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Charles Gunn et al v. Kerrie Moravec

August 30, 2011


(Super. Ct. No. SCCVCV081295)

The opinion of the court was delivered by: Duarte ,j.

Gunn v. Moravec



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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Charles and Jerene Gunn (the Gunns) brought suit against multiple parties, alleging they were induced to purchase a defective house by fraudulent misrepresentations. One of the defendants, Kerrie Moravec (Moravec), successfully demurred to the various causes of action against her. The Gunns appeal from the subsequent judgment of dismissal. They also appeal from a postjudgment award of attorney fees to Moravec.

As we will explain, we hold that the Gunns failed to state a cause of action against Moravec and the trial court properly awarded her attorney fees. We shall affirm.



Original Complaint

In the fall of 2008, the Gunns filed suit against various defendants, including Moravec and her husband, Gary. Also named as defendants were Gary Moravec's sole proprietorship GM Construction, David and Frances Zuckswert and David Zuckswert's sole proprietorship, River Valley Construction, and Cornerstone Foundation Investments LLC (Cornerstone), a limited liability company of which the Moravecs and David Zuckswert were managers. The complaint referred to all these defendants collectively as "Defendant Owner-Builders." Various realtors and an engineering firm were also named as defendants.

The complaint alleged that the Gunns closed escrow on a retirement residence in the summer of 2006. The residence was a 1,900 square foot house at the base of a hill overlooking a golf course, constructed by Defendant Owner-Builders. The purchase contract named David and Frances Zuckswert as owners, although the Moravecs were equal owners of the property. Days before the property was transferred by grant deed to the Gunns, "Defendant Owner-Builders removed their individual names from the property and transferr[ed] ownership into their LLC," Cornerstone.

The complaint alleged there were several problems with the house. The fireplaces were inadequate for heating, although David Zuckswert had represented they were adequate to heat up to 1,600 square feet. There were problems with the eaves and the retaining wall, neither of which complied with the rules of the Lake Shastina Property Owners Association (the Association). In addition, the retaining wall had not been built to code. Additional construction issues were outstanding.

The final factual allegation was that "[o]n August 5, 2008, all of the named parties or their representatives participated in mediation conducted by Retired Judge John Letton in Mt. Shasta, California. No offers to settle or make any repairs were extended thereafter to the Plaintiffs."

The complaint set forth 14 causes of action and included multiple exhibits. Moravec was named as a defendant in 10 causes of action, related to her alleged failure to disclose material facts, fraud, residential construction defects, negligence per se, breach of implied warranties, and breach of contract. In addition to damages, the complaint sought attorney fees.

For purposes of this appeal, the only relevant cause of action in the original complaint is the first, which was labeled "Breach of Duty to Disclose Material Facts" and "Violation of Civil Code section 1102.1." It alleged that Civil Code section 1102.1, subdivision (a) provided that parties to a real estate contract have an obligation to disclose any fact materially affecting the value and desirability of the property. Defendant Owner-Builders failed to disclose that the property contained merely decorative propane fireplaces and the property and improvements had not obtained final approval from the Association. The only allegation specific to Moravec was that the property title listed her as one of the owners of the property. Exhibit 3 to the complaint, the purchase contract, shows that only David Zuckswert signed the contract as seller.

Moravec demurred to this complaint on the basis that it failed to state a cause of action and was uncertain. Before this demurrer was heard, the trial court ruled on a demurrer brought by the realtor defendants. The court found Civil Code section 1102.1 was only a statement of legislative intent and did not create a cause of action. It sustained the realtors' demurrer to the first cause of action without leave to amend.

Before the court ruled on Moravec's demurrer, the Gunns filed a first amended complaint. The court found Moravec's demurrer was moot because the original complaint had been superseded by the first amended complaint.


First Amended Complaint

The first amended complaint was substantially similar to the original complaint, except that it deleted the first cause of action for violation of Civil Code section 1102.1 and the 10th cause of action against the engineering company. It continued the same blanket reference to the Moravecs, the Zuckswerts, their construction companies, and Cornerstone as "Defendant Owner-Builders."

Moravec demurred on the basis that the first amended complaint failed to state a cause of action against her and it was uncertain.

In opposition, the Gunns argued Moravec committed tortious acts before the property was transferred to Cornerstone. If required, the Gunns intended to show that Cornerstone was used as an alter ego rather than as a separate entity.

The court ruled the categorical reference to several defendants as owner-builders was uncertain; there were no allegations that Moravec did any work on the residence. The court sustained the demurrer as to all causes of action against Moravec with leave to amend.


Second Amended ...

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