9826 LFRCA, LLC v. Hurwitz et al

Filing 130

Redacted ORDER Granting in Part and Denying in Part {118], 119 , 120 , 121 , 122 and Denying as Moot 128 . Signed by Judge M. James Lorenz on 2/16/2018.(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 GRANTING IN PART AND
DENYING IN PART MOTIONS
[Docs. 118-122] IN LIMINE

RORBERT A. HURWITZ, et al.,

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Defendants.

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Pending before the Court are two joint motions in limine and three opposed

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motions in limine. By way of background, this case arises out of a dispute between a real

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estate purchaser and a selling real estate agent. Donald A. Burns (“Burns”) purchased a

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property offered for sale by real estate agent Robert A. Hurwitz (“Defendant”). After

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executing the purchase contract, Burns assigned the contract to 9826 LFRCA, LLC

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(“Plaintiff”), an LLC whose sole member is a trust for which Burns is settlor and trustee.

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Plaintiff alleges that when Burns executed the purchase he reasonably relied on

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Defendant’s representations that the property featured private beach access. After the

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contingency period ended and the contract became fully executed, Plaintiff alleges it

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discovered that these representations were false and that, in reliance upon them, Plaintiff

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overpaid for the property. Accordingly, Plaintiff filed a complaint alleging intentional

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misrepresentation, negligent misrepresentation, fraudulent concealment, and negligence.

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Defendant denies liability, arguing he did not misrepresent the true nature of the beach
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access and that, even if he did, Plaintiff should have no recovery because Burns’ alleged

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reliance was unreasonable, Defendant owed no fiduciary duty to Plaintiff, Plaintiff

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suffered no damages, and Plaintiff failed to mitigate its damages.

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I.

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SEXUAL ORIENTATION
The parties jointly move to exclude at trial any evidence of the sexual orientation

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of any party, participant, or witness. (Doc. 118.) The parties contend that such evidence

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is not relevant to the issues at trial and that its introduction would be invasive to

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individual privacy and potentially trigger juror bias or prejudice. The Court agrees, and

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therefore excludes such evidence pursuant to Fed. R. Evid. 403 and 402.

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II.

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MR. CASTELLANOS
Rafael Castellanos is a real estate attorney retained by Burns for the subject

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transaction. By way of joint motion, the parties request that the Court order Mr.

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Castellanos “be precluded from offering any opinion testimony on standard of care,

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causation or damages.” (Doc. 122.) The parties’ joint request is granted.

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III.

FBI EXTORTION INVESTIGATION
Plaintiff seeks to exclude evidence of Burns’ relationship to Teofil Brank and

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Burns’ role as charging witness in a criminal case against Mr. Brank. Mr. Brank is an

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adult film actor who appeared in movies that catered to a homosexual audience. It

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appears that Burns may have commissioned Mr. Brank to connect him to homosexual

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porn stars that provided sexual services in the context of group sex parties. After Brank

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repeatedly blackmailed Burns, Burns approached the FBI. The FBI conducted a sting

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operation that led to the arrest and conviction of Brank in the Central District of

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California. Burns was the charging witness.

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Plaintiff seeks to exclude this evidence under Fed. R. Evid. 403 because it is
irrelevant and carries substantial risk of unfairly prejudicing Plaintiff. Defendant does
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not dispute the plain fact that this evidence carries a substantial risk of unfair prejudice.

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Rather, Defendant argues only that it is relevant as it tends to show that Burns did not

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rely on Defendant’s statements regarding private beach access. Defendant’s theory

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seems to be that this evidence shows that Burns enjoys group sex parties at his residences

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and therefore values privacy. Because Burns thus values privacy, Defendant argues

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Burns must not have actually wanted a direct beach access path to the property and

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therefore must not have relied on the statement regarding this allegedly unwanted feature

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of the property.

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Defendant’s argument lacks merit. From the premise that Burns may value

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residential privacy, it does not follow that he would not also value a private beach access

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path appurtenant to the property. Simply put, a desire for privacy and a desire for private

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beach access are not mutually exclusive. On the other hand, there is no question that

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evidence tending to show a preference for homosexual group sex parties with paid porn

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stars carries substantial risk of unfair prejudice. Accordingly, pursuant to Fed. R. Civ. P.

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403, the Court orders that no evidence shall be introduced regarding Burns’ relationship

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with Branks or the investigation and prosecution stemming from this relationship.

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Furthermore, the Court finds that the highly salacious nature of this evidence and its

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potential to cause personal embarrassment are sufficiently compelling justifications to

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seal both this order and Defendant’s opposition [Doc. 126].

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IV.

PRE-SALE APPRAISAL AND UNACCEPTED PURCHASE OFFER AMOUNTS
Plaintiff seeks to exclude three appraisals of the subject property that predate the

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transaction as well as an unaccepted purchase offer made by Burns. The three appraisals

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and the unaccepted purchase price are all higher than the $14,097,000 price at which

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Plaintiff ultimately purchased the property. The main issue at trial for which the prior

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appraisals and rejected purchase offer could be of relevance is the issue of damages. To

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determine damages, if any, the jury will have to decide how much value private beach

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access, in a form the jury finds Plaintiff reasonably believed to exist, would add to the

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property.

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Plaintiff contends that outdated appraisals and the purchase offer for the entire

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property carry little or no probative value as to how much private beach access is

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specifically worth. Plaintiff further contends that higher appraisals and purchase offers

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could have an unfair prejudicial effect of misleading the jury into believing that Plaintiff

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suffered no damages because it purchased the property at a price significantly below

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market.

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The Court agrees that old appraisals of this property are not probative of the value

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of the beach access Plaintiff believed came with the property. Indeed, because beach

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access in the form Plaintiff expected does not actually exist, it is hard to see how its value

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would be incorporated in an appraisal of this property. The Court also agrees that this

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evidence could create juror bias by misleading the jury into thinking Plaintiff suffered no

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damages because he paid below market price for the property.

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That said, these prior appraisal amounts could be relevant for purposes of

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comparative valuation of the property. To illustrate, if a comparable property that

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featured the type of beach access Plaintiff expected sold in the same timeframe as one of

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the appraisals of the subject property, comparing the purchase price of such a property to

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the appraisal price of the subject property could be probative of the marginal value added

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by the beach access. Accompanied by a cautionary instruction that a prior appraisal does

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not accurately reflect the value of the property at time purchased because of market

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fluctuations, this relevant evidence would not offend Fed. R. Evid. 403. Accordingly, the

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Court orders that evidence of appraisal amounts is admissible only in the context that it is

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relevant to a comparative valuation of the subject property to another comparable

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property sold on a date near the appraisal date.

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As to the unaccepted purchase offer Burns made in March 2011, the Court finds

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the amount of that offer is not relevant to the issue of comparative valuation because

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Burns is not a certified appraiser making an objective valuation. Further, the fact that the
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property sat on the market for about nine months after Burns’ initial offer then sold for

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significantly less suggests the initial offer was high. That Burns did make an offer in

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March of 2011, by contrast, is relevant. It shows Burns’ ongoing familiarity with the

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property and thus goes to the issue of reliance. Accordingly, the Court orders that

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evidence of Burns March 2011 purchase offer is admissible only if there is no reference

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to the offer’s amount or to the fact that it was greater than the ultimate purchase price.

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V.

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SITE VISIT
Defendant requests to take the jury on a site visit to the subject property to view

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the property grounds and the beach access path. Defendant contends that, as to the issue

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of reliance, it is critical that the jury see with their own eyes what Burns could have seen

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during his pre-purchase site visits. Plaintiff opposes, arguing that, given the number of

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images and exhibits depicting the property, the marginal probative value of a site visit is

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minimal. Plaintiff further contends that this marginal probative value is substantially

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outweighed by the logistical difficulties of a site visit and the risk that the jury, after

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seeing the upscale property and surroundings, will develop bias against Plaintiff on

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account of his wealth.1 The Court will therefore defer resolution of this issue until after

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the close of evidence, at which time I will ask the jury whether they believe a site visit

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would be helpful.

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Plaintiff also argues that if the jury sees the subject property they should also get to see similar
properties for purposes of comparative valuation as relevant to the issue of damages. Because it would
clearly be an undue burden to visit other properties in addition to the subject property, Plaintiff argues
the jury should visit no properties at all. This “slippery slope” argument is unpersuasive because a visit
to the subject property does not trigger the alleged need to visit other properties. Rather, to the extent
there is a need to visit other properties for comparative valuation (there is not), it exists regardless of
whether the jury does or does not visit the subject property to see whether Burns should have noticed the
lack of private beach access.

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VI.

CONCLUSION & ORDER
The Court GRANTS IN PART and DENIES IN PART the parties’ motions in

limine as follows:
 The parties shall not present any evidence of the sexual orientation of any
party, participant, or witness at trial.
 Mr. Castellanos shall not offer any opinion testimony on standard of care,
causation, or damages.

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 The parties shall not introduce any evidence regarding Burns’ relationship

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with Teofil Branks; any evidence regarding the resulting investigation and

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criminal prosecution of Mr. Branks; or any evidence of Burns’ alleged

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participation in or hosting of sex parties. The Court further orders that the

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Clerk of Court shall seal the unredacted version of this order and Defendant’s

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opposition [Doc. 126] to Plaintiff’s second motion in limine. Plaintiff’s ex

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parte motion [Doc. 128] to file a reply to Defendant’s opposition is denied as

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moot.

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 Evidence of appraisal amounts is admissible only in the context that it is

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relevant to a comparative valuation of the subject property to another

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comparable property sold on a date near the appraisal date.

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 The parties shall make no reference to (1) the amount of Burns’ March 2011

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purchase offer or (2) the fact that it was greater than the ultimate purchase

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price.

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 The Court defers decision on the issue of a jury site visit until close of

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evidence, at which time I will ask the jury if they believe a site visit would be

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helpful.

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 The hearing on motions in limine set for Thursday, March 22, 2018 at 10:00
a.m. is vacated.
IT IS SO ORDERED.

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Dated: February 16, 2018

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