Kim v. Lee

EDWARD KIM et al., Plaintiffs and Respondents, v. HELEN LEE et al., Defendants and Appellants.

B295665

B303317

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

May 26, 2021

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. BC563651)

APPEAL from a judgment of the Superior Court of Los Angeles County, Maureen Duffy-Lewis, Judge. Affirmed in part; reversed in part.

Law Office of Jim P. Mahacek and Jim P. Mahacek for Defendants and Appellants.

Law Offices of Donna Bullock and Donna C. Bullock for Plaintiffs and Respondents.

____________________ Helen Lee and Young Hee Kim (collectively, defendants) appeal in case No. B295665 from a judgment entered after a jury trial (case No. B295665) in favor of Edward Kim,¹ Ginnie Cho, Seung Kang (collectively, Kim plaintiffs), and GNE Property Management, Inc. (GNE). Defendants also appeal the denial of their motion for judgment notwithstanding the verdict or, in the alternative, for a new trial.

The jury's special verdict found defendants, through their agent John Rhee, contracted with Kim's company GNE to perform remediation work on a multi-unit residential apartment building owned by defendants, but failed to pay GNE for all of the work performed under the contract. The jury further found defendants, through Rhee, sold the property to Kim, Cho, and Kang while intentionally concealing orders by the Los Angeles County Department of Public Health (Health Department) to remediate multiple public health code violations.

Defendants contend on appeal the trial court erred in allowing Kim to testify at trial with the assistance of a noncertified interpreter and in excluding testimony from the incomplete deposition of Rhee. Defendants also argue substantial evidence does not support the jury's finding defendants had knowledge of the Health Department orders, or that defendants had a duty to disclose the orders because Kim was reasonably able to discover the orders on his own. Defendants further assert the damages awarded are in excess of that proven at trial. We reduce the amount of damages but otherwise affirm.

Defendants separately appeal the trial court's award to the Kim plaintiffs of $412,500 in attorneys' fees (case No. B303317). Defendants do not contest the amount awarded, instead arguing the Kim plaintiffs were not entitled to attorneys' fees under the escrow agreement that consummated the sale because the Kim plaintiffs only asserted tort claims. We conclude the broadly-worded attorney fee provision in the escrow agreement supports recovery of fees for the Kim plaintiffs' fraudulent concealment claim.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Complaint and Cross-complaint

On November 13, 2014 the Kim plaintiffs and GNE filed this action against Lee and Young Hee. The Kim plaintiffs asserted causes of action for fraud and negligent misrepresentation. GNE asserted causes of action for breach of contract and a common count.

Defendants filed a cross-complaint against the Kim plaintiffs, GNE, and Rhee, asserting causes of action for fraud, concealment, conversion, common counts, and breach of contract against Rhee; causes of action for breach of oral contract, intentional or negligent misrepresentation, concealment, and common counts against Kim; and causes of action for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, negligent interference with prospective economic advantage, and conspiracy against all cross-defendants.

B. The Evidence at Trial

1. Kim plaintiffs' case

(a) Lee and Young Hee's purchase of the property

Prior to March 2013 Jeanne Salamon and Advanced Pension Programs owned a property located at 716 South Westlake Avenue (the property). The multi-unit apartment building on the property was distressed. At some point prior to March 2013, the property was placed in receivership. Receiver Thomas Coleman hired VPMI Property Management (VPMI), a company owned by Daniel and Adrian Talamentes,² to manage the property.

On August 15, 2012 the Health Department issued a notice to Salomon identifying multiple violations of the Los Angeles County Code and state housing laws, including rodent and insect infestations. The notice was signed by Environmental Health Specialist Guadalupe Castruita.

On July 13, 2012 the property was referred to the Rent Escrow Account Program (REAP) (L.A. Mun. Code, § 162.00 et seq.) based on code violations identified by the City of Los Angeles Housing and Community Investment Department (Housing Department).³ On October 29, 2012 the propertyentered REAP. When a property is placed in REAP, a portion of all tenants' rental payments are withheld from the owner by the City of Los Angeles.

On March 23, 2013 Rhee⁴ purchased the property at a foreclosure auction for approximately $1.3 million on behalf of defendants. After the purchase, the receivership on the property terminated, and VMPI ceased management of the property. Lee and Young Hee hired Rhee to manage the property.

Rhee emailed Adrian and told her he was the agent of Lee and Young Hee and authorized to negotiate on their behalf. Adrian provided Rhee with past operating statements for the property, and Rhee and Adrian discussed the possibility of Lee and Young Hee hiring VPMI to manage the property again. VPMI collected rents from the tenants for Rhee in April 2013. Ultimately, VPMI opted not to manage the property.

(b) Rhee hires Kim and GNE to remediate the property in response to the Housing Department orders

Sometime in March 2013 Rhee approached Kim, seeking consultation on the Housing Department orders on the property. On March 26 Kim visited the property at Rhee's invitation, while the Housing Department conducted an inspection of the property. Kim believed Rhee wanted him there to show the inspector thatRhee had a contractor to address problems with the building. Kim did not participate in the discussions between Rhee and Housing Department inspector Erwin Larranaga, but he "listen[ed] to some of the conversations" from the hallway.

Rhee and Kim discussed Rhee's hiring of GNE to perform remediation work on the property. On April 2 or 3, 2013 Kim provided Rhee with a handwritten estimate of $200,000 for GNE to perform the remediation work required by the Housing Department. Rhee stated he needed to discuss the proposal with Lee and Young Hee. On April 3 Kim and Rhee met with Young Hee. In the presence of Kim, Young Hee told Rhee that Rhee was "in charge of everything" regarding the property. Young Hee authorized Rhee to hire Kim as the general contractor to work on the property on her behalf. After this initial meeting, Young Hee relied on Rhee to communicate with Kim. Kim and Young Hee did not meet or speak again.

On April 16, 2013 the Housing Department issued a notice and order to comply to both Rhee and Kim regarding violations on the property. However, the notice addressed to Kim listed an incorrect mailing address. The notice ordered additional work to be performed on the property, which Kim had not accounted for in his original estimate. Rhee asked Kim to perform the additional work and told him Lee or Young Hee would pay him, or Rhee would "sell the building to pay" him.

On April 18 Kim attended a hearing with Rhee regarding the property's inclusion in REAP. At the hearing, Kim did not hear any mention of "pests" or an "unhealthy environment" at the building, or of any Health Department orders. Kim received a copy of the March 26, 2013 Housing Department notice and order for the first time on this date.

Young Hee authorized Rhee to hire Kim and to discuss the needs of the property with Kim while Rhee oversaw the completion of all repairs. Young Hee expected Rhee to handle any problems that arose on the property and authorized him to receive legal notices on her behalf. On April 28 or 30, 2013 Rhee returned to Kim a typed invoice memorializing the terms of Kim's written proposal for GNE to perform the remediation work. Rhee signed the invoice on behalf of Lee and Young Hee. The signed invoice provided GNE would be paid $200,000 for the listed work, with an "extra charge on additional work beyond this list." The invoice provided the property would "[p]ass LAHD [i]nspection" and "[p]ass LADBS [i]nspection," in apparent reference to the Housing Department and the Los Angeles Department of Building and Safety. The scope of the work did not include pest control. Relying on the signed contract, Kim and GNE began to perform the remediation work.

On May 2, 2013 Lee visited the property. Lee told Kim the contract price was too expensive and requested a discount, but she did not tell him to stop work on the property. On May 6 Lee returned to the property. She did not enter the building, but from the outside observed work being performed. At this time, Lee gave Kim two checks totaling $37,000 as partial payment for the work that was underway. In total, Kim received $97,000 as a down payment on the work.

Lee and Young Hee did not pay for utilities, including water and electricity, during July and August 2013. Kim testified he paid between $17,000 and $18,000 for utility bills owed by Lee and Young Hee. According to Kim, it would have been "impossible to continue construction" without paying the utilities. Normal business practice for contractors includedpaying utilities due and issuing an invoice to the owner, in order to continue work uninterrupted.

In August 2013 GNE completed all of the remediation work under the contract and required by the Housing Department, including that required by the April 16, 2013 notice and order. Neither Lee or Young Hee ever told Kim and GNE to stop working. But neither defendants nor...