Vera v. Rel-Bc, LLC

66 Cal.App.5th 57

281 Cal.Rptr.3d 45

Adriana R. VERA, Plaintiff and Appellant,

v.REL-BC, LLC, et al., Defendants and Respondents;

SNL Real Estate Solutions, LLC, Defendant and Respondent.

SNL Real Estate Solutions, LLC, Cross-complainant and Respondent,

v.Adriana R. Vera, Cross-defendant and Appellant.

Adriana R. Vera, Plaintiff and Appellant,

v.REL-BC, LLC, et al., Defendants and Appellants;

SNL Real Estate Solutions, LLC, Defendant and Respondent.

A155807, A156823, A159141

Court of Appeal, First District, Division 4, California.

Filed June 30, 2021

McInerney & Dillon, William McInerney, Neil Bui, Oakland, for Plaintiff and Appellant.

Kaufman Dolowich & Voluck for Defendants and Appellants REL-BC, LLC.

Hopkins & Carley, Allonn E. Levy, Jay M. Ross, San Jose, Mary Cirone for Defendant and Respondent SNL Real Estate Solutions.

BROWN, J.

The trial court entered summary judgment on Adriana Vera's complaint against REL-BC, LLC (REL-BC); Buildzig, Inc. (Buildzig); SNL Real Estate Solutions, LLC (SNL); Carlos Plazola; and Laura Blair (collectively, "Sellers") relating to Vera's purchase of a home in Oakland. The court ruled the action was barred by the three-year statute of limitations for actions based on fraud in Code of Civil Procedure ¹ section 338, subdivision (d) ( section 338(d) ). The trial court awarded attorneys’ fees to Sellers except for REL-BC, whose request the trial court denied.

Vera appeals from the judgment and the awards of attorneys’ fees. In challenging the judgment, she contends that the trial court erred in applying the three-year statute of limitations to her breach of contract claim and that the court ignored disputes of material fact concerning when the limitations period began to run. In her challenge to the fees awards, she argues that the court should not have awarded fees to Buildzig, Plazola, and Blair based on the purchase agreement's fees provision because the trial court determined her claims were based on fraud, not the contract, for purposes of the statute of limitations. She also asserts the trial court should have excluded from SNL's award those amounts attributable to its cross-complaint against her broker and real estate agent. REL-BC cross-appeals the trial court's denial of its fees request, arguing it was entitled to fees even though it had dissolved.

The trial court correctly concluded that Vera's breach of contract claim was based on fraud and therefore subject to section 338(d). The trial court also correctly concluded that the undisputed facts demonstrate Vera's claims based on fraud accrued more than three years before she filed suit and were therefore time-barred. We therefore affirm the judgment. As to the fees awards, Vera has not shown the trial court abused its discretion in awarding fees related to SNL's cross-complaint. However, we agree with REL-BC that it was authorized to request fees despite its dissolution. We therefore affirm the fees awards to SNL, Buildzig, Plazola, and Blair, and reverse the denial of fees to REL-BC.

I. BACKGROUND

In July 2011, REL-BC and SNL bought a property in Oakland to remodel and resell. Buildzig was one of REL-BC's managers, Plazola was Buildzig's chief executive officer, and Blair was its chief operating officer and general counsel. After Ceferino Vega renovated the property for REL-BC and SNL, in November 2011 the companies signed an agreement to sell it to Vera.

The purchase agreement obligated REL-BC and SNL to disclose known material facts and defects affecting the property. Pursuant to that provision, and as independently required by statute ( Civ. Code, § 1102.6 ), in November 2011 REL-BC and SNL provided disclosures in which they identified material conditions of the property. In those documents, REL-BC and SNL said they were not aware of any significant defects or malfunctions (including past defects that had been repaired) with respect to various components of the property, including the sewers and drainage. The disclosures also stated that REL-BC and SNL were not aware of any water intrusion, leaks from the sewer system or any pipes, work or repairs that had been done without permits or not in compliance with building codes, or any material facts or defects that had not otherwise been disclosed to Vera.

Vera hired her own inspector, Eric Burtt, to examine the property and she accompanied Burtt during the inspection. Burtt's report stated that the basement was well below the exterior grade and several areas showed a history of water intrusion, including areas that had been recently tiled and painted. The report stated, "Expect moisture and water intrusion during periods of wet weather!!" Burtt also noted that there was a sump pump in the basement that was not operating correctly.

Burtt observed through a vent that there had been some prior work or repair to the front stairs leading up to the house, but he did not inspect it because the area was inaccessible. He recommended further inspection. In light of the considerable remodeling, some of which appeared to be peculiarly or imperfectly done, Burtt also advised Vera to obtain the property's complete permit history to verify that the work was permitted and inspected. Vera acquired the permit history for the property and sent it to Burtt, but Vera was unable to recall later whether she discussed the permit history with him.

Vera also had a sewer inspection done by Rhino Rooter. That inspection revealed that there was a major disconnect at the house cleanout that was leaking a large amount of water into the crawl space. REL-BC and SNL agreed to repair several items noted in the Burtt report, including the sump pump and the sewer disconnect.

Escrow closed on December 2, 2011, but the sewer line still had not been corrected. In January 2012, a large amount of water flooded into the basement, apparently because the repairs to the sewer line were not done correctly. Vera contacted Laura Blair, who at the time lived across the street. Blair came over and told Vera that it was not necessary to obtain another inspection of the sewer line because the water coming into the basement was rainwater. Blair told Vera that rain had previously flowed down the foundation wall when there was a sewer problem. Sellers later admitted to Vera that the earlier sewer work had been completed without a permit and that Vega was unlicensed, though they told Vera that Vega's work had been done under the supervision of a licensed contractor.

In May 2014, the exterior stairs leading up to the house began collapsing. Vera asked Burtt to investigate. Burtt concluded that there was no support for the stairs. Burtt also said that the unsupported joists holding up the stairs were the same repairs he had observed through the vent when he inspected the property in November 2011.

On December 5, 2014, three years and three days after the close of escrow, Vera filed her initial complaint against Sellers. Vera's second amended complaint alleged six causes of action: negligence (first and sixth causes of action), breach of warranty (second cause of action), breach of contract (third cause of action), fraud (fourth cause of action), and negligent misrepresentation (fifth cause of action). Sellers moved for summary judgment based on, among other grounds, the three-year statute of limitations in section 338(d) for actions based on fraud or mistake. The trial court granted the motion and entered judgment for Sellers. Vera appealed.

Sellers then requested an award of attorneys’ fees, based on a clause in the purchase agreement entitling the prevailing party in any action arising out of the agreement to recover their attorney's fees. The trial court granted SNL's request for attorney's fees, including fees related to a cross-complaint SNL filed against Vera's broker and real estate agent. The trial court denied REL-BC's request for fees because REL-BC had dissolved and therefore lacked capacity to request fees. The trial court granted the fees requests of Buildzig and the individual defendants, though it awarded a slightly lower amount than they requested. Vera and REL-BC cross-appealed this ruling.

We consolidated the three appeals.

DISCUSSION

I. Summary Judgment

"We review the grant of summary judgment de novo and decide independently whether the parties have met their burdens and whether there are triable issues of material fact. [Citation.] The defendant has the initial burden on summary judgment to show that undisputed facts establish an affirmative defense. [Citation.] Once the defendant meets that burden, the burden shifts to the plaintiff to show a triable issue of material fact regarding the defense. [Citation.] We review the evidence in the light most favorable to the plaintiff. [Citation.] Although application of the statute of limitations is normally a question of fact, the question becomes one of law when the evidence is susceptible of only one reasonable conclusion." ( Filosa v. Alagappan (2020) 59 Cal.App.5th 772, 778, 273 Cal.Rptr.3d 731.)

A. Applicable statute of limitations

Vera first contends the trial court erred in applying the three-year statute of limitations in section 338(d) for actions based on fraud to her breach of contract cause of action. "To determine the statute of limitations which applies to a cause of action it is necessary to identify the nature of the cause of action, i.e., the ‘gravamen’ of the cause of action. [Citations.] ‘[T]he nature of the right sued upon and not the form of action nor the relief demanded determines the applicability of the statute of limitations under our code.’ " ( Hensler v. City of Glendale (1994) 8 Cal.4th 1, 22–23, 32 Cal.Rptr.2d 244, 876 P.2d 1043.) "In determining whether an action is on the contract or in tort, ... it is the nature of the grievance rather than the form of the pleadings that determines the character of the action. If the complaint states a cause of action in tort, and it appears that this is the gravamen of the complaint, the nature of the action is not...