9826 LFRCA, LLC v. Hurwitz et al

Filing 111

ORDER granting in part and denying in part 107 Motion to Exclude. Defendant may not introduce evidence of post contract execution activity for the specific purpose of negating Plaintiffs claim of justifiable reliance. Defendants proffered evidence regarding Plaintiffs alleged failure to mitigate damages is relevant. Signed by Judge M. James Lorenz on October 20, 2017. (dsn)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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9826 LFRCA, LLC,

Case No.: 3:13-cv-01042-L-JMA
Plaintiff,

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v.

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ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF’S
MOTION [Doc. 107] IN LIMINE

RORBERT A. HURWITZ, et al.,
Defendants.

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ROBERT A HURWITZ, et al.,
Third Party Plaintiffs,

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v.

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DONALD A BURNS,

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Third Party Defendant.

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Pending before the Court is Plaintiff 9826 LFRCA, LLC’s motion in limine. At
the final pretrial conference, the Court established a two round schedule for motions in
limine. In the first round, the Court granted Plaintiff leave to file a motion in limine on
the issue of whether Jue v. Smiser, 23 Cal. App. 4th 312 (1994) precludes Defendants
from offering evidence regarding post contract execution activity for the purpose of
establishing justifiable reliance. The Court ordered that all other issues shall wait until
the second round, which is not set for briefing and hearing until February 2018. In their
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briefing on the first round, the parties discuss a number of issues the Court did not grant

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them leave to raise at this time. For purposes of efficiency, the Court reaches only two

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issues with this order: (1) whether Defendants may offer evidence regarding post contract

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execution activity for the purpose of negating the element of justifiable reliance and (2)

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whether Defendants’ proffered evidence that Plaintiff failed to mitigate damages is

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relevant.

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Regarding the first issue, there appears to be no disagreement between the parties

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as to the fact that the temporal focus for justifiable reliance is time of contract execution.

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Jue, 23 Cal. App. 4th at 313 (holding “a purchaser of real property who learns of

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potential material misrepresentations about the property after execution of a purchase

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agreement-but before consummation of the sale-[may] close escrow and sue for

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damages.”) From this, it clearly follows that evidence of anything Mr. Burns learned

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after contract execution has no relevance as to the issue of reasonable reliance and

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therefore cannot be offered for this specific purpose. This holding does not, however,

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prevent Defendants from offering otherwise admissible evidence of post contract

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execution activity for other purposes.

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As to the second issue, it is hornbook law that a plaintiff cannot recover damages

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in tort or for breach of contract to the extent a defendant proves the plaintiff could have

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mitigated damages by undertaking reasonable avoidance measures. Shaffer v. Debbas, 17

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Cal. App. 4th 33, 41 (1993). At trial Defendants will contend that, even if Plaintiff

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prevails on its claims, it is not entitled to a recovery (or entitled to less of a recovery)

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because Hurwitz offered Burns an opportunity to quickly flip the property at a near $1

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million profit. More specifically, Defendants have submitted an email Hurwitz sent

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shortly after close of escrow to Burns’ attorney in which Hurwitz offered to connect

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Burns to a Saudi Arabian buyer who appeared eager to pay up to $15 million in cash for

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the property. (Dec. 30 Email [Doc. 108-3 Ex. L].) It seems that Burns ignored the offer.

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In its reply brief, Plaintiff argues in rather conclusory fashion that any damage
mitigation evidence is irrelevant because there was no practical way for Plaintiff to
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mitigate its damages. The Court disagrees. Plaintiff alleges it sustained damages of

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about $1 million by overpaying for the property under the false belief that it featured

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private beach access. (Compl. [Doc. 1].) Defendant’s proffered evidence is therefore

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highly relevant because it tends to show that Plaintiff may have failed to take advantage

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of an opportunity to easily recover nearly the entire amount of alleged overpayment.

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Accordingly, the Court will not exclude this evidence on the grounds of it not being

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relevant.

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For the foregoing reason, the Court GRANTS IN PART and DENIES IN PART
Plaintiff’s motion as follows:
 Defendant may not introduce evidence of post contract execution activity for the
specific purpose of negating Plaintiff’s claim of justifiable reliance.
 Defendant’s proffered evidence regarding Plaintiff’s alleged failure to mitigate
damages is relevant.

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IT IS SO ORDERED.

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Dated: October 20, 2017

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