Opinion
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.
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 casé went to nonbinding arbitration. The arbitrator denied both Hinesley’s claims for fraud and rescission and Oakshade’s claims for rent and attorney 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.
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 that 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)
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)
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)
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
HI.
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 not support an action for fraud citing the general rules that an action for fraud must be based on a statement of fact, not opinion, and that statements as to future actions by some third party are deemed nonactionable opinions.
(Nibbi Brothers, Inc.
v.
Home Federal Sav. & Loan Assn.
(1988)
In opposition to Oakshade’s motion for summary judgment Hinesley disputed the summarization of Beck’s deposition testimony regarding the representations made by Petrovich. Hinesley pointed out Beck did not testify that Petrovich made no specific statements about other tenants, but only that he could not recall the specifics of the conversation. Although Beck could not recall any specific time or date mentioned for the arrival of the other tenants, Beck was left with the impression “it was soon. Whatever soon is.” Beck remembered that Petrovich pointed to particular locations on the shopping center site plan for the three other tenants, indicating they were going to locate there. Beck said there was no discussion regarding the status of contract negotiations with the three tenants. According to Beck, the question did not come up. However, nothing was said that left Beck with the impression there was some conditional nature to their future tenancy. When asked later whether he recalled anything to the effect that Petrovich was in negotiations with these other tenants but they had not yet signed, Beck said he was sure there was some conversation to that effect or he would not have had the feeling they were coming. Beck suggested “it would have probably been in the context of, yes, we are working with them, or something to that effect[,]” but he could not recall the exact conversation.
In opposition to the motion for summary judgment Hinesley submitted a declaration from Beck in which Beck said Petrovich “never stated that these .three major tenants . .. were potential tenants, possible tenants, likely tenants, probable tenants etc. [Petrovich] pointed to the lease spaces on his site plan of his shopping center and stated definitely where each of these three major tenant[s] were going to be located. There is no question in my mind that Mr. Petrovich presented these three major tenants as definite.”
Hinesley also submitted in opposition to the summary judgment portions of his own
Hinesley’s opposition to Oakshade’s motion for summary judgment, thus, showed a conflict in the evidence over- what Petrovich said, and expressed by gestures, to Hinesley regarding Dos Coyotes, Starbucks, and Baskin-Robbins. Hinesley’s version was not obviously false and if believed, Hinesley’s description of the representations made by Petrovich regarding at least Dos Coyotes and Starbucks, supported by Beck’s declaration and deposition testimony taken in context, contained an implied assertion that Oakshade had already signed leases with these particular businesses. 3 The definite description of where they were going to be located and that they were going to be operating by the end of the calendar year suggested they were already tenants of Oakshade in the process of opening their businesses. This was a false assertion of existing fact, not an opinion regarding future actions of third parties. Petrovich did not disclose to Hinesley Oakshade’s true contractual status with these businesses. A triable issue existed, therefore, as to what Petrovich actually represented to Hinesely; whether Petrovich’s expressions were actionable misrepresentations of facts or nonactionable opinions about the future.
We turn to the question of whether Oakshade showed, in its motion for summary judgment, that such misrepresentations, even if found to have been made, were not material assertions on which Hinesley justifiably relied in deciding to sign his lease with Oakshade.
IV.
Oakshade Successfully Demonstrated No Triable Issue of Fact Existed as to Whether Hinesley Justifiably Relied on Any Material Misrepresentation or Concealment
Oakshade claimed any representations made by Petrovich regarding the three other tenants were not material assertions on which Hinesley justifiably 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.
Oakshade submitted, as part of the evidence supporting its summary judgment motion, a copy of the lease between Hinesley and Oakshade. Paragraph 25.33 of the lease provides: “Lessor reserves the right to effect such other tenancies in the Shopping
Oakshade cited to Hinesley’s deposition in which Hinesley stated he was certain he had read paragraph 25.33, as he had read all other sections in the contract. Oakshade pointed out Hinesley had a lawyer assist him in reviewing the lease and Hinesley never requested any revisions to paragraph 25.33 of the lease despite requesting and receiving revisions to a number of other provisions in the lease.
In his declaration submitted in support of the summary judgment motion, Petrovich stated that at the time Hinesley executed his lease the shopping center already had a Safeway store and a Rite Aid store. The Safeway store occupies approximately 40,000 square feet of space and is the largest grocery store in Davis. The Rite Aid store has approximately 17,500 square feet and is the only pharmacy serving south Davis. In comparison to the 103,713 total square footage of the shopping center, the total square footage which would have been occupied by Dos Coyotes, Starbucks and Baskin-Robbins was 5,400. Hinesley never asked if these three other tenants had signed leases, did not discuss with Petrovich the potential benefits, such as traffic volume or spending patterns, of such tenants, never told Petrovich that he was signing this lease based on those three tenants coming, and never said the start date of his lease should be tied to the arrival of those three tenants.
In opposition to Oakshade’s summary judgment motion, Hinesley admitted paragraph 25.33 was in the lease, but stated it was not emphasized in any manner. Hinesley acknowledged he had read the entire lease prior to signing it, but pointed to a portion of his deposition in which he clarified that he did not remember stopping at paragraph 25.33 and spending any time reviewing it to a point where he could recall looking at that particular paragraph. Hinesley said he paid for and obtained only a limited review of the lease by his attorney. He asked the attorney to take a “precursor look at this contract” just for “obvious improprieties[.]” He did not ask for an in-depth, line-by-line review. He did not mention to his attorney any of the representations made by Petrovich regarding other tenants. As the attorney was unaware of such representations, he did not bring paragraph 25.33 to Hinesley’s attention. The attorney did not advise Hinesley in the preparation of the lease modifications proposed by Hinesley. Hinesley agreed he never requested revision to paragraph 25.33.
Hinesley did not dispute the square footage of the various stores in the shopping center and admitted Safeway and Rite Aid were open when he signed his lease. Hinesley contended, however, the issue was not size, but location. Safeway and Rite Aid were located across the parking lot from the space Hinesley was leasing, while Dos Coyotes, Starbucks and BaskinRobbins were supposed to be locating next to or nearby Hinesley in the two buildings at the point of the triangular shopping center property.
In his deposition testimony, submitted in opposition to the summary judgment motion, Hinesley said he had no reason to doubt Petrovich’s
assertions or gestures or to query him further. Petrovich’s representations regarding the three other tenants were very important to Hinesley and he relied on those representations in making his decision to locate his store at this
In contending his deposition testimony establishes a triable issue of material fact for purposes of Oakshade’s summary judgment motion, Hinesley relies heavily on the California Supreme Court’s discussion in
Engalla v. Permanente Medical Group, Inc.
(1997)
The Supreme Court stated in
Engalla, supra,
15 Cal.4th at pages 976-977: “Actual reliance occurs when a misrepresentation is ‘ “an immediate cause of [a plaintiff’s] conduct, which alters his legal relations,” ’ and when, absent such representation, ‘ “he would not, in all reasonable probability, have entered into the contract or other transaction.” ’ [Citations.] ‘It is not . . . necessary that [a plaintiff’s] reliance upon the truth of the fraudulent misrepresentation be the sole or even the predominant or decisive factor in influencing his conduct. ... It is enough that the representation has played a substantial part, and so has been a substantial factor, in influencing his decision.’ [Citation.] [|] Moreover, a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material. [Citations.] A misrepresentation is judged to be ‘material’ if ‘a reasonable [person] would attach importance to its existence or nonexistence in
Applying the Supreme Court’s standard for determining materiality, that is, whether “ ‘a reasonable [person] would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question[,]’ ”
(Engalla, supra,
We conclude, however, Oakshade presented such rebuttal evidence regarding Hinesley’s justifiable reliance on any misrepresentations or concealment about his cotenants in this case.
The Absence of Evidence of Justifiable Reliance
Paragraph 25.33 of the lease expressly provides: “Lessor reserves the right to effect such other tenancies in the Shopping Center as Lessor in the exercise of its judgment shall determine to bet \sic\ promote the interest of the Shopping Center. Lessee does not rely on the fact nor does Lessor represent that any specific Lessee of \sic\type or number of Lessees shall during the term of this Lease occupy any space in the Shopping Center.'” (Italics added.)
Hinesley contends this lease provision may not be used by Oakshade as a ploy to evade liability.
(Ron Greenspan Volkswagen, Inc. v. Ford Motor Land Development Corp.
(1995)
However, the rule that this kind of contract provision does not, as a matter of law, preclude a finding of fraud does not mean the contract provision is in every case irrelevant. We find helpful the analysis that has been applied to consideration of the effect of an “as is” clause.
For example, in
Driver v. Melone
(1970) 11 Cal.App.3d .746 [
The court in
Driver
also noted that in addition to the obvious condition of the property, plaintiff was put on some notice of defects by the wording of the agreement, which specified he was purchasing the property “as is.” While such clause alone did not itself protect the sellers or absolve them from liability, “it is a factor to be considered with all other circumstances in determining whether the buyer has been misled.”
(Driver, supra,
Like an “as is” clause, paragraph 25.33 was not merely a generic integration/no oral representations clause. The language specifically stated, “Lessee
does not rely on
the fact nor does Lessor represent that
any specific Lessee
of [wc] type or number of Lessees shall during the term of this Lease
occupy any space in the Shopping
Center.” (Italics added.) Oakshade could not contractually insulate itself from its own fraud by this language, but such express language should have conveyed the implication
(Lingsch, supra,
Hinesley admitted he read the entire lease, including paragraph 25.33. If the represented tenancies of Dos Coyotes, Starbucks, and Baskin-Robbins were in fact at all significant to his decision to enter into a lease at Oakshade, paragraph 25.33 should have waved a red flag, or at least a yellow flag, in front of him. Hinesley, however, did not even remember stopping
Hinesley admits he did not question Petrovich regarding his representations. Hinesley never asked if the other three cotenants had signed leases, did not discuss with Petrovich the potential benefits, such as traffic volume or spending patterns, of such tenants, never told Petrovich that he was signing this lease based on those three tenants coming, and never said the start date of his lease should be tied to the arrival of those three tenants. Contrary to Hinesley’s claim that he had no reason to doubt Petrovich’s assertions or gestures or to query him further, paragraph 25.33 itself should have alerted him to such need for clarification.
We do not suggest Hinesley had an independent obligation to question Petrovich or to tell him that the status of the other tenants’ leases was important to his decision and the timing of his own lease. (See
Reed v. King, supra,
Hinesley’s deposition testimony that Petrovich’s representations were very important to him and that he relied on those representations in making his decision to locate his store at this shopping center and timing his lease as he did is contradicted by his behavior and his actions on the lease at the time. Moreover, we conclude Oakshade successfully showed Hinesley could not have justifiably relied on any such representations under the circumstances.
The judgment is affirmed. Costs on appeal are awarded to respondent. (Cal. Rules of Court, rule 27(a).)
Blease, Acting R J., and Nicholson, J., concurred.
Notes
Starbucks and Baskin-Robbins never leased space from Oakshade. However, Marble Slab Creamery (an ice cream store) and Common Grounds (a coffee house) did become tenants. Dos Coyotes did become a tenant of Oakshade, but its lease did not commence until December 2000.
The parties also assert the trial court awarded costs of $3,583.35 to Oakshade, but the record on appeal does not contain any signed and filed order or amended judgment including such award.
According to Hinesley, Petrovich said it was not totally decided which suite Baskin-Robbins would be taking. The only reasonable inference from such statement is that Baskin-Robbins had not yet actually signed a lease for the property. In contrast to the definite statements regarding Dos Coyotes and Starbucks, Hinesley could not have understood Baskin-Robbins already was a tenant of Oakshade. Even under the version of Petrovich’s statements given by Hinesley, it was clear some future action was still required before Baskin-Robbins came to the shopping center.
In
Stevenson v. Baum
(1998)