1 Filed 4/10/14 Sierra Industries West v. Hosseinioum CA1/4 NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

SIERRA INDUSTRIES WEST, L.P. etc., et al., Plaintiffs and Appellants,

v. ABOL HOSSEINIOUM et al., Defendants and Respondents. A135894
(San Francisco City & County Super. Ct. No. CGC04434239)

I.
INTRODUCTION
This lawsuit arises out of a 1999 comme rcial real estate transaction in which appellant Sierra Industries West, L.P., a Calif ornia limited partnership (buyer) purchased a commercial building in San Francisco, Ca lifornia (the City) from respondents Abol Hosseinioum and Farrokh Hosseinyoun (selle rs). At the time of the purchase, the building had a large billboard on its roof (t he billboard) which generated significant income through a long-te rm lease to a third party for adve rtising rights. In 2003, several years after the purchase, buyer purportedly fi rst learned the billboard’s legal status was being questioned by the City; and after all the administrativ e remedies were exhausted, buyer was eventually ordered by th e City to remove the billboard. In this action, buyer sought to re cover damages from sellers for fraudulent concealment, negligence, negligent misrepre sentation, as well as restitution for a
violation of California’s Unfa ir Competition Law, Business a nd Professions Code section2 17200 (the UCL). 1 Essentially, buyer claimed that prior to its purchase of the property, sellers had misrepresented or failed to disclose material facts regarding the legal status of the billboard, specifically, whet her the billboard had the prop er permits from the City. The case proceeded to a jury trial on tw o of buyer’s causes of action––fraudulent concealment and negligence. On November 3, 2011, the ju ry returned its verdict for sellers. The jury’s determination is not challenged in this appeal. This appeal concerns the remaining two ca uses of action that were decided by the trial court––buyer’s negligent misrepresentat ion cause of action, and the cause of action alleging unfair acts and practices violating the UCL. Before trial, sellers were granted summary adjudication on the ne gligent misrepresentation ca use of action based on the court’s determination that the undisputed evidence showed selle rs had not made a “positive assertion” of fact regarding the b illboard in connection w ith the sale of the property. After trial, the cause of ac tion for unfair business practices was tried exclusively to the court, resulting in a findi ng that section 17200’s requirements were not met. On appeal, buyer claims “[b]oth rulings were in error.” We disagree and affirm.
II.
FACTS AND PROCED URAL HISTORY In April 1999, sellers entered into th e Purchase Sale Agreement (PSA) with buyers’ predecessor, LLM Investments, Inc. (LLM), whereby sellers agreed to sell a commercial building located at 290 Division Street in the City (the building) for $5.6 million. 2 The building had a prominent billboard on its roof oriented to face the adjacent elevated freeway. In an “Offering Memorandum” prepared by sellers’ real estate agent, it was represente d that “There is significant signage income (10% of the gross income) on a long term lease with annual increases.” The value of the billboard was purported to be “[$] 757,000 (@ 9.1% CAP Rate).” (Italics omitted.)

1 All undesignated statutory references ar e to the Business and Professions Code.

2 

### LLM, which is also a named plaintiff in this case, assigned its rights under the PSA to buyer prior to the July 1999 close of escrow.3 Sellers presented buyer with copies of the 1997 and 1998 leas es for the billboard
that had been entered into with Richard Traverso doing business as ADCO Outdoor Advertising (the sign tenant). The 1997 le ase contained information relating to the history of the billboard, including a referen ce that there were some questions about the legal status of the billboard. The 1997 lease indicated that before the terms of a new lease were negotiated, the sign tenant “will atte mpt to determine if the face on the rooftop
structure will be allowed to remain due to th e uncertainty of its grandfathered status.” The sign tenant was referring to the City’s passage of a land use ordinance regulating outdoor advertising with the provision th at, under certain circumstances, existing billboards would be “grandfather ed” and exempted from the law. The 1998 lease replaced th e 1997 lease. The 1998 lease was for a 10-year term with a 10-year renewal option. Furthermore, it increased the rent payable by the sign tenant under the prior agreement from $1,200 to $5,000 a month. Buyer has maintained throughout this litigation that sellers’ production of a new long-term lease at a higher rent led it to reasonably believe that the sign tenant had successfully established the billboard’s legality. In 2003, more than four ye ars after the sale was complete d, the City sent notices to all property owners with outdoor billboards requesting information about the legality of their signs. The purpose was to conduct a sign inventory, and then assign to all nonconforming but allowed signs (such as thos e grandfathered) an “in lieu” number for display on such signs. Buyers claimed this was the first time they became aware that there were current issues regard ing the legality of the billboard. On August 27, 2004, buye r filed suit against sellers. 3 After the lawsuit was filed, all parties agreed to stay th e action to allow buyer to comp lete administrative proceedings with the City seeking to estab lish the legal right to continue using the billboard. The stay was lifted and this case was allowed to proc eed after buyer exhausted its administrative

3 S 

### ellers cross-complained against the si gn tenant for indemnity as the sign tenant had the lease for the bi llboard and was responsible for all repair, maintenance, and permitting issues.4 remedies with the City, its position was rej ected, and the billboard was ordered removed from the property’s rooftop. In its second amended complaint (SAC), which is the operative complaint for our purposes, buyer asserted causes of action ag ainst sellers for fraudulent concealment, negligent misrepresentation, negligence, and violation of the UCL. Buyer’s position was that sellers allegedly “knew, recklessly disregarded or should have known . . . that the Rooftop Sign . . . was not duly authorized, co nstructed, permitted and/or maintained under the laws, regulations and requirements of the City of San Francisco.” Moreover, buyer claimed that sellers’ misrepresentati ons and omissions caused it to reasonably and justifiably conclude the billboard was authoriz ed by the City at th e time of the sale in 1999, until buyer discovered otherwise after it received a notice from the City in 2003, leading to the eventual removal of the billboard. In the SAC, buyer points to Section 6.2 of the PSA, entitled “Representations and Warranties of Seller,” stating that “There ar e no condemnation, environmental, zoning or other land use regulation pro ceedings, either instituted or planned to be instituted, nor does Seller have knowledge of any facts whic h could detrimentally affect the use or operation of the Property . . . .” (Italics added.) Fu rthermore Section 6.4 of the PSA states: “No representation, warranty or statem ent of Seller in this Agreement or in any
documents . . . in connection with the transact ions contemplated here in contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements or facts contained herein misleading.” Buyer claims sellers’ representations and disclosures were “fraudulent and deceptive” in light of a conversation with the sign tenant th at took place before the 1998 lease was negotiated and entered into. The sign tenant provided de position testimony that
he “didn’t know for sure whether this si gn could be operated. I didn’t know what position the City would take.” He “didn’t do anything overt . . . just waited to see if the City would make a move against the sign.” He explained, “Did I anticipate [the City] coming? No. Did I think they were going to do anything about it? No. Did I feel that we had a very good argument for a legal sign? Yes. But you don’t know.” When the5 sign tenant was asked if he informed sellers of the above, the sign tenant testified: “I think that I relayed the facts as I unders tood them to Abol [respondent Abol Hosseinioum] right down the line, 100 percent st raight arrow. Everyt hing that I thought; whatever I thought; what was going through my mind; how this was all crafted: all of it was discussed openly and freely.” Based on sellers’ alleged misrepresentati ons and nondisclosures, buyer claimed to have “out-of-pocket” damage s, including loss of the billb oard, valued at $757,000. Prior to trial, sellers moved for and were granted summary adjudication against buyer on the negligent misrepresentation clai m. The action proceeded to jury trial on October 18, 2011, on buyer’s claims that se llers had intentionally concealed material information regarding the billb oard (fraudulent concealment) a nd/or negligently failed to disclose information regarding the billboard’s legal status (negligence). After hearing the evidence and the arguments of counsel, on Nove mber 3, 2011, the jury found in favor of sellers and against buyer. As already noted, th e jury’s determination is not challenged in this appeal. Thereafter, on November 28, 2011, a he aring was held to address buyer’s remaining cause of action for a violation of section 17200. On March 23, 2012, the court
issued its statement of deci sion determining that buyer wa s not entitled to any relief under section 17200. The second amended judgment , resolving all of the causes of action in sellers’ favor, was filed on May 16 , 2012. This appeal followed.
III.
DISCUSSION
A. Negligent Misrepresentation Before trial, the trial court granted selle rs’ request for summary adjudication of the cause of action for negligent misrepresentati on. Buyer claims this ruling was in error. The same rules that apply to summary j udgment apply to summary adjudication. (See Lomes v. Hartford Financ ial Services Group, Inc. (2001) 88 Cal.App.4th 127, 131.) “[T]he party moving for summary judgment bear s the burden of persuasion that there is
no triable issue of material fact and that he is entitled to judgment as a matter of law.”6 ( Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 8 26, 850, fn. omitted ( Aguilar ).) “Once the [movant] has met that burden, the bur den shifts to the [other party] to show
that a triable issue of one or mo re material facts exis ts as to that cause of action . . . .” (Code Civ. Proc., § 437c, subd. (p)(1); Aguilar, supra , 25 Cal.4th at p. 850.) A triable
issue of material fact exists where “the evid ence would allow a reasonable trier of fact to find the underlying fact in favor of the part y opposing the motion in accordance with the applicable standard of proof.” ( Aguilar
, supra , at p. 850.) Where summary judgment has been granted, “[w]e review the trial court’s decision de novo, considering all of the evidence the parties offered in connection wi th the motion (except that which the trial court properly excluded) an d the uncontradicted inferen ces the evidence reasonably supports.” ( Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476; see also Brisbane Lodging, L.P. v. Webcor Builders, Inc. (2013) 216 Cal.A pp.4th 1249, 1256.) While intentional fraud requires the in tent to deceive (Civ. Code, § 1709), negligent misrepresentation encompasses “the a ssertion, as a fact, of that which is not true, by one who has no reasonab le ground for believing it to be true” (Civ. Code, § 1710, subd. 2), or “[t]he positive assertion, in a ma nner not warranted by th e information of the person making it, of that which is not true, th ough he believes it to be true” (Civ. Code, § 1572, subd. (2)).
The elements of a cause of action for ne gligent misrepresentation are as follows: (1) a representation of a past or existing material fact or other matter; (2) the representation was untrue; (3) regardless of hi s or her actual belief, the person making the representation did not have an y reasonable ground for believi ng the representation to be true; (4) the representation was ma de with an intent to induce the injured party to rely on it; (5) the injured party was unaware of the falsity of the representation, acted in justifiable reliance on the truth of the represen tation, and was justifie d in relying upon the representation; and (6) as a result of justifia ble reliance, the injured party was damaged. (1 Miller & Starr, Cal. Real Estate (3d ed. 20 11, Supp. 2003) Contracts, § 1:126, pp. 441- 452, and cases cited therein.)7 As explained by a leading treatise: In or der to state a cause of action for negligent misrepresentation, “[t]he requirement of intent is satisfied when it is established either that the defendant had actual knowledge of the fa lsity of the statements or that he or she
lacked an honest belief in thei r truth, or that he or she made the statements carelessly and recklessly in a manner not warranted by the in formation available. Because it is often difficult to prove the actual knowledge of a person who makes a misrepresentation, the tort of negligent misrepresentation is a c onvenient alternative [to fraudulent concealment] because it usually is easier to prove that th e perpetrator lacked su fficient information to make the representation, whether or not he or she actually believed the statement was true.” (1 Miller & Starr, Cal. Real Estate, supra , Com. at p. 445.) In granting summary adjudica tion, the trial court found the undisputed facts failed
to demonstrate a triable issue of fact with re spect to the first element of a cause of action for negligent misrepresentation because no affirmative statement had been made by sellers regarding the legal status of the billb oard. Specifically, the court pointed out that buyer had failed to identify a misrepresenta tion made by sellers constituting a “positive assertion’ or ‘assertion of fact.’ ” Buyer clai ms this ruling was in e rror, pointing out that sellers had made a representation in the PSA that they were not aware of any untrue statements or omissions in any of the transa ction documents nor were they aware of any facts concerning the property “which could de trimentally affect the use or operation of the Property for its intended purpose . . . .” Buyer argues that th e information conveyed to sellers by the sign tenant, concerning th e billboard’s questionable legal status, made
these statements false assertions of fact. Buyer states: “By repr esenting they had ‘no knowledge’ regarding the referenced subject ma tter, [sellers] positively asserted a fact.” Contrary to buyer’s argument, under California law, “best of knowledge and
belief” disclosure statements like those co ntained in the PSA here, simply do not constitute positive assertions of fact whic h can support a neglig ent misrepresentation
claim. This tenet is aptly illustrated by Wilson v. Century 21 Great Western Realty (1993) 15 Cal.App.4th 298 ( Wilson ), a case remarkably similar to the case before us. In
Wilson , Division Two of the First District Court of Appeal upheld a grant of a nonsuit on8 a negligent misrepresentation cause of action in a real estate case because the alleged negligent misrepresentation wa s not a positive assertion of fact. The court explained: “Negligent misrepresentation is a species of fraud or deceit specifically requiring a ‘positive assertion’ [citation] or ‘assertion’ [c itation] of fact. [Citations.] An ‘implied’ assertion or representation is not enough. [Citations]” ( Id . at p. 306.) Applying these principles, the Wilson court held that the sellers’ representation in a disclosure statement that they were “not ‘aware’ of significant ‘defects/malfunctions’ ” in the home’s foundation could not support a negligent misrepresentation claim because a positive assertion of fact was required. ( Wilson
, supra , 15 Cal.App.4th at p. 306.) This was true even though there wa s evidence the sellers’ real estate agent had a brief conversation with the sellers’ next door neig hbor, who suggested that the property might have foundation problems. ( Id . at p. 303.) The court observed: “[A]sserting that one is not ‘aware’ of significant ‘defects/malfunctions ’ in a foundation, while a direct reference to a foundation, is still only implied as to its true condition. Indeed, one who claims to be ‘aware’ of no defects necessarily leaves open the chance that unknow n defects do exist.” ( Id . at p. 306.) Thus, the lack of a positiv e assertion defeated the buyer’s claim of negligent misrepresentation. ( Id. at pp. 306-307; accord, Shamsian v. Atlantic Richfield
Co. (2003) 107 Cal.App.4th 967, 984 ( Shamsian ).) The principle that a neglig ent misrepresentation claim requires a positive assertion of fact and that an implied assertion is insuff icient is well-settled in California law. Many cases quote a 1977 decision that “ ‘No case has been cited and we find none in which any court held that the doctrine of neglig ent misrepresentation applies to implied representations. In all cases a “positiv e assertion” was involved . . . .’ ” ( Diediker v. Peelle Financial Corp. (1997) 60 Cal.App.4t h 288, 298-299, quoting Huber, Hunt & Nichols, Inc. v. Moore (1977) 67 Cal.App.3d 278, 304; see also Weissich v. County of
Marin (1990) 224 Cal.App.3d 1069, 1083 [affirming di smissal of a negligent misrepresentation claim because it allege d an implied, not positive assertion].) This same principle also bars a claim for negligent misrepre sentation based on a failure to disclose or the making of a half-t ruth, which is the failu re to disclose full9 information. In a particularly instructive case, the court in Byrum v. Brand (1990) 219 Cal.App.3d 926 ( Byrum ), affirmed a trial court’s refusal to give a jury instruction that the
failure to disclose material facts cons tituted a negligent misr epresentation. ( Id. at pp. 941-942.) Significantly, CACI No. 1903, the standard negligent misrepresentation instruction, provides, in pertin ent part, that the defendant “rep resented to [plaintiff] that an important fact was true.” Nothing in CACI No. 1903 a llows for negligent misrepresentation liability for a concealment, fa ilure to disclose, or half-truth. (Compare CACI No. 1901 [instructions on concealment provide for liability based on failure to disclose and half-truths]; see Shamsian
, supra , 107 Cal.App.4th at p. 984.) In light of this overwhelming authority, b uyer’s failure to present any evidence of a positive assertion from sellers concerning the existence of permits for the billboard or an express assurance that the billboard was in full complian ce with all applicable legal requirements bars buyer’s claim for ne gligent misrepresentation. (See Byrum , supra , 219 Cal.App.3d at p. 941 [by statute, a neglig ent misrepresentation claim requires “positive assertions”; the court “see[s] no reason to depart from thes e statutory requirements that something more than an omission is required to give rise to recovery on that theory, even as against a fiduciary”]; see also Evan F. v. Hughson United Methodist Church (1992) 8 Cal.App.4th 828, 840-841, fn. 2 [“The record shows that the only representations made to plaintiffs regarding Murphy were implied representations that Murphy was fit to be a minister . . . . The tort of negligent misr epresentation requires a ‘positive assertion’ and does not apply to implied misrepresentations”].) The cases cited by buyer do not hold to the contrary. (See, e.g., Mary Pickford Co. v. Bayly Bros., Inc (1939) 12 Cal.2d 501; Universal By-Products, Inc. v. City of
Modesto (1974) 43 Cal.App.3d 145; Tijsseling v. General Acc. etc. Assur. Corp. (1976) 55 Cal.App.3d 623.) Co nsequently, we agree with the trial court that there is no statement made by sellers whic h could be construed as a pos itive assertion of a past or existing material fact; thus, buyer could not es tablish the first essent ial element necessary to submit a claim for negligent misrep resentation to the trier of fact.10 Because we affirm the trial court’s gran t of summary adjudication as being fully supported by the law of negligent misrep resentation, we do no t consider sellers’ alternative argument that “even had this cl aim gone to trial with the concealment and non-disclosure causes of action, the jury woul d clearly have found in favor of [sellers] anyway based on the jury’s de termination that all informa tion material to the Rooftop Billboard had been properly disclosed.”
B

. The UCL The UCL prohibits “any unlawful, unfair or fraudulent business act or practice.” (§ 17200.) It authorizes courts to enjoin unfair competition and order restitution of money or property obtained by means of unfair competition. (§ 17203.) Individuals may
institute actions for such relief on behalf of themselves or the general public. (§ 17204.) Virtually any law may serve as the pred icate for an enforcement action. ( Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969.) Sellers argued below that their one-time sale of the building did not qualify as a “business act or practice” for the purpose of establishing liability under section 17200. They insisted “[s]ection 17200 does not appl y to a singular purchase of a commercial building by sophisticated real estate investors. . . . [¶] [T]h e evidence at trial established that [sellers] were not engaged in the ‘busin ess’ of selling commerc ial buildings in 1999, and did not have a ‘practice’ of doing so. To the contrary, th e sale of 290 Division Street was a single transaction involving a single prope rty. [Buyer] has not cited to a single case where Section 17200 was successfully a pplied to an isolated sale of commercial property.” Buyer’s section 17200 claim was tried to the trial court. ( Hodge v. Sup. Ct . (2006) 145 Cal.App.4th 278, 284-285 [no right to a jury trial of section 17200 action as its remedies, injunctive relief and/or restitution, are equitable].) The court found this argument was persuasive, concluding the evid ence failed to show “the sale of 290 Division was a business act committed pursu ant to a business act ivity.” The court explained, there is “no indication that [selle rs] had a business, or made a livelihood, from11 selling buildings.” Based on this reasoning, the court found that sellers’ conduct with respect to selling its commercial property fell outside of the purview of section 17200.
We believe the trial court was on firm foo ting in holding that this isolated private sale of commercial property, by one not in the business of doing so, is not encompassed within the definition of “business act or practice” as that term is used in section 17200. The overriding purpose of the UCL is to prot ect the general public against unscrupulous business practices. ( Boschma v. Home Loan Center, Inc . (2011) 198 Cal.App.4th 230, 252-253.) As stated by our Supreme Cour t, the UCL prohibits “ ‘anti-competitive business practices’ as well as injuries to c onsumers, and has as a major purpose ‘the preservation of fair business competition.’ [Citations.]” ( Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 ( Cel-Tech ).) In this case, the alleged unfair busine ss act or practice took place within the context of two sophisticated parties enteri ng into a multi-million dollar commercial real estate transaction in which they each recei ved professional advice. Factually, this situation is far from the type of circumstance th e statute was designed to protect against. Furthermore, the fact that a single transacti on might provide the basis for a violation of the UCL does not really help buyer in sta ting a claim because it does not address the pivotal question of whether the UCL applies to a transaction by a person not in the business of making such transactions. (See Stop Youth Addiction, In c. v. Lucky Stores,
Inc . (1998) 17 Cal.4th 553, 570 [single act will support a secti on 17200 claim].) In any event, the trial c ourt’s ruling that sellers did not violate section 17200 was undoubtedly correct based on another more f undamental reason, even though it was not relied upon by the court below. (See, e.g., D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19 [“If right upon any theo ry of the law applicab le to the case, [the trial court’s ruling] must be sustained rega rdless of the considerations which may have moved the trial court to its conclusion.”].) Section 17200 defines unfair competition to include any “unlawful, unfair or fraudulent bus iness act or practice.” At trial and again on appeal, buyer describes sellers’ predicate “unlawful, unfair or fraudulent” business practices under section 17200 as “pumping up the value of the purchase price for a12 commercial property by emphasizing the stabili zed long-term rents arising from a rooftop advertising billboard that was illega l under local laws.” (Fn. omitted.) The California Supreme Court has explaine d that “[b]y proscr ibing ‘any unlawful’ business practice, ‘section 17200 “borrows” violations of othe r laws and treats them as unlawful practices’ that the unfair competiti on law makes independently actionable. [Citation.]” ( Cel-Tech
, supra, 20 Cal.4th at p. 180.) A claim made under section 17200 is not confined to anticompetitive business pr actices, but is also directed toward the public’s right to protection from fra ud, deceit, and unlawful conduct. ( Wilson v. Hynek (2012) 207 Cal.App.4th 999, 1007-1008.) U nder the broadest possible definition, a business practice is considered unfair if it is forbidden by any law or if it offends an established public policy or is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers. ( Gregory v. Albertson’s, Inc . (2002) 104 Cal.App.4th 845, 854.) Applying this test to the acts claimed to be “unlawful, unfair or fraudulent” by buyer is an easy task. (§ 17200.) First, by the jury’s verdict and our decision today, no unfair or fraudulent business practices were found. Moreover, there was no showing here that any members of the public were likely to be deceived by any business practice of sellers, and no showing of a business practice fo rbidden by law. As no evidence exists to support buyer’s claim that se llers were engaged in unfa ir, unlawful, or fraudulent business practices, it cannot stat e a claim under section 17200.13 IV.
DISPOSITION The judgment is affirmed. Costs on appeal to sellers.

_ ____________ ____________ RUVOLO, P. J.

We concur:

_____________ ____________ REARDON, J.

_____________ ____________ HUMES, J.