Block v. Tobin

• Court: California Court of Appeals
• Citation: 119 Cal.Rptr. 288,45 Cal.App.3d 214
• Decision Date: 10 February 1975
• Parties: Harry BLOCK et al., Plaintiffs and Appellants, v. George TOBIN et al., Defendants and Respondents. Civ. 35469.

Page 288

119 Cal.Rptr. 288 45 Cal.App.3d 214 Harry BLOCK et al., Plaintiffs and Appellants,
v.
George TOBIN et al., Defendants and Respondents. Civ. 35469. Court of Appeal, First District, Division 4, California. Feb. 10, 1975.

Page 289

[45 Cal.App.3d 218] Eugene Rippen, Maynard, Rippen, Hom & Ono, San Jose, for plaintiffs and appellants.

Bernard J. Vogel, Jr., San Jose, for defendants and respondents George Tobin and Authony Cocciardi.

Frank C. Burriesci, San Jose, for defendants and respondents Transamerica Title Ins. Co. and Roxanne J. Friesen.

CHRISTIAN, Associate Justice.

Harry Block, Dale Hutchins and Jerome A. Kolkin, prospective bidders at a trustee's sale under a deed of trust, sued the beneficiary, and those who conducted the sale, for damages for deceit and the holding of a mock auction. The appeal is from a judgment of dismissal which was entered after defendants' demurrer to plaintiffs' complaint was sustained.

The allegations of the complaint may be summarized as follows. Respondents published notice that the property subject to the deed of trust would be sold at public auction to satisfy the secured obligation. Respondent Transamerica was the trustee for the benefit of respondent Anthony Cocciardi, an assignee of the original beneficiary. The advertisement was issued by respondent Roxanne Friesen, a foreclosure officer of Transamerica. It was alleged that respondents had no real intention to sell the property at auction; on the contrary, they planned to arrange matters so that Cocciardi could bid the property in without competition. While the sale had originally been scheduled for December 7, 1972, respondents made repeated postponements to frustrate competitive bidding. The auction was eventually rescheduled for January 12, 1973. At the time and place of the auction, however, George Tobin was secretly substituted as trustee. Tobin then secretly sold the property to Cocciardi for $26,700, whereas the fair market value of the property was $36,000. Believing that a real auction would be held, appellants had expended time and effort in preparing to bid.

Appellants claimed damages in the sum of $9,300 for their loss of opportunity to purchase the property at the sale. In addition, they prayed for judgment in the amount of $600 each to compensate for loss of time and effort, and $50,000 each in punitive damages.

[45 Cal.App.3d 219] Appellants first contend that the complaint stated a cause of action for deceit under Civil Code sections 1709--1711.

Page 290

Actionable deceit allegedly occurred when they were induced to prepare for and appear at a public auction which the trustee secretly intended to avoid. Actionable deceit occurs if a material and knowingly false representation, made with intent to induce action, causes reasonable and detrimental reliance. (Civ.Code, §§ 1709--1711; Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 422, 159 P.2d 958; Harazim v. Lynam (1968) 267 Cal.App.2d 127, 130, 72 Cal.Rptr. 670.) It is not a defense that a false statement was made pursuant to some statutory scheme such as the statutory procedure for a trustee's sale. (See Macdonald v. de Fremery (1914) 168 Cal. 189, 202, 142 P. 73.)

Appellants have alleged that respondents knowingly made, or caused to be made, a false statement with knowledge of its falsity. The misrepresentation consists of respondents' notice indicating that a public auction was intended when, in fact, the property was to be sold secretly. A defendant who deceives the public by advertisements which are intended to induce reliance may be liable to any individual who reasonably relies on the misrepresentation. (See Civ.Code, § 1711; Cohen v. Citizens Nat. Turst etc. Bank (1956) 143 Cal.App.2d 480, 486, 300 P.2d 159 (dictum); cf. Wennerholm v. Stanford Univ. Sch. of Med. (1942) 20 Cal.2d 713, 716, 128 P.2d 522.) Appellants alleged: 'it was foreseeable that persons such as plaintiffs might suffer damage in the loss of advantages relative to purchasing of the subject real estate and might suffer damage by reason of the time, effort, and investigation expended in attempts and preparation to attempt to purchase said real estate if in fact defendants were to breach the duty to conduct the public auction.' That language sufficiently alleges respondents' awareness that persons such as appellants might act in reliance on the notice of...