Procedural Posture

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Plaintiff purchasers appealed from the judgment of the Superior Court of Los Angeles County (California), which sustained the demurrers of defendants, sales agents, architects, and inspectors, and dismissed plaintiffs’ action, without leave to amend, for various allegations, including fraudulent concealment, professional negligence, and fraudulent conspiracy, in an action to rescind or affirm contracts of purchase of certain condominiums.

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Overview

Plaintiff purchasers filed a suit against defendants, sales agents, architects, and inspectors, to rescind or affirm the contracts for the purchase of a condominium for various causes of action relating to alleged construction defects. Plaintiffs appealed from the trial court’s order sustaining, without leave to amend, defendants’ general demurrers to relevant portions of plaintiffs’ second amended complaint and dismissing plaintiffs’ complaint. On appeal, the court reversed, remanded, and held plaintiffs alleged a sufficient cause of action against defendant sales agents for negative fraud because defendant sales agents knew of purchasers’ ignorance of the structural deficiencies and failed to disclose the deficiencies; against defendant architects for negligence because the duty of care in the performing their services extended to plaintiffs who purchased and suffered loss from the allegedly defectively designed and built condominium; and against defendant inspectors for intentional misrepresentation amounting to actual fraud because they failed to disclose adverse material facts despite their duty to disclose the defective construction and to prevent the construction.

Outcome

The court reversed the dismissal of plaintiff purchasers’ claim with directions to vacate and overrule the general demurrer of defendants, sales agents and architects; and to modify the order sustaining the general demurrer of defendant inspectors by granting leave to amend; and held plaintiffs alleged a sufficient cause of action for negative fraud, professional negligence, and intentional misrepresentation amounting to actual fraud.