UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
February 16, 2011
MANOUTCHERH & JALEH MOVASSATE,
TRUSTEES, MOVASSATE FAMILY TRUST, COLLIERS PARISH INTERNATIONAL, PLAINTIFF,
CHRIS TWARDUS AND MARK DUDLEY RIDGE PROPERTIES, LLC, ET AL.,
The opinion of the court was delivered by: Lucy H. Koh United States District Court
(re: docket #47)
ZAMUDIO'S MOTION TO DISMISS WITH LEAVE TO AMEND
Comprehensive Environmental Responses, Compensation, and Liability Act ("CERCLA"), Cal. Health & Saf. Code § 25363(e). Plaintiffs seek response costs in connection with alleged 21 contamination of property located at 450 Montague Expressway, Milpitas, California (the "Property"). In addition to these claims for recovery of response costs, Plaintiffs also bring 23 numerous state law claims in connection with their June 2008 purchase of the Property, including 24 claims of professional negligence and breach of fiduciary duty against Defendants Colliers Parish Presently before the Court is the Broker Defendants' motion to dismiss for failure to state a claim.
Broker Defendants' motion to dismiss is GRANTED WITH LEAVE TO AMEND. United States District Court For the Northern District of California
ORDER GRANTING DEFENDANTS
Plaintiffs Manoutcherh Movassate and Jaleh Movassate, trustees of the Movassate Family Trust, bring suit for recovery of response costs against various Defendants under the U.S.C. § 9601 et seq. and the California Hazardous Substance Account Act ("California HSAA"), International, Inc., Mark P. Zamudio and Chris C. Twardus' (collectively "Broker Defendants").
The Court held a hearing on this matter on January 27, 2011. For the reasons set forth below, Expressway, Milpitas, California. Pls.' First Am. Compl. ("FAC") ¶ 4. Plaintiffs purchased the Property in a June 20, 2008 Purchase and Sale Agreement ("June 2008 Agreement"). Plaintiffs 8 allege they purchased the Property pursuant to Defendants' "false representations" that the
A. The Parties
1. Plaintiffs: Buyers of Property
Plaintiffs are Manoutcherh Movassate and Jaleh Movassate, trustees of the Movassate Family Trust ("Plaintiffs"). Plaintiffs are the owners of record of the Property at 450 Montague Property was not contaminated with hazardous substances. Id. 10 Plaintiffs have sued various sets of Defendants in connection with the June 2008 Agreement and allegation of contamination. Plaintiffs bring suit against the entity that sold them 13 the Property, namely Dudley Ridge Properties, LLC ("Dudley Ridge"), a California limited 14 liability company. Id. at ¶ 5. According to Plaintiffs' allegations, another Defendant, Lost Hills Dudley Ridge through a merger of the two companies. Id. at ¶ 6.
2. Defendants: Seller, Former Tenant and Brokers of the Property United States District Court For the Northern District of California LLC ("Lost Hills") is a Washington limited liability company, and is the successor in interest to Besides the seller of the Property, Plaintiffs also name a former tenant, Peco Controls Corporation ("PECO") as a Defendant. Plaintiffs allege that PECO, a California corporation, 19 leased the Property from Dudley Ridge and manufactured machinery for the cannery industry. Id. 20 at ¶ 7.
Finally, Plaintiffs have named as Defendants the real estate brokers that provided services in connection with the eventual sale of the Property in June 2008. Defendant Colliers International Zamudio ("Zamudio"), an employee and Vice-President of Colliers, served as Defendant Dudley C. Twardus ("Twardus"), also an employee and Vice-President of Colliers, served as Plaintiffs' 27 real estate broker in connection with the purchase of the Property. Id. at ¶ 10. Colliers acted as an 28 authorized dual agent and broker. Id. at ¶ 99.
Asset Management, Inc. ("Colliers") is a California corporation. Id. at ¶ 8. Defendant Mark P. Ridge's real estate broker in connection with the sale of the Property. Id. at ¶ 9. Defendant Chris
B. Plaintiffs' Allegations
1. Lead-up to the June 2008 Agreement On April 30, 2008, Plaintiffs entered into their original purchase agreement with Seller (Dudley Ridge). A copy of this agreement is attached as Exhibit A to Plaintiff's original complaint 5 filed on May 26, 2010. On June 4, 2008, Plaintiffs cancelled the first agreement, as permitted by 6 the agreement's conditions, because they believed the price of the Property, $11.2 million at that 7 time, was too high.
On or about June 20, 2008, Plaintiffs agreed to purchase the Property from Defendant Dudley Ridge for approximately $9 million, with $5.9 million paid in cash and $3.1 million 10 financed through Dudley Ridge. FAC at ¶¶ 14-15. The June 2008 Agreement is attached as "Where Is," and that, except as expressly set forth in the June 2008 Agreement, the Seller and Seller's agents did not make any representations with respect to the Property, including "its 15 environmental condition." See June 2008 Agreement, Exh. A. to FAC at ¶ 7. The "As Is" clause 16 includes a provision entitled "Release of Seller," in which the Buyer acknowledged that the 17 purchase price reflects the "As Is" nature of the transaction. In addition, the Buyer agreed to 18 release the Seller and its agents of any and all claims "arising out of or in connection with:" the 19 condition of the Property; the environmental and land use aspects of the Property; the nature, 20 contamination or environmental state of the Property; and the existence, presence or release of "hazardous materials" in, on or under the Property. Id. at ¶ 7(c). The release, however, does not 22 include: (a) breach of express representations in the June 2008 Agreement by the Seller; (b) the 23 disclosure obligations of Seller under California law; or (c) any matter that would be fraud or 24 deceit. Id.
Exhibit A to Plaintiff's FAC. The June 2008 Agreement, in paragraph 7, included an "As Is"
United States District Court For the Northern District of California clause, in which the Buyer (i.e., Plaintiffs) acknowledged purchase of the property "As Is" and 13 In Paragraph 8 of the June 2008 Agreement entitled "Seller's Representations," Dudley Ridge represented that, to its "actual knowledge," there are no hazardous materials on the Property, 27 nor has any release occurred or is threatened to occur. Id. at ¶ 8. These representations also 28 included a "Disclaimer" stating that, except as disclosed in environmental reports provided to the Buyer, neither the Seller nor any predecessor in interest used, stored or released hazardous 2 materials in violation of applicable laws. Id. Paragraph 12 of the June 2008 Agreement entitled Buyer and Seller are each advised to consult with "technical and legal experts" concerning 5 potential environmentally hazardous substances on the Property and a statement that Buyer agrees 6 that, under the "As Is" clause, it will be responsible for correcting environmental hazard should 7 that be required by a governmental agency. Id. at ¶ 12.
"Seller's Disclosures" includes a provision on "Environmental Hazard Consultation," in which the 4 Finally, Paragraph 34 of the June 2008 Agreement includes a venue provision,in which Buyer (Plaintiffs) and Seller (Dudley Ridge) agree to the jurisdiction of the "California State 10 of all disputes arising between the parties in connection with this Agreement." Id. at ¶ 34.*fn1 Courts located in Santa Clara County, where the Property is situated as a venue for the resolution disclosed a Phase I environmental report and a Phase II environmental report. FAC ¶ 17. These 15 reports are attached to the FAC as Exhibits B and C, respectively. The first report is titled "Phase I Environmental Site Assessment" and is dated February 10, 1999. The Phase I report recommended additional sampling of the Property for lead-based paint and asbestos, removal or capping of an 18 abandoned well pipe, cleaning or removal of an exhaust duct, and limited soil sampling around a August 2000. The Phase II report addresses only the possible presence of asbestos and lead-based 21 materials. FAC ¶ 18. entitled "Remediation" and the other entitled "Certificate of Completion." These documents are 24 attached as Exhibits D and E to the FAC, respectively. The Remediation document, which is 25 unsigned but allegedly drafted by Dudley Ridge, states that "no evidence of spills was observed" and that "[t]he property had only one tenant since its construction. Two of our LLC members 2 owned or worked for the tenant company for nearly all of this time. They were confident that no 3 spillage had ever occurred on the property and so felt that testing was not necessary." FAC ¶ 20. 4 The Certificate of Completion, dated January 20, 2001, states that asbestos containing material and 5 construction debris were disposed of at the Forward Landfill in Manteca, California. Id. at ¶ 21. against Dudley Ridge and Lost Hills; (2) for breach of implied covenant of good faith and fair 14 dealing against Dudley Ridge and Lost Hills; (3) for misrepresentation/concealment against Dudley 15 Ridge and Lost Hills in connection with alleged "false representations" that the Property was not 16 contaminated; (4) for negligent misrepresentation against Dudley Ridge and Lost Hills; (5) for 17 recovery of response costs pursuant to CERCLA § 107(a), 42 U.S.C. § 9607(a) against Dudley Cal. Health & Saf. Code § 25363(e) against Dudley Ridge, Lost Hills and Peco; (7) for nuisance 20 against Dudley Ridge, Lost Hills and PECO; (8) for trespass against Dudley Ridge, Lost Hills and PECO; (9) for equitable indemnity and contribution against Dudley Ridge, Lost Hills and PECO 22 based on the California Regional Water Quality Control Board for the San Francisco Bay Region's 23 assertion of jurisdiction over the Property and potentialrequirement of cleanup costs; (10) for 24 injunctive relief against Dudley Ridge, Lost Hills and PECO in the form of a requirement for these 25 entities to assume responsibility for abating the alleged contamination; (11) for professional 26 negligence against real estate brokers Colliers, Zamudio and Twardus for failure to disclose the 27 contamination and failure to investigate and recommend proper investigation of the condition of 28 the Property; and (12) for breach of fiduciary duty against Twardus (Plaintiffs' real estate broker). United States District Court For the Northern District of California Plaintiffs bring twelve causes of action: (1) for rescission of the June 2008 Agreement Ridge, Lost Hills and PECO; (6) for recovery of response costs pursuant to the California HSAA, to state a claim. In their motion, the Broker Defendants cite to three additional documents which 4 they allege all parties have in their possession and represent agreements between the parties in 5 connection with the June 2008 Agreement. First, a September 14, 2007 "Exclusive Authorization 6 to Sell" Agreement between Colliers and Dudley Ridge, which includes a provision that "Expert "beyond the expertise and/or responsibility of Broker" and that Dudley Ridge will not rely on Plaintiffs, Dudley Ridge, and Broker Defendants, which authorizes Colliers to act as a dual agent, states that the Broker Defendants have not investigated the property and that the Brokers' disclosure responsibilities will be met by disclosure of material facts provided by the Seller (Dudley Ridge) or actually known by the Brokers. The "Dual Agency Agreement" also provides 14 that the Seller and Buyer, not the Brokers, will address "Expert Matters." Finally, a June 25, 2008 "Expert Matters Agreement," which provides that: (a) Brokers have not made and will not make an 16 independent investigation into any "Expert Matters," including with regard to the use, storage or 17 presence of hazardous substances; (b) Broker's disclosures will not include information beyond 18 that provided by the Seller or known by Brokers; and (c) Brokers recommend that Buyer obtain 19 advice from a qualified legal professional. See Broker Defs.' Mot. to Dismiss, Attach. 2 and 3.
C. Broker Defendants' Submission of Extrinsic Documents The Broker Defendants (Colliers, Zamudio and Twardus) have moved to dismiss for failure Matters," including those related to the use, storage, or presence of hazardous substances are Colliers for such "Expert Matters." Second, a June 19, 2008 "Dual Agency Agreement" between United States District Court For the Northern District of California
II. LEGAL STANDARDS
Dismissal under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim is "proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to 23 support a cognizable legal theory." Shroyer v. New Cingular Wireless Services, Inc., 606 F.3d 658, 24 664 (9th Cir. 2010) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). In considering 25 whether the complaint is sufficient to state a claim, the court must accept as true all of the factual 26 allegations contained in the complaint. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). While a 27 complaint need not allege detailed factual allegations, it "must contain sufficient factual matter, 28 accepted as true, to "'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1949 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
pleadings, it must normally convert the 12(b)(6) motion into a Rule
56 motion for summary 5 judgment, and must give the nonmoving party an
opportunity to respond. See United States v.
Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). A court may, however,
consider documents attached to 7 the complaint, documents incorporated
by reference in the complaint, or matters of judicial notice 8 without
converting the motion to dismiss into a motion for summary judgment.
Id. at 908. Thus,
When ruling on a Rule 12(b)(6) motion, if a district court considers
evidence outside the
"[e]ven if a document is not attached to a complaint, it may be
incorporated by reference into a 10 complaint if the plaintiff refers
extensively to the document or the document forms the basis of the
plaintiff's claim." Id. The court may treat such a document as part of
the complaint, and may
assume that its contents are true for purposes of a motion to dismiss
under Rule 12(b)(6). See
Summary judgment may be granted if there is no genuine issue of
material fact and the
movant is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c); Celotex Corp. v. Catrett,
477 U.S. 317, 321 (1986). Material facts are those which may affect
the outcome of the case and a dispute as to a material fact is
"genuine" only if there is sufficient evidence for a reasonable trier
of 18 fact to decide in favor of the nonmoving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). In a motion for summary judgment, the Court draws all
reasonable inferences that may be 20 taken from the underlying facts
in the light most favorable to the nonmoving party. Matsushita
Under Rule 56(d),*fn2 a party may request a
continuance of the summary judgment ruling or
request additional time to take discovery, but such a party "must
identify by affidavit the specific 24 facts that further discovery
would reveal, and explain why those facts would preclude summary
judgment." See Tatum v. City & County of San Francisco, 441 F.3d 1090,
1100 (9th Cir. Cal.
2006). But a continuance under Rule 56(d) is inappropriate when the
evidence sought is "almost certainly nonexistent or is the object of pure speculation." See
Terrell v. Brewer, 935 F.2d 1015,
1018 (9th Cir. 2001).
A.The Court treats Broker Defendants' Motion as a Motion to Dismiss The Broker Defendants have moved to dismiss for failure to state a claim under Rule 12(b)(6). According to Broker Defendants, the Court may consider the three extrinsic documents 7 cited in their motion ("Exclusive Authorization to Sell," "Dual Agency Agreement," and "Expert Matters Agreement") to dismiss under the "incorporation by reference" rule because Plaintiffs do 9 not dispute the documents authenticity and, although not physically attached to the FAC, Plaintiffs' 10 claims against Broker Defendants necessarily rely on the contractual agreements with the Broker Defendants. In the alternative, Broker Defendants request the Court to convert their motion into one for summary judgment under Rule 12(d).
January 27, 2011 hearing, Plaintiffs acknowledged the documents' authenticity. Instead, Plaintiffs 15 argue that it would be "unfair and prejudicial" to consider these documents because Plaintiffs have 16 not yet had the opportunity to depose Defendants Zamudio and Twardus, or depose any 17 representative of Seller with respect to the three disclosure documents.
Agency Agreement" and the "Expert Matters Agreement" were actually signed by Plaintiffs, and 21 formed part of the contractual agreement between Plaintiffs and their Brokers. Plaintiffs cannot 22 selectively ignore, or ask the Court to ignore, signed agreements that form the basis for the 23 relationship between Plaintiffs and Broker Defendants. See Lee v. City of Los Angeles, 250 F.3d 24 668, 688-89 (9th Cir. 2001) ("If the documents are not physically attached to the complaint, they 25 may be considered if the documents' 'authenticity . is not contested' and 'the plaintiff's complaint 26 necessarily relies' on them."). Thus, the Court will take judicial notice of the "Dual Agency Agreement" and the "Expert Matters Agreement."
United States District Court For the Northern District of California Plaintiffs did not challenge the authenticity of the documents in their briefing, and, at the Plaintiffs' objections are not well-taken. With discovery open for the past five months (since August 2010), Plaintiffs could have deposed relevant individuals. Moreover, the "Dual between Seller (Dudley Ridge) and Colliers. Plaintiffs are not a party to that agreement and are not 3 bound by any of its terms and conditions. Broker Defendants respond that the "Exclusive Authorization to Sell," though not binding on Plaintiffs, is relevant and should be considered "to 5 demonstrate the consistency in the scope of duties undertaken on behalf of Buyers and Sellers to 6 the transaction." See Broker Defs.' Reply at 12. Such a consideration is inappropriate on a motion 7 to dismiss, and is, in any event, unnecessary to the Court's analysis below. Accordingly, the Court 8 will not take judicial notice of the "Exclusive Authorization to Sell." and the Plaintiffs-Buyer's Brokers. Plaintiffs' eleventh cause negligence against the Seller's Brokers, namely Mark P. Zamudio and Colliers International.
Specifically, Plaintiffs allege that Defendants Zamudio and Colliers International had a 14 professional duty to investigate the true material facts about the Property and to recommend proper inspections. See FAC ¶ 101. Under California law, "[t]he elements for a cause of action for negligence are commonly stated as (1) a legal duty to use care; (2) a breach of that duty; (3) a reasonably close causal 18 connection between that breach and the resulting injury; and (4) actual loss or damage." See Ahern Plaintiffs are correct, however, that the "Exclusive Authorization to Sell" is a contract
B.Claim Against Defendant-Seller's Brokers Zamudio and Colliers
The Court will analyze separately Plaintiffs' claims against the Defendant-Seller's Brokers of action is for professional United States District Court For the Northern District of California v. Dillenback, 1 Cal. App. 4th 36, 42 (Cal. App. 4th Dist. 1991). "Real estate brokers are subject to 20 two sets of duties: those imposed by regulatory statutes, and those arising from the general law of 21 agency." See Carleton v. Tortosa, 14 Cal. App. 4th 745, 755 (Cal. App. 3d Dist. 1993). Under California Civil Code § 2079, "a broker who is engaged by a seller, or who acts in cooperation with 23 a broker engaged by a seller, has a duty 'to a prospective purchaser of residential real property . 24 to conduct a reasonably competent and diligent visual inspection of the property offered for sale 25 and to disclose to that prospective purchaser all facts materially affecting the value or desirability 26 of the property that an investigation would reveal . .'" See Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal. App. 4th 858, 875 (Cal. App. 6th Dist. 2008) (emphasis 28 added). No such statutory duty applies in the context of commercial transactions, and California courts have "expressed doubt that any such duty should be imposed" at all because "a purchaser of 2 commercial real estate is likely to be more experienced and sophisticated in his dealings in real 3 estate and is usually represented by an agent who represents only the buyer's interests." Id. at 876; 4 see also Smith v. Rickard, 205 Cal. App. 3d 1354, 1360 (Cal. App. 2d Dist. 1988) ("the Legislature 5 intended the duties set out in section 2079 to apply only to brokers selling residential properties of 6 four or fewer dwellings, and not to commercial real estate transactions."). any statutory or contractual duty, on the part of the Seller's real estate brokers, to investigate the 9 environmental condition of the Property or to advise Plaintiffs to perform further inspections.
In this action, involving the sale of commercial real estate, Plaintiffs have failed to identify Without such a duty, Plaintiffs fail to state a claim for professional negligence. Moreover, the June 19, 2008 "Dual Agency Agreement" between Plaintiffs, Dudley Ridge, and Broker Defendants United States District Court For the Northern District of California states that the Broker Defendants have not investigated the property and that the Brokers' 13 disclosure responsibilities will be met by disclosure of material facts provided by the Seller (rejecting argument that real estate broker had duty to provide specialized advice where contract 16 expressly disclaimed any such duty). Plaintiffs nowhere allege that Zamudio or Colliers had actual 17 knowledge that the Property was contaminated and failed to disclose that information. Finally, in 18 the June 2008 Agreement, the Buyer (Plaintiffs) agreed to release the Seller and its agents of any 19 and all claims "arising out of or in connection with:" the condition of the Property; the 20 environmental and land use aspects of the Property; the nature, contamination or environmental 21 state of the Property; and the existence, presence or release of "hazardous materials" in, on or 22 under the Property. See June 2008 Agreement, Exh. A. to FAC at ¶ 7(c). Thus, Plaintiffs have 23 apparently waived any potential claim against the Seller's agents, including Defendant Colliers Accordingly, Broker Defendants' motion to dismiss is granted with respect to the 26 professional negligence claim against Colliers International and Mark P. Zamudio. Although Plaintiffs have not identified any duty on the part of the Seller's agent, Plaintiffs did request leave 28 to amend in their briefing and at the January 27, 2011 hearing. Plaintiffs are granted leave to (Dudley Ridge) or actually known by the Brokers. See, e.g., Carleton, 14 Cal. App. 4th at 758-59 International and Zamudio, in connection with the environmental condition of the Property.
amend. However, failure to remedy all the deficiencies identified above risks dismissal of this 2 claim with prejudice. of fiduciary duty against their real estate brokers in the June 2008 Agreement, namely Colliers
C.Claims Against Plaintiffs-Buyer's Broker Twardus and Colliers
Plaintiffs' eleventh and twelfth causes of action are for professional negligence and breach International and Chris C. Twardus. Specifically, Plaintiffs allege that these Defendants failed to 7 investigate the accuracy of the environmental disclosure reports and failed to recommend the 8 proper environmental inspections and investigations. See FAC ¶ 101. Although Plaintiffs 9 professional negligence and breach of fiduciary duty causes of action are pled in separate counts, 10 the breach of fiduciary duty cause of action includes no additional allegations. Accordingly, the As Broker Defendants acknowledge, a real estate agent owes a fiduciary duty to his or her principal, a duty which includes "a fiduciary duty to his own client to refrain from making 14 representations of facts material to the client's decision to buy the property without advising the 15 client that he is merely passing on information received from the seller without verifying its 16 accuracy." See Salahutdin v. Valley of California, Inc., 24 Cal. App. 4th 555, 562 (Cal. App. 1st Broker Defendants' duty must derive "from the general law of agency, i.e., from the agreement 19 between the principal and agent. 'The existence and extent of the duties of the agent to the 20 principal are determined by the terms of the agreement between the parties, interpreted in light of 21 the circumstances under which it is made, except to the extent that fraud, duress, illegality, or the 22 incapacity of one or both of the parties to the agreement modifies it or deprives it of legal effect.'" In this action, Plaintiffs' agreement with the Broker Defendants is contained in the June 2008 Agreement, the June 19, 2008 "Dual Agency Agreement," and the June 25, 2008 "Expert Matters Agreement." Unlike above, the issue with respect to Defendants Twardus and, by 27 extension, Colliers International, is not whether a duty exists, but rather the scope of that duty as 28 agreed upon by the parties. For the reasons described below, the Court finds that Plaintiffs have For the Northern District of California Court will analyze the claims together.
United States District Court Dist. 1994). Plaintiffs do not contend that Broker Defendants violated a statutory duty. Thus, See Carleton, 14 Cal. App. 4th at 755 (citing Restatement 2d Agency, § 376).
failed to state a claim for professional negligence and breach of fiduciary duty against Defendants Twardus and Colliers International.
Twardus and Colliers International should have investigated the accuracy of the environmental 6 disclosure reports and should have recommended proper inspections. See FAC ¶ 101. The 7 difficulty with these allegations is that Plaintiffs, repeatedly, signed documents agreeing that As a preliminary point, Plaintiffs do not allege that Defendants Twardus and Colliers International had actual knowledge of the alleged contamination. Rather, Plaintiffs allege that "Expert Matters," including those related to the environmental condition of the property and any 9 potential hazardous substances, were beyond the expertise and responsibility of their real estate brokers. See Carleton, 14 Cal. App. 4th at 755-756 (finding that plaintiff's claim of duty negated 11 by specific documents limiting scope of duty of real estate broker). For example, in Paragraph United States District Court For the Northern District of California of the June 2008 Agreement, Plaintiffs acknowledged that they were "advised to consult with 13 technical and legal experts concerning the existence, testing, discovery, location, and evaluation 14 of/for and risks posed by, environmentally hazardous substances, if any, located on or potentially 15 affecting the Property." See June 2008 Agreement at ¶ 12. In the Expert Matters Agreement, Plaintiffs acknowledged that "Expert Matters," including those related to the presence of hazardous or toxic substances on the Property, are beyond their Brokers' expertise and/or responsibility. See Expert Matters Agreement at 1. The Expert Matters Agreement also included an express statement 19 that Broker recommends that the parties to the June 2008 Agreement obtain the advice of qualified 20 professionals regarding "Expert Matters," and that the parties will not rely on Broker for such "Expert Matters." Id. Finally, in the Dual Agency Agreement, Plaintiffs again expressly agreed 22 that Broker "has no responsibility to, has not made and will not make an independent investigation 23 or determination with respect to any Expert Matters." See Dual Agency Agreement at 1.
Under these circumstances, Plaintiffs have not established that Defendants Twardus and Colliers International had a duty to investigate the environmental condition of the Property or to 26 recommend additional investigation as to the environmental condition of the Property. In fact, all 27 the agreements above suggest the opposite. Plaintiffs repeatedly agreed that their Brokers Twardus 28 and Colliers International were not responsible for a determination of the environmental condition of the Property aside from the information provided by Seller Dudley Ridge or information actually 2 known by the Brokers. 3 Thus, the Broker Defendants motion to dismiss is granted with respect to the professional negligence and breach of fiduciary duty claims against Defendants Colliers International and Chris C. Twardus. Plaintiffs are granted leave to amend. Failure to cure all the deficiencies identified 6 above risks dismissal of these claims with prejudice.
Accordingly, the Broker Defendants' motion to dismiss is GRANTED WITH LEAVE TO AMEND. If Plaintiffs wish to file an amended complaint, the amended complaint must be filed 10 and served no later than March 16, 2011. Failure to do so risks dismissal of their claims against d complaint, Plaintiffs may not add new causes Broker Defendants with prejudice. In any amende 12 of action or parties without seeking leave of the Court pursuant to Fed. R. Civ. P. 15 or obtaining Defendants' permission by stipulation.
IT IS SO ORDERED.
For the Northern District of California United States District Judge