Meritage Homes of California v. Runbo Wang, Ping Lu, et al.

On March 17, 2026, Meritage filed an answer to the FAXC with a general denial asserting fifty-three (53) affirmative defenses. On March 18, 2026, Meritage filed a motion for summary adjudication which is scheduled to be heard by the Court on June 22, 2026.

On April 6, 2026, Jolie Zhou filed a verified answer to the FAXC while asserting eighteen (18) affirmative defenses.

The Court held a trial setting conference on April 6, 2026 and continued it until August 14, 2026.

On April 8, 2026, Cross-Defendant Carsten Phillips (also known as Your Home Sold Guaranteed Realty) and Jolie Zhou (“The Carsten Phillips Parties”) filed this present demurrer and motion to strike together with declarations by Shannon B. Jones, Esq.

On April 15, 2026, Terri Christenson filed an answer to the FAXC consisting of a general denial asserting forty-seven (47) affirmative defenses. Christenson also filed a motion for Summary Adjudication as to the first amended cross-complaint. That motion is currently scheduled to be heard by the Court on July 28, 2026.

On May 19, 2026, Wang and Lu filed oppositions to both the demurrer and motion to strike. On May 26, 2026, The Carsten Phillips Parties filed replies. After issuing a tentative ruling and holding a hearing on the motion, the Court now issues its final ruling.1

II. EXPLANATION OF COURT’S DEMURRER RULINGS A. Civil Code § 2079.13

The main argument by the Defendants in all the causes of action relies upon Civ. Code, § 2079.13, entitled definitions, and which states:

As used in this section and Sections 2079.7 and 2079.14 to 2079.24, inclusive, the following terms have the following meanings:

1 The Court finds that the moving party has complied with its meet-and-confer obligation.

...

(l) “Single-family residential property” or “single-family residential real property” means any of the following:

(1) Real property improved with one to four dwelling units, including a leasehold exceeding one year’s duration.

(2) A unit in a residential stock cooperative, condominium, or planned unit development.

(3) A mobilehome or manufactured home when offered for sale or sold through a real estate broker pursuant to Section 10131.6 of the Business and Professions Code.

Therefore, Defendants argue, that there can be no misrepresentation or falsity because single family residence includes a condominium. This is a definitional provision for statutory agency-disclosure. As the Wangs point out, there are other provisions of California law that treated detached residences and condominiums as distinct property categories. (See Opp. at p. 7.) Also, under ordinary meaning, any potential residential buyer, who asked a broker to show them single family residences, would be surprised to learn that a condominium or mobilehome was the same thing. The representations made by Defendants should be measured against ordinary consumer meaning. For this reason, the demurrer based upon Civ. Code, § 2079.13 is OVERRULED.

B. First Cause of Action for Intentional Misrepresentation

“To sustain a fraud-based cause of action, a plaintiff must allege: (1) misrepresentation (false representation, concealment or nondisclosure); (2) knowledge of falsity; (3) intent to deceive; (4) justifiable reliance; and (5) resulting damage. (Lazar v. Superior Ct. (1996) 12 Cal.4th 631, 638.) The particularity requirement for a fraud-based claim necessitates pleading facts that show how, when, where, to whom, and by what means the representations were tendered. (Id., at 645; see also Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) “[F]alse representations made recklessly and without regard for their truth in order to induce action by another are the equivalent of misrepresentations knowingly and intentionally uttered.”“ (Id., at 974)

This cause of action is listed at ¶¶ 16-24 of the FAXC, after the general allegations set forth earlier in the document. It specifical states that Agent Zhou, Buyer Broker represented to the Wang Parties that the Subject Property was a Single Family Home or Independent Home when the property was a condominium, in WeChat Messages. The FAXC alleges that Agent Zhou and Buyer Broker knew the representation was false. They are licensed professionals who had access to the MLS, title data and public reports which correctly identified the type of Subject Property. This was done with the intent to defraud the Wang Parties of their $25,000 deposit, and Single Family Home has a specific market meaning distinct from Condominium affecting value, ownership rights and resale potential.

The FAXC contains sufficient specificity to ground fraud allegations. There appears to be a proper cause of action for intentional misrepresentation alleged in the FAXC. The Agent knew the Wang Parties were interested in a single-family home and not a condominium.

As to the argument that the buyer’s agent passed along information from the seller, that cannot be determined on a demurrer. (Assizadeh v. Cal. Fed. Bank (82 Cal.App.4th 399, 412.) The FAXC alleges affirmative misrepresentations by Agent Zhou.

C. Second Cause of Action for Negligent Misrepresentation

Negligent misrepresentation is a sub-species of fraud. (Pacific Gas and Electric Company v. Public Utilities Commission (2015) 237 Cal.App.4th 812, 846 (““tort law recognizes a claim for negligent misrepresentation, which allows recovery in the absence of scienter or intent to defraud [citations] and attaches liability to ‘[t]he suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact.’ [Citation.]”).)

A claim for negligent misrepresentation is similar to an intentional misrepresentation claim, except that the defendant may have honestly believed that the representation was true, but had no reasonable grounds for believing the representation was true when it was made. (Judicial Council of California Civil Jury Instruction 1903.) Some cases hold that the same specificity required in pleading fraud actions is required for negligent misrepresentation. (See Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166, disapproved on other grounds by Sheen v.

Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 948, & fn. 12 [“each element must be pleaded with specificity”]; Goonewardene v. ADP, LLC (2016) 5 Cal.App.5th 154, 178, rev’d on other grounds (2019) 6 Cal.5th 817 [“plaintiff must allege with sufficient particularity that he or she actually relied on the misrepresentation, as well as that such reliance was justifiable”].)

This cause of action is listed from FAXC ¶¶ 25-29, and states that even if Zhou and Buyer Broker did not intentionally deceive them, they had no reasonable ground for making their misrepresentation, and since they are real estate professionals they owed a duty to verify the legal classification of the property they were selling. For the same reasons discussed above, the Court OVERRULES the demurrer to the second cause of action for negligent misrepresentation.

D. Breach of Fiduciary Duty

The elements of a cause of action for breach of fiduciary duty are (1) existence of a fiduciary relationship; (2) breach; and (3) damage proximately caused by the breach. (Knox v. Dean (2012) 205 Cal.App.4th 417, 432.)

A fiduciary relationship is “‘any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent. ...’ “ (Wolf v. Superior Court (Walt Disney Pictures and Television) (2003) 107 Cal.App.4th 25, 29, quoting Herbert v. Lankershim (1937) 9 Cal.2d 409, 483.) A real estate broker is a fiduciary relationship. Assizadeh v. Cal. Fed. Bank (82 Cal.App.4th 399, 414-15 states:

“A broker’s fiduciary duty to his client requires the highest good faith and undivided service and loyalty. [Citations.] ‘The broker as a fiduciary has a duty to learn the material facts that may affect the principal’s decision. He is hired for his professional knowledge and skill; he is expected to perform the necessary research and investigation in order to know those important matters that will affect the principal’s decision, and he has a duty to counsel and advise the principal regarding the propriety and ramifications of the decision.

The agent’s duty to disclose material information to the principal includes the duty to disclose reasonably obtainable material information. [P] . . . [P] The facts that a broker must learn, and the advice and counsel required of the broker, depend on the facts of each transaction, the knowledge and the experience of the principal, the questions asked by the principal, and the nature of the property and the terms of sale. The broker must place himself in the position of the principal and ask himself the type of information required for the principal to make a well-informed decision.

This obligation requires investigation of facts not known to the agent and disclosure of all material facts that might reasonably be discovered.’ [Citation.] [P] Thus, depending on the circumstances, a broker’s fiduciary duty may be much broader than the duty to visually inspect and may include a duty to inspect public records or permits concerning title or use of the property, a duty which is expressly excluded from section 2079.” (Id. at pp. 25-26.)

Breach of a real estate agent’s fiduciary duty to his or her client may constitute negligence or fraud, depending on the circumstances of the case. (Salahutdin v. Valley of California, Inc. (1994) 24 Cal. App. 4th 555, 563 [29 Cal. Rptr. 2d 463].) Additionally, a real estate agent, as a fiduciary, is also “‘. . . liable to his principal for constructive fraud even though his conduct is not actually fraudulent. Constructive fraud is a unique species of fraud applicable only to a fiduciary or confidential relationship.’ [Citation.] [P] ‘[A]s a general principle constructive fraud comprises any act, omission or concealment involving a breach of legal or equitable duty, trust or confidence which results in damage to another even though the conduct is not otherwise fraudulent.

Most acts by an agent in breach of his fiduciary duties constitute constructive fraud. The failure of the fiduciary to disclose a material fact to his principal which might affect the fiduciary’s motives or the principal’s decision, which is known (or should be known) to the fiduciary, may constitute constructive fraud. Also, a careless misstatement may constitute constructive fraud even though there is no fraudulent intent.’ [Citation.]” (Id. at p. 562, italics omitted.)

The FAXC lists this cause of action at ¶¶ 40-44, after incorporating the previous allegations of the FAC. In light of the above case law and these detailed allegations, the Court rules to OVERRULE the demurrer as to this cause of action.

E. Sixth Cause of Action for Negligence in violation of Civ. Code, § 2079, 2079.16

This cause of action is listed in the FAXC at ¶¶ 45-49. Defendants’ demurrer on the same basis as above in that there was no false disclosure since the property is a single family residence pursuant to Civ. Code, § 2079.13 and they merely passed information through.

Civil Code § 2079 imposes upon a licensee a duty to a prospective purchaser of residential real property comprising one to four dwelling units to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose all facts materially affecting the value or desirability of the property that an investigation would reveal. (Easton v. Strassburger (1984) 152 Cal.App.3d 90 [the seminal broker-disclosure decision codified by section 2079]; Civil Code § 2079.) Civil Code § 2079.16 prescribes the statutory agency-disclosure form, which expressly recites a licensee’s “duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties”.

The Court OVERRULES the demurrer to the sixth cause of action.

F. Eighth Cause of Action for Declaratory Relief

Defendants’ demurrer on the ground that this cause of action is purely derivative of the other causes of action. This cause of action is listed at FAXC ¶¶ 56-60.

Declaratory Relief is proper when an actual controversy exists and is by a (i) person interested under a written instrument or contract or (ii) person seeking a declaration of his rights or duties with respect to another. (Code Civ. Proc., § 1060.) The plaintiff must plead (a) a proper subject of declaratory relief and (b) an actual, present controversy. (Maguire v. Hibernia Savings & Loan Soc. (1944) 23 Cal.2d 719, 729; Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)

“Generally, an action in declaratory relief will not lie to determine an issue which can be determined in the underlying tort action.” (California Insurance Guarantee Assoc. v. Superior Court (Jakes at the Shore, Inc.) (1991) 231 Cal.App.3d 1617, 1623.) The purpose of a declaratory relief action is to afford a new relief where needed and not furnish a litigant with another cause of action to determine identical issues. (Id. at p. 1624.) Additional authorities support that the declaratory relief claim is duplicative. See, e.g., Hood v. Superior Court (United Chambers Administrators, Inc.) (1995) 33 Cal.App.4th 319, 324 (“Hood”) (“The issues invoked in that cause of action already were fully engaged by other causes of action. Because they were, declaratory relief was unnecessary and superfluous.”).

More explicitly, the Court of Appeal in Hood, supra, 33 Cal.App.4th 319, 324 noted as follows:

We believe a comment is in order about the declaratory relief cause of action itself. The issues invoked in that cause of action already were fully engaged by other causes of action. Because they were, declaratory relief was unnecessary and superfluous. (See 5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 800, p. 243; California Ins. Guarantee Assn. v. Superior Court (1991) 231 Cal.App.3d 1617, 1623.)

Accordingly, since this cause of action appears to be duplicative, the Court SUSTAINS the demurrer WITHOUT LEAVE TO AMEND.

III. MOTION TO STRIKE The moving Defendants seek to strike the following:

1) Prayer for Relief 4, “For punitive and exemplary damages against Cross- Defendant...Buyer Broker [and] Agent Zhou...for fraud pursuant to Civil Code § 3294 should be struck because the allegations in the First Amended Cross- Complaint show that, as a matter of law, there is no fraud that supports a claim for punitive damages;

2) Prayer for Relief 5, “For reasonable attorney’s fees permitted by statutes or contracts”, because there is no factual allegation supporting any grounds for an award of attorney fees in favor of the Wang Parties.

A. Punitive Damages

In a motion to strike punitive damages allegations, the “ultimate facts showing entitlement to such relief must be pled by the Plaintiff.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) A claim for punitive damages cannot be pleaded generally. Specific factual allegations are required to support a claim for punitive damages, allegations a defendant acted with oppression, fraud, and malice are merely legal conclusions. (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864.) Facts of oppression, fraud, or malice must be alleged. (Grieves v.

Superior Court (1984) 157 Cal.App.3d 159, 166.) The necessary facts can be stated as ultimate facts or conclusions of law, as long as they are read in context with the other facts alleged as to defendant’s conduct so as to “adequately plead the evil motive requisite to recovery of punitive damages.” (Monge v. Superior Court (1986) 176 Cal.App.3d 503, 510.) Pursuant to Civ. Code, § 3294, where it is proven that the defendant is guilty of oppression, fraud, or malice, the Plaintiff may recover punitive damages.

Here, as discussed above, the Plaintiffs have pleaded a proper cause of action for fraud. In light of that and the additional authorities stated above, the Court exercises discretion to DENY the motion to strike punitive damages.

B. Attorney’s Fees

However, as to attorneys’ fees, unless authorized by contract, statute, or law, attorney fees are borne by each party. (Code Civ. Proc., §§ 1021, 1033.5, subd. (a)(10); Trope v. Katz (1995) 11 Cal.4th 274, 278.) If one is entitled to recover attorney fees per a statute or contract, that fact should be pled in the complaint and demanded in the prayer. (Wiley v. Rhodes (1990) 223 Cal.App.3d 1470, 1474.) There is no fact pled in the complaint. While the Plaintiffs have arguments in the opposition to the motion to strike, they are outside the four corners of the FAXC. Accordingly, the Court GRANTS the motion to strike the request for attorneys’ fees.

IV. CONCLUSION

1. The demurrer to the first (intentional misrepresentation); second (negligent misrepresentation); fifth (breach of fiduciary duty); sixth (professional negligence) causes of action are OVERRULED;

2. The demurrer to the eighth (declaratory relief) cause of action is SUSTAINED WITHOUT LEAVE TO AMEND;

3. The motion to strike punitive damages (Prayer for Relief # 4) is DENIED; and

4. The motion to strike the demand for attorneys’ fees (Prayer for Relief # 5) is GRANTED.

IT IS SO ORDERED.

Dated: [TENTATIVE – NOT FINAL] Hon. Joseph B. Widman Judge of the Superior Court