwithstanding the fact that the defendant was a real estate broker, all of the evidence pointed to a sale by her of real property held on her own account and not arising out of a business as a real estate broker. Id. at 763-64.

In this case, Mundt purchased the Property, which was a vacant lot, on February 14, 2014. Mundt Decl., ¶4. Upon purchasing the Property, he intended to build a home for himself and his family. Mundt Decl., ¶4. In 2016, Mundt commenced construction of a residence. Mundt Decl., ¶5. The construction was completed on an unknown date[7] and Mundt’s family lived there for several years. Mundt Decl., ¶¶ 7-8. On December 27, 2017, Mundt accepted Plaintiffs’ offer to purchase the Property. Mundt Decl., ¶10, Ex. A. As part of the transaction, Plaintiffs and Mundt executed a lease which allowed Mundt’s family to stay in the property through May 31, 2018. Mundt Decl., ¶11, Ex. B. Mundt’s family vacated the Property on May 31, 2018. Mundt Decl., ¶9.

Plaintiffs reply that Mundt is a real estate speculator and developer who renovates homes he designates as his primary residence and must do so for 12 months to be an “owner builder” under Bus. & Prof. Code section 7044(a)(3). Reply at 3. Mundt held the Property vacant for two years (Mundt Decl., ¶4), moved in after construction started, and sold immediately after it was finished. He reinvested in another “forever home” which he also intends to resell. Reply at 4.

The evidence provides some support for Mundt’s claim that he did not sell the Property as part of his trade of flipping properties. Unlike Nakasone, the evidence can be interpreted as consistent with Mundt’s trade. Despite his contention to the contrary, he may have purchased the vacant lot with the idea of building and flipping the Property when the time was right and living in the home in the interim. Plaintiffs believe so and they may well be correct. But there is only sparse evidence on the timing of construction and move in. Mundt also lease the Property after sale to Plaintiffs through May 31, 2018.

Based on the evidence presented, Plaintiffs’ claim does not arise out of Mundt’s conduct of a trade, business, or profession.

6. Defendant’s Property Is Adequately Described

Where the defendant is a natural person, the description of the property must be reasonably adequate to permit the defendant to identify the specific property sought to be attached. CCP §484.020(e). Although the property must be specifically described, the plaintiff may target for attachment everything the individual defendant owns. Centravel of America v. Salinas Nissan, Inc., (1989) 207 Cal.App.3d 260, 268. Although the property must be specifically described, the plaintiff may target for attachment everything the individual defendant owns. Bank of America v. Salinas Nissan, Inc., (1989) 207 Cal.App.3d 260, 268. The requirement of specificity avoids unnecessary hearings where an individual defendant is willing to concede that the described property is subject to attachment. Ibid. A general list of categories - e.g., “real property, personal property, equipment, motor vehicles, chattel paper, negotiable and other instruments, securities, deposit accounts, safe-deposit boxes, accounts receivable, general intangibles, property subject to pending actions, final money judgements, and personal property in decedents’ estates” – is sufficient. Ibid.

Plaintiffs claim entitlement to attach the Triunfo Property, the Malibu Property, and cash on deposit at financial institutions in excess of $1,000. The property to be attached is adequately described.[8]

E. Conclusion

The application for a right to attach order is denied.


[1] The court has not read or considered the footnotes in Plaintiffs’ application or reply because they do not meet the 12-point type requirement of CRC 2.104.

[2] Mundt failed to lodge a courtesy copy of his opposition brief in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing. His counsel is admonished to provide courtesy copies in all future filings.

[3] Plaintiffs failed to lodge a courtesy copy of their reply brief in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing. Their counsel is admonished to provide courtesy copies in all future filings

[4] All of Plaintiffs’ written evidentiary objections to the Mundt declaration through paragraph 22 are overruled. The remaining objections are to evidence relevant only to the claims of exemption.

[5] In reply, Plaintiffs state that CCP section 483.010(b) provides for attachment of the difference between “the value of the security and the amount then owing on the claim”. Plaintiffs conclude that this means a calculation of the difference in value at the time of attachment, not at the time of the fraud: Reply at 6. Plaintiffs are focusing on the wrong portion of CCP section 483.010(b) which permits consideration “the amount then owing” because the amount owed at the time of attachment may be less than originally claimed (e.g., partial paydown of a loan). However, CCP section 483.010(b)’s plain focus is on the security’s decrease in value since the time it was originally given.

[6] Plaintiffs contend that it conflates two standards to consider CCP section 483.010(b) as part of the readily ascertainable determination and that their claim is readily ascertainable because they are owed $2.3 million in rescission. Reply at 4-5. This may be correct, but it does not really affect the analysis.

[7] Contrary to Plaintiffs’ claims that construction was completed on December 20, 2017 (Reply at 4), Mundt’s evidence only states that he received approvals for the completed work on this date.

[8] The court need not consider Mundt’s claims of exemption.

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