Hinesley v. Oakshade Town Center

• Decision Date: 29 November 2005
• Docket Number: No. C045865.,C045865.
• Court: California Court of Appeals Court of Appeals
• Parties: Barry HINESLEY, Plaintiff, Cross-Defendant and Appellant, v. OAKSHADE TOWN CENTER, Defendant, Cross-Complainant and Respondent.

37 Cal.Rptr.3d 364

135 Cal.App.4th 289

Barry HINESLEY, Plaintiff, Cross-Defendant and Appellant, v. OAKSHADE TOWN CENTER, Defendant, Cross-Complainant and Respondent.

No. C045865.

Court of Appeal, Third District.

November 29, 2005.

Jay-Allen Eisen Law Corporation and C. Athena Roussos, Sacramento, for Plaintiff, Cross-Defendant and Appellant.

Law Office of Watson, Khachadourian & Iams, Gilbert Khachadourian, Sacramento, for Defendant, Cross-Complainant and Respondent.

CANTIL-SAKAUYE, J.

Plaintiff Barry Hinesley (Hinesley) challenges on appeal the summary judgment granted defendant Oakshade Town Center (Oakshade) on Hinesley's first amended complaint for fraud and rescission of his commercial lease with Oakshade. Hinesley contends Oakshade did not conclusively negate or show Hinesley could not prove an essential element of his case. We disagree and shall affirm the judgment.

BACKGROUND

In July 1998 Hinesley signed a five-year commercial lease with Oakshade for 1,200 square feet of retail space in a shopping center located in the south part of the city of Davis in Yolo County. In September 1999, Hinesley filed this action against Oakshade alleging causes of action for fraud and rescission of the lease. Oakshade answered the complaint, generally denying the allegations and asserting numerous affirmative defenses. Hinesley relinquished the leased premises in April 2000, and in September 2000, Oakshade filed a cross-complaint against Hinesley for rent due under the lease and for attorney fees. After Oakshade's motion for judgment on the pleadings was granted as to Hinesley's fraud cause of action with leave to amend, Hinesley filed a first amended complaint for fraud based on fraudulent concealment of material facts and for rescission.

In his first amended complaint Hinesley alleged he and Oakshade, during the spring of 1998, had negotiated the terms and conditions of a commercial lease to Hinesley of a suite within a shopping center being developed by Oakshade in Davis. Hinesley and Oakshade later executed a lease, dated July 6, 1998, for a 1,200 square foot space at the Oakshade Town Center Shopping Center for a term of five years. Hinesley alleged that during the negotiations, Oakshade's agent and representative, Paul Petrovich (Petrovich), told Hinesley the regional restaurant chain Dos Coyotes, the international coffee shop chain Starbucks, and the international ice cream and yogurt vendor chain Baskin-Robbins would be leasing and occupying suites near the suite Hinesley was to lease. It was represented all three chains would commence operations by the end of 1998.¹

Hinesley alleged Petrovich knew when these representations were made that Oakshade did not have any contractual commitment from any of these businesses. Hinesley alleged Oakshade, through Petrovich, had an obligation to make a full and truthful disclosure of the contractual status of these prospective tenants once it elected to make some representations about them. Instead, in order to mislead Hinesley, Oakshade concealed the true facts and failed to qualify the representations.

Hinesley's first amended complaint alleged he incurred costs, had to pay rent and other lease obligations for the leased premises, and lost profits directly attributable to the lack of foot traffic as the result of his reasonable reliance on the misrepresentations about his cotenants. He alleged Oakshade failed to disclose the true facts concerning the prospective tenancies of Starbucks, Baskin-Robbins and Dos Coyotes, which facts, if they had been accurately disclosed to Hinesley "would have induced him not to enter into the subject lease, or, alternatively, to execute the lease with a later effective commencement date tied to the occupancy of one or more of the aforementioned prospective major tenants." In addition to damages, he sought rescission of the lease.

The case went to nonbinding arbitration. The arbitrator denied both Hinesley's claims for fraud and rescission and Oakshade's claims for rent and attorneys fees. After both parties requested trial de novo, Oakshade moved for summary judgment on the grounds that the alleged statements were nonactionable opinion and the alleged concealment was not material because paragraph 25.33 of the lease provided Hinesley was not relying on the existence of other tenants in entering the contract and because Hinesley never expressed any concern or raised any question about the other tenants to Oakshade.

The trial court granted the motion, relying on the undisputed facts that Hinesley did not advise Oakshade that the existence of the other tenants was important to his decision, did not ask if other tenants had signed leases, and did not advise Oakshade the start date of his lease should be tied to the arrival of other tenants. The trial court concluded a lessee in a commercial lease situation has a duty of discovery. Judgment was entered in favor of defendant Oakshade on Hinesley's complaint.

On Oakshade's cross-complaint for rent, the trial court granted summary adjudication for Oakshade, finding Hinesley liable for the outstanding rent due under the lease, but required the parties to proceed to trial on Hinesley's defense of mitigation of damages. A jury found Oakshade had acted unreasonably in its efforts to mitigate its damages, and that Oakshade could have further mitigated damages in the amount of $5,000. The court applied such further offset to the rent determined to be due and entered a judgment against Hinesley on Oakshade's cross-complaint in the amount of $57,506.52. The trial court subsequently ordered Hinesley to pay Oakshade attorney fees of $90,876.80.² This appeal followed.

Hinesley claims on appeal there were triable questions of fact as to whether Petrovich's unqualified representations regarding the three other tenants were "material" assertions of "fact" or, at the least, opinions for which he had no reasonable basis.

DISCUSSION

I. Standard of Review

A motion for summary judgment shall be granted when "all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) A moving defendant is entitled to judgment as a matter of law when the defendant shows without rebuttal one or more elements of the plaintiff's case cannot be established or there is a complete defense to that cause of action. (Id., subds. (a), (o); Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 356, 100 Cal.Rptr.2d 352, 8 P.3d 1089.)

On appeal after a summary judgment has been granted, we review de novo the trial court's decision to grant summary judgment and are not bound by the trial court's stated reasons. (Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1001, 67 Cal.Rptr.2d 483; Prilliman v. United Air Lines, Inc. (1997) 53 Cal.App.4th 935, 951, 62 Cal.Rptr.2d 142.) In reviewing the summary judgment, we apply the same three-step analysis used by the trial court: we (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. (Silva v. Lucky Stores, Inc. (1998) 65 Cal.App.4th 256, 261, 76 Cal.Rptr.2d 382.) Like the trial court, we view the evidence in the light most favorable to the opposing party and accept all inferences reasonably drawn therefrom. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843, 107 Cal.Rptr.2d 841, 24 P.3d 493.)

II. Issues Pled

Hinesley's first amended complaint pled causes of action for fraud and rescission based on fraud in the inducement. The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638, 49 Cal.Rptr.2d 377, 909 P.2d 981; 5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 772, p. 1135.) Fraud in the inducement is a subset of the tort of fraud. It "occurs when `"the promisor knows what he is signing but his consent is induced by fraud mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable."'" (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415, 58 Cal.Rptr.2d 875, 926 P.2d 1061, quoting Ford v. Shearson Lehman American Express, Inc. (1986) 180 Cal.App.3d 1011, 1028, 225 Cal.Rptr. 895, italics omitted.)

Oakshade's summary judgment focused on the fraud elements of misrepresentation and justifiable reliance. Specifically, Oakshade claimed the alleged representations were nonactionable opinions about the future actions of third parties. Oakshade also claimed the representations were not material assertions on which Hinesley reasonably relied because a specific section of the signed lease expressly repudiated any such reliance and Hinesley never expressed any concern or raised any question about the other tenants to Oakshade.

III. There Existed a Triable Issue of Fact as to Whether Petrovich's Representations Were Statements of Fact or of Nonactionable Opinion

Oakshade contended in its motion for summary judgment that Hinesley could not establish fraud because the alleged statements by Petrovich were nonactionable opinion. Oakshade relied on the deposition testimony of Wayne Beck (Beck), an acquaintance of Hinesley who was present at the meeting at which the alleged representations were made. According to Oakshade, Hinesley's own witness Beck testified Petrovich had made no specific statements regarding the other tenancies; Beck was simply left with the impression that the tenants were "coming soon" with no specific time frames for their arrival. According to Beck, Petrovich stated he was merely "working with" these other tenants.

Oakshade argued such statements could...