Loughrin v. Superior Court, D017921

• Decision Date: 11 May 1993
• Docket Number: No. D017921,D017921
• Citation: 15 Cal.App.4th 1188,19 Cal.Rptr.2d 161
• Parties: Andrew LOUGHRIN, Petitioner, v. The SUPERIOR COURT of San Diego County, Respondent; Irwin BARR, Real Party in Interest.
• Court: California Court of Appeals Court of Appeals

Page 161

19 Cal.Rptr.2d 161

15 Cal.App.4th 1188

Andrew LOUGHRIN, Petitioner, v. The SUPERIOR COURT of San Diego County, Respondent;

Irwin BARR, Real Party in Interest.

No. D017921.

Court of Appeal, Fourth District, Division 1, California.

May 11, 1993.

As Modified on Denial of Rehearing May 26, 1993.

G.S. Wampler and R.J. Barberio, Vista, for petitioner.

No appearance for respondent.

Graham K. Fleming, Escondido, and Robert B. Coffin, San Diego, for real party in interest.

FROEHLICH, Associate Justice.

This petition, brought under Code of Civil Procedure section 437c, subdivision (l), seeks a writ of mandate directing the superior court to reverse its order granting summary adjudication. The complaint which was the subject of the summary judgment motion contained five causes of action. Summary judgment was denied because the court found certain of the causes of action to be viable. Summary adjudication was granted in favor of the defendant, however, as to the first cause of action. This cause of action was based on the alleged negligent failure of the defendant, Irwin Barr, a seller of residential real estate (sometimes called "Seller" herein), to make appropriate disclosures of defects in the real property in accordance with the statutory duty set forth in CIVIL CODE SECTION 1102¹ et seq.

The thrust of the summary judgment motion did not reach the question of whether concealed defects actually existed respecting the realty. The sole ground of defense was that Seller's potential liability for nondisclosure of defects was waived by the insertion in the sales agreement of a provision to the effect that the property was purchased "as is."

The clause upon which Seller relies is contained in a printed addendum to the real estate purchase contract and receipt for deposit, which document constituted the basic written agreement for purchase and sale of the realty, signed by both Seller and the plaintiff buyer, Andrew Loughrin (sometimes called "Buyer" herein). The provision is entitled "Disclaimer for 'As Is' Sale," and states:

"BUYER ACKNOWLEDGES Purchase price reflects deferred maintenance and SELLER shall have no responsibility or liability whatsoever to BUYER or Buyer's assign or successor and SELLER has made no representation or warranty with respect to the physical condition or compliance with state or local building codes and ordinances of the property which is the subject of this Agreement or as to any part, aspect or item hereof. SELLER makes no express or implied warranty with respect to said property as to its condition or illness [meaning, we assume, fitness] for general or specific use. BUYER has relied solely upon BUYER'S inspection and evaluation of the property either performed by the BUYER or Contractor in determining the condition and fitness of the property. In executing this Agreement BUYER accepts the property in its 'AS IS' condition and waives any claim, demand or cause of action against SELLER and BROKERS."

Buyer contends that this detailed "as is" provision was never accepted, but admits that in subsequent documentation it was agreed that the property was purchased "as is." This issue was not resolved in the trial court's grant of summary adjudication. While we would reach the same conclusion whether the controlling clause be the extended language quoted above, or simply a shortened reference to a sale "as is," we proceed upon the assumption that we deal simply with a stock "as is" clause, and therefore refer to authority dealing with "as is" provisions in terms of a uniform legal effect from the use of the phrase. As stated in Shapiro v. Hu (1986) 188 Cal.App.3d 324, 333, 233 Cal.Rptr. 470:

"[A]ny sale of property 'as is' is a sale of the property in its 'present or existing condition'; the use of the phrase 'as is' relieves a seller of real property from liability for defects in that condition. The only exception to this principle is when a seller, through fraud or misrepresentation, intentionally conceals material defects not otherwise visible or observable to the buyer."

In terms of potential liability for negligent misrepresentation, Katz v. Department of Real Estate (1979) 96 Cal.App.3d 895, 158 Cal.Rptr. 766 provides the following rule at page 901, 158 Cal.Rptr. 766:

"[A]n 'as is' provision, 'generally speaking, ... means that the buyer takes the property in the condition visible to or observable by him. [Citations.]' ... 'It ... does not in itself protect ... or absolve [a seller] from liability for ... passive concealment.' "

Buyer's contention contained in the first cause of action states no claim for common law misrepresentation, but is based upon an alleged failure to comply with the disclosure requirements of section 1102 et seq. These sections, adopted in 1985, require that "[t]he transferor of any real property subject to this article shall deliver to the prospective transferee the written statement required by this article ... in the case of a sale, as soon as practicable before transfer of title." (§ 1102.2.) The form of disclosure is set forth in section 1102.6 in great detail, requiring that the seller specifically answer "yes" or "no" as to whether Seller is aware of any significant defects in a long list of residential components, including "Foundation ... Slab(s) Driveways ... Structural Components." Section 1102.13 provides that failure by the seller to comply with these requirements does not invalidate the sale, but that "any person who willfully or negligently violates or fails to perform any duty prescribed by any provision of this article shall be liable in the amount of actual damages suffered by a transferee."

The first cause of action of Buyer's complaint alleges a "failure to disclose [Seller's] awareness of significant defects/malfunctions in ... floors ... foundation ... slab ...," in violation of the requirements of section 1102 et seq. Papers filed in connection with the summary judgment motion establish that Seller did in fact fill out and deliver the form required by section 1102.6. Buyer's position, therefore, is clear: the first cause of action alleges that Seller negligently misrepresented, or concealed, the existence of defects in the realty when the section 1102.6 form was prepared.

The issues presented for our review, as framed by Seller, are: (1) May the disclosure requirements of section 1102 et seq. be waived by a buyer, and (2) Is waiver accomplished by a sale in "as is" condition? Citing Tunkl v. Regents of University of California (1963) 60 Cal.2d 92, 32 Cal.Rptr. 33, 383 P.2d 441, Seller contends that a waiver of protective rights established by statute may be accomplished, and will be enforced, when the interests involved are private, as distinguished from rights affecting a public interest. Seller contends that since this was a private sale of a residence, between parties on an equal bargaining footing, the waiver should be effective. Seller also contends that the inclusion of the "as is" provision in the sales agreement imports such waiver into the transaction. The trial court agreed.

We first address the contention that the disclosure requirements of section 1102 et seq. cannot be waived. The start of any discussion of waiver must be section 3513, which provides that "[a]ny one may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement." Tunkl v. Regents of University of California, supra, 60 Cal.2d 92, 32 Cal.Rptr. 33, 383 P.2d 441, contains an extensive discussion of the factors which will invest a law with "public interest" so that its requirements are not subject to waiver. A transaction involving the public interest is one, the court stated, which exhibits some or all of the following characteristics:

"It concerns a business of a type generally thought suitable for public regulation. The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public. The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards. As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services. In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence. Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents." (Tunkl v. Regents of University of California, supra, 60 Cal.2d at pp. 98-100, 32 Cal.Rptr. 33, 383 P.2d 441, fns. omitted.)

We find that none of the characteristics cited in Tunkl as creating a "public interest" exists in the typical private real estate purchase and sale transaction. Neither the parties nor...