9826 LFRCA, LLC v. Hurwitz et al

Filing 117

ORDER Dismissing Third Party Defendant Donald A. Burns. Signed by Judge M. James Lorenz on 1/23/2018.(sjt)

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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 DISMISSING THIRD
PARTY DEFENDANT DONALD A.
BURNS

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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This case arises out of a dispute between a real estate purchaser and a selling real
estate agent. Third Party Defendant Donald A. Burns (“Burns”) purchased a property
offered for sale by real estate agent Robert A. Hurwitz (“Defendant”). After executing
the purchase contract, Burns assigned the contract to 9826 LFRCA, LLC (“Plaintiff”), an
LLC whose sole member is a trust for which Burns is settlor and trustee. Plaintiff alleges
that when Burns executed the purchase he reasonably relied on Defendant’s
representations that the property featured private beach access. After the contingency
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period ended and the contract became fully executed, Plaintiff alleges it discovered that

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these representations were false and that, in reliance upon them, Plaintiff overpaid for the

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property.

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Defendant filed a third party complaint against Burns, seeking indemnification

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from Burns in the event that Defendant is found liable to Plaintiff. The gist of the third

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party complaint is that any harm Plaintiff may have suffered stems from Burns’ alleged

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negligent failure to investigate the nature of the private beach access. Burns filed a

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motion to dismiss the third party complaint against him, arguing, inter alia, that it failed

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to state a claim because if Burns is found to have been negligent in performing due

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diligence, that finding would eliminate Defendant’s liability to Plaintiff in the first

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instance by way of Defendant’s defenses. By order dated July 31, 2014, the Court found

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this argument unpersuasive and denied Burns’ motion to dismiss the third party

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complaint as to him. (Doc. 32).

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On January 5, 2018, the Court indicated it was inclined to reconsider the denial of

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Burns’ motion to dismiss and ordered the parties to show cause as to why the Court

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should not dismiss Burns from this case. (Doc. 112.) Burns, Plaintiff, and Defendant

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have all filed responses to the Court’s order to show cause. (Docs. 113–15.) In his

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response, Defendant argues that “so long as the obligations and/or liabilities under the

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subject purchase agreement are retained by Burns individually, Mr. Burns must be

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included in this matter as an individual party, if not as a Third Party Defendant, than [sic]

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as an involuntary Plaintiff.” (Doc. 113 2:18–21.)

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Defendant’s argument is not persuasive. Defendant does not cite any supporting

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authority or present any explanation as to how the non-assignment of Burns’ alleged

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“obligations and / or liabilities” carries any relevance here given that Burns assigned to

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Plaintiff all of his rights in the subject transaction. Under the law of assignments,

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Plaintiff (as assignee) stands in Burns’ (the assignor’s) shoes with respect to any right it

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has to recover against Defendant for the alleged misrepresentation regarding private

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beach access. Cal. Civ. Code § 1459. Any defenses that Defendant would have had as to
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Burns are therefore preserved as to Plaintiff. To illustrate, if a jury finds that Burns’

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alleged negligence in conducting due diligence was the legal cause of any loss suffered

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by Plaintiff, such a finding would necessarily offset Defendant’s liability to Plaintiff in

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the first instance by way of Defendant’s defenses that (1) any reliance by Plaintiff

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(standing in Burns’ shoes) on Defendant’s alleged misrepresentations was unreasonable

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and (2) Plaintiff did not conduct the required due diligence and thus failed to mitigate

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damages.

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Because any negligence on the part of Burns would thus offset liability in the first
instance, there is no possibility of Defendant obtaining secondary relief from Burns. It

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follows that the only feasible purpose keeping Burns as a third party defendant could

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accomplish is to unnecessarily complicate the issues and confuse the jury. Accordingly,

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pursuant to Federal Rule of Civil Procedure 54(b), the Court hereby reconsiders its denial

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of Burns’ Fed. R. 12(b)(6) motion and dismisses Burns as third party defendant.

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IT IS SO ORDERED.

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Dated: January 23, 2018

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