Filed 2/1/23 Yoon v. Kim CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION TWO

DON YOON et al.,

Plaintiffs and Appellants,

v.

SUNNY MISUN KIM et al.,

Defendants and

Respondents.

 B312654

 (Los Angeles County

 Super. Ct. No. BC585932)

APPEAL from a judgment of the Superior Court of Los 

Angeles County, Steven J. Kleifield, Judge. Affirmed.

Frederick W. Lee Law Firm and Sam M. Muriella for 

Plaintiffs and Appellants.

David S. Kim & Associates, David S. Kim and Todd A. 

Fuson for Defendants and Respondents.
2

Don Yoon (Yoon) and Eunice Yoon (appellants) appeal from 

a judgment entered after a bench trial on appellants’ claims 

against Young Ja Choi (Choi), LA1 Realty and Sunny Misun Kim 

(Kim)1 arising out of appellants’ purchase of commercial real 

property. Appellants argue that the trial court improperly 

calculated damages against Choi and that the trial court 

erroneously denied their motion to conform to proof to add a 

cause of action for constructive fraud against respondents. We 

affirm the judgment.

BACKGROUND

The following background facts is taken from the trial 

court’s written statement of decision in this matter.

Appellants purchased commercial real property in Mojave, 

California from Choi for $3.6 million. The property consisted of 

four buildings and 13 rental units. Choi and her husband 

decided to sell the property and hired Kim, a licensed real estate 

broker at LA1 Realty, to assist with the sale.

After posting a brochure online, Kim was contacted by 

Yoon, who expressed an interest in buying the property. Yoon, 

who resides in San Jose, California was not assisted by a real 

estate broker and made an offer to buy the property without a 

personal viewing. After some negotiation, the parties agreed on 

the $3.6 million purchase price and signed a purchase agreement 

in July 2014.

1 Because Choi has not filed a brief in this appeal, LA1 

Realty and Kim are collectively referred to as “respondents” in 

this opinion.
3

Kim, who acted in the capacity of a dual agent with respect 

to this transaction, had the parties sign a dual agent disclosure 

form, in which they acknowledged being informed of the dual 

agency and the rights and obligations inherent thereto.

Initially, Choi’s husband, Hwa Scob Choi, had the primary 

role with respect to the transaction. He died suddenly, and 

thereafter Choi’s son, Byoung Kuk Choi, assisted in the sale.2

During the escrow period, pursuant to the purchase 

agreement, various documents were produced to Yoon, including 

a rent roll on Kim’s stationary, estoppel certificates, copies of 

leases, and receipts that were allegedly for cash payments of 

rent. Kim provided Yoon with the rent roll and understood the

information would be significant to him and that it was 

important that this documentation be accurate. The rent roll 

contained the following disclaimer: “Information deemed reliable,

but not guaranteed.” Kim also prepared a document entitled 

“Income & Expense, as of July 2014.” Like the rent roll, the 

income and expense document specifically stated, “Information 

deemed reliable but not guaranteed.” This document was 

prepared solely based on information provided by Choi.

The rental units central to this matter were a thrift shop 

and a restaurant. Miguel Arvizu was the lessee for both of these 

units. The rental agreement for the restaurant listed a monthly 

rental of $3,800, and the rental agreement for the thrift shop 

called for $2,000 per month. With respect to the restaurant, 

Arvizu typically paid somewhere between $300 and $800 per 

month, although he had free rent for January through April 

2 Byoung Kuk Choi was named as a defendant below. 

Default was entered against him in May 2019.
4

2014. He rarely paid anything close to $2,000 monthly for the 

thrift shop.

Arvizu had a long relationship with the late Mr. Choi, who

wanted Arvizu to succeed. They had entered into an oral sideagreement, whereby Arvizu would perform maintenance in 

common areas and would be credited against the rent for the 

value of his time. This oral side-agreement was not disclosed to 

Yoon. Despite the existence of the side agreement, Arvizu signed 

estoppel certificates for each tenancy, which represented that 

there were no other agreements than the written lease. The 

estoppel certificates were also signed by Choi, who initially 

claimed to have very little knowledge of anything having to do 

with the property. Ultimately she admitted knowledge of the 

side-agreement.

Fabricated rental receipts for Arvizu’s two leases were 

given to Yoon during the escrow. The trial court found that the 

receipts were most likely fabricated by Byoung Kuk Choi acting 

on behalf of his mother. The rent rolls that were provided to 

Kim, which she copied on her letterhead and gave to Yoon, also 

contained false information. They showed monthly payments of 

$4,500 per month for the restaurant, and $2,700 per month for 

the thrift shop. Thus, Yoon was led to believe that the rents from 

the commercial property would be $7,200 per month more than 

they turned out to be.

Appellants purchased the property in reliance on the 

information provided by Choi. Fraudulent misrepresentations 

were made by and on behalf of Choi, which caused financial loss 

to appellants. The misrepresentations in the estoppel certificates 

were made by Choi herself, who had knowledge that the 

representation of no agreement other than the written lease was 
5

false, and nevertheless signed the documents. The other 

misrepresentations were made by her son, to whom she delegated 

certain responsibilities, for which she was responsible.

In October 2014, escrow closed for the purchase of the 

property in the amount of $3.6 million. From that transaction, a 

commission in the amount of $216,000 was paid to respondents. 

Arvizu paid no rent to appellants for either the restaurant 

or the thrift shop. After the close of the sale appellants became 

aware material misrepresentations had been made to them 

during the transaction with regard to the unpaid rents.

PROCEDURAL HISTORY

Pleadings

On June 23, 2015, appellants filed a complaint against Choi 

and respondents alleging breach of contract, breach of the 

covenant of good faith and fair dealing, fraud—nondisclosure of 

material fact, fraud—misrepresentation, negligent 

misrepresentation, breach of fiduciary duty, constructive fraud,

and professional negligence.

After various challenges to the complaint, appellants filed a 

first amended complaint on December 14, 2015. Following 

further challenges, appellants filed the operative second amended 

complaint (SAC) on January 20, 2017.

On August 11, 2017, the trial court sustained respondents’ 

demurrer to the SAC without leave to amend as to the third 

cause of action for fraud—nondisclosure of material fact, the 

fourth cause of action for fraud—misrepresentation, the fifth 

cause of action for negligent misrepresentation, and the seventh 

cause of action for constructive fraud.
6

On August 24, 2017, respondents filed their answer to the 

SAC. On March 5, 2019, Choi filed her answer to the SAC.

Trial

A seven-day bench trial commenced on February 4, 2020. 

Appellants called Paul Russell, an appraiser, as a witness. 

Russell testified that the fair market value for the property on 

October 8, 2014, was $2.49 million. Appellants also called 

Lawrence Jacobson, a licensed real estate broker and attorney, as 

an expert witness. Jacobson testified that respondents did not 

meet the standard of care in representing appellants in the 

transaction. Jacobson opined that in preparing estoppel 

certificates, the broker should go through the tenants. Instead 

respondents went through the seller. In addition, Jacobson 

testified that respondents lacked familiarity with the area and 

lacked understanding of the responsibilities of a commercial real 

estate agent in valuing property.

During trial, appellants moved to amend their complaint to 

conform to proof and add a cause of action for constructive fraud 

against respondents, which the trial court denied in its written 

decision following trial.

The court’s decision

On March 20, 2020, the trial court issued a tentative 

decision. On April 3, 2020, appellants filed objections to the 

tentative statement of decision and a request for hearing.

On July 21, 2020, the trial court entered its final statement 

of decision. The court found that appellants relied on the 

misrepresentations made by Choi, who had knowledge of their 

falsity. As to respondents, the trial court found insufficient 

evidence to prove appellants’ claims against respondents and 

found on their behalf against appellants.
7

The court noted that appellants’ expert, Jacobson, was 

unconvincing because he never addressed the scope of 

respondents’ duties while acting as dual agents. Further, the 

court was not convinced of Jacobson’s position that respondents 

were required to “look behind” the documents provided by the 

seller. The court knew of no authority that a broker is required 

to conduct an audit of the information supplied by the seller.

Further, the court found that Yoon did not exercise due 

diligence in determining the fair market value of the property. 

He made an offer to close on the asking price without having seen 

the property and did not consult with a real estate appraiser 

before investing in the property. The court found Kim was 

legally prohibited from advising appellants as to the price they 

should pay for the property, citing Civil Code section 2079.16,3

which provides: “In representing both Seller and Buyer, a dual 

agent may not, without the express permission of the respective 

party, disclose to the other party confidential information, 

including, but not limited to, facts relating to either the Buyer’s 

or Seller’s financial position, motivations, bargaining position, or 

other personal information that may impact price, including the 

Seller’s willingness to accept a price less than the listing price or 

the Buyer’s willingness to pay a price greater than the price 

offered.”

In calculating damages against Choi, the court referred to 

the testimony of Russell, who “described how commercial 

property is considered ‘stable’ when 80% of the units are fairly 

rented.” Russell considered the subject property, “as is,” to be at 

3 All further statutory references are to the Civil Code unless 

otherwise indicated.
8

64 percent occupancy. Russell explained that it can take up to 

three years for a rental property to be stabilized. Thus, the 

“‘prospective upon stabilized’ value as of October 2017” was $2.63 

million. The court therefore concluded that the property’s “‘cost 

to stabilization’ was $110,000, which would represent 

[appellants’] damages, with one complication.”

The court explained the “complication” as follows: “When 

Mr. Yoon became aware of the inadequate rent payments during 

the escrow period, [the parties] signed amended escrow 

instructions . . . whereby $41,000 was to be held back from escrow 

to account for unpaid rent. [Appellants] received $31,000 from 

that sum, which should be deducted from the ‘cost to 

stabilization’ amount.” Thus, the court awarded appellants 

“$110,000 minus $31,000, or $78,900” against Choi.

The court noted that it had bifurcated the issue of punitive 

damages and set a hearing on the punitive damages phase of 

trial.

On March 17, 2021, the court entered judgment in favor of 

appellants and against Choi and Byoung Kuk Choi for 

compensatory damages in the amount of $78,900, punitive 

damages in the amount of $315,600, and prejudgment interest in 

the amount of $192,923.32 for a total award of $587,423.37. 

Appellants were awarded nothing against respondents.

On May 13, 2021, appellants filed their notice of appeal 

from the judgment.

DISCUSSION

I. Standards of review

Appellants raise two issues on appeal. First, they argue 

that the trial court improperly calculated damages. Second, they 
9

argue the trial court erroneously denied their motion to amend 

the pleadings to conform to proof.

“An appellant’s challenge to damages, depending upon its 

specific nature, may be subject to a substantial evidence, abuse of 

discretion, or de novo standard of review.” (JMR Construction 

Corp. v. Environmental Assessment & Remediation Management, 

Inc. (2015) 243 Cal.App.4th 571, 583.) “The question of whether 

‘a certain measure of damages is permissible given the legal right 

the defendant has breached, is a matter of law, subject to de novo 

review.’” (Ibid.) “But where the measure of damages is legally 

permissible, a trial court’s choice of that measure, among other 

legally permissible measures of damages, is reviewed for abuse of 

discretion.” (Ibid.)

“A trial court may allow the amendment of a pleading at 

any time up to and including trial.” (Faigin v. Signature Group 

Holdings, Inc. (2012) 211 Cal.App.4th 726, 736.) While such 

leave should ordinarily be liberally granted in the absence of 

prejudice to the opposing party, leave to amend a complaint is 

properly denied “if the proposed amendment . . . would not 

establish a basis for liability as a matter of law.” (Ibid.) We 

review the record to determine whether substantial evidence 

supports the fact finder’s determination that there was no 

liability under the proposed amendment to the pleading. (Ibid.)

II. Compensatory damages

Appellants argue that the trial court did not apply the 

proper measure of compensatory damages against Choi. 

Appellants argue that the court failed to provide any authority to 

justify the cost to stabilization basis for its damage calculation. 

Instead, appellants assert that the proper basis for calculating 

damages is found in section 3343, subdivision (a), which provides, 
10

in part, that “[o]ne defrauded in the purchase, sale or exchange of 

property is entitled to recover the difference between the actual 

value of that with which the defrauded person parted and the 

actual value of that which he received . . . .” Appellants point out 

that they paid $3.6 million for the property, and the fair market 

value of the property on October 8, 2014, was $2.49 million. As a 

result, appellants argue, the proper amount of compensatory 

damages is $1.11 million.

We find the trial court’s calculation of damages permissible 

and did not constitute an abuse of its discretion. First, we note 

section 3343, subdivision (a)(1), permits a court to take into 

consideration “[a]mounts actually and reasonably expended in 

reliance upon the fraud.” (Italics added.) Here, as appellants 

admit, the trial court found that appellants’ $1 million 

overpayment for the property “was not due to any 

misrepresentations by the seller or any act of Ms. Kim.” Instead, 

appellants overpaid “because [they] didn’t exercise diligence in 

determining the fair market value of the property.” Appellants 

“made an offer close to the asking price without having seen the 

property, and didn’t consult with anyone such as a real estate 

appraiser before determining whether to invest several million 

dollars in a piece of commercial real estate in the Mojave desert.”

Appellants do not argue a lack of substantial evidence to

support the trial court’s factual conclusion that the cause of 

appellants’ overpayment was their own lack of due diligence. 

Instead, appellants argue that their own due diligence is not 

relevant, citing Seeger v. Odell (1941) 18 Cal.2d 409, 414 (Seeger)

for the proposition that the negligence of a party in discovering 

the falsity of a statement is not a defense to fraud. Seeger 

involved a real estate transaction induced by fraudulent 
11

misrepresentations. The Seeger court noted the above 

proposition of law, asserting that “[n]egligence on the part of the 

plaintiff in failing to discover the falsity of a statement is no 

defense when the misrepresentation was intentional rather than 

negligent.” (Ibid.) Thus, “[t]he fact that an investigation would 

have revealed the falsity of the misrepresentation will not alone 

bar his recovery . . . .” (Id. at pp. 414-415) Here, in contrast to 

Seeger, the failure of appellants in discovering Choi’s false 

statements is not at issue. The court explicitly found that 

appellants did not overpay the full $1 million due to Choi’s false 

statements. Instead, the trial court found that appellants 

overpaid due to their own failure to conduct adequate diligence.4

While the trial court did not award appellants the full $1 

million overpayment, it awarded appellants damages for their 

losses fairly attributable to Choi’s false statements. As set forth 

in its written order, the trial court endeavored to calculate the 

damages proximately caused by Choi’s false statements. In doing 

so, the court relied on the testimony of appellants’ expert witness, 

Russell.5 Taking into consideration the state of the rental units 

4 The other two cases cited by appellants on this point are 

similarly distinguishable because they involve the buyer’s failure 

to discover the falsity of the seller’s statements. (Piazzini v. 

Jessup (1957) 153 Cal.App.2d 58, 61 [“plaintiff buyer ‘has the 

right to rely on a vendor’s representation as to the quantity of 

land’”]; see Mills v. Hellinger (1950) 100 Cal.App.2d 482, 487.)

5 Appellants argue that the trial court erred because it failed 

to name a legal basis for its use of the “cost to stabilization” 

method of calculating damages. Appellants invited any such 

error by presenting Russell’s testimony, on which the trial court 

relied. (Saxena v. Goffney (2008) 159 Cal.App.4th 316, 329 
12

at the time of appellants’ purchase, Russell “came up with what 

[he] thought the value—or cash flow ought to be once it’s 

stabilized, once it is properly managed . . . and how much cost or 

time it would take to get to a stabilized situation.” Russell 

concluded that as to the property at issue, this cost would be 

$110,000. The trial court took this number from appellants’ 

expert, and subtracted a set-off that appellants received in 

escrow for unpaid rent.

The court’s calculation of compensatory damages was 

reasonable and supported by the record. No abuse of discretion 

occurred.

III. Constructive fraud

A fiduciary may be liable for constructive fraud even 

though his or her conduct is not actually fraudulent. (Salahutdin 

v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 562 

(Salahutdin).) The Salahutdin court explained:

“‘[A]s a general principle constructive fraud 

comprises any act, omission or concealment involving 

a breach of legal or equitable duty, trust or 

confidence which results in damage to another even 

though the conduct is not otherwise fraudulent. Most 

acts by an agent in breach of his fiduciary duties 

constitute constructive fraud. The failure of the 

fiduciary to disclose a material fact to his principal 

which might affect the fiduciary’s motives or the 

principal’s decision, which is known (or should be 

known) to the fiduciary, may constitute constructive 

fraud.’” (Ibid.)

[“‘“Where a party by his conduct induces the commission of error, 

he is estopped from asserting it as a ground for reversal” on 

appeal.’”].)
13

The elements of a cause of action for fraud are (1) a 

fiduciary relationship, (2) nondisclosure (breach of fiduciary 

duty), (3) intent to deceive, and (4) reliance and resulting injury. 

(Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498, 516, fn. 14.)

The trial court sustained respondents’ demurrer without 

leave to amend as to appellants’ constructive fraud cause of 

action against them, and denied appellants’ motion to conform 

the pleadings to assert a cause of action for constructive fraud 

during trial.6

As the trial court noted, there are differences between the 

fiduciary obligations of an exclusive representative of the seller or 

buyer and a dual agent representing the seller and the buyer. 

(Horiike v. Coldwell Banker Residential Brokerage Co. (2016) 1 

Cal.5th 1024, 1031 (Horiike).)7 The primary difference is that 

6 As respondents point out, appellants are not clear on the

precise trial court decision they are challenging on appeal. 

Because the matter proceeded to trial and all of the facts have 

been conclusively established, we analyze only the denial of 

appellants’ motion to add a cause of action for constructive fraud 

during trial.

7 In Horiike, the Supreme Court held that when an 

individual associate represents a brokerage in a real property 

transaction, his or her duties are the same as those of the 

brokerage. (Horiike, supra, 1 Cal.5th at p. 1036.) Horiike 

involved a dual agency where the buyer discovered a significant 

discrepancy between the square footage of the residence’s living 

area and what was represented in the marketing materials. (Id. 

at pp. 1028-1029.) The high court acknowledged “the potential 

for conflicts of interest in the dual agency context,” but declined 

to address this point further, as the issue in that case “create[d] 

no such conflict.” (Id. at p. 1040.)
14

dual agents must “both inform their clients of the agency 

relationships involved and obtain the clients’ consent.” (Horiike,

at p. 1030.) Section 2079.16 recognizes that an agent 

representing both the seller and the buyer has “[a] fiduciary duty 

of utmost care, integrity, honesty, and loyalty in the dealings 

with either Seller or the Buyer.” (Ibid. [“AGENT 

REPRESENTING BOTH SELLER AND BUYER”].)8

While appellants are correct that dual agents have certain 

fiduciary obligations to both the buyer and the seller, those 

obligations do not include a duty to confirm the veracity of all 

8 Respondents point out that section 2079, which requires a 

“real estate broker or salesperson . . . to conduct a reasonably 

competent and diligent visual inspection of the property offered 

for sale and to disclose . . . all facts materially affecting the value 

or desirability of the property,” applies exclusively to sales of 

“residential real property improved with one to four dwelling 

units.” (§ 2079, subd. (a); see Smith v. Rickard (1988) 205 

Cal.App.3d 1354, 1360.) Thus, the obligations found in section 

2079 do not apply to this commercial real estate transaction. 

However, respondents cite no authority that the disclosures set 

forth in section 2079.16 are inapplicable in a commercial 

transaction such as the one at issue in this case. Further, we 

note that the Rickard court expressly found that regardless of the 

limited application of section 2079, a buyer may still state a claim 

for breach of fiduciary duty against an agent or broker. (Rickard, 

supra, at p. 1363; see Field v. Century 21 Klowden-Forness Realty 

(1998) 63 Cal.App.4th 18, 21 [concluding “the fiduciary duty of a 

broker, who contracts to exclusively represent a purchaser of real 

property to investigate for its client, is independent of the 

separate obligation imposed on a seller’s broker to conduct a 

reasonable visual inspection of the marketed property for a

buyer’s protection, as announced in Easton v. Strassburger (1984) 

152 Cal.App.3d 90 and incorporated into section 2079”)
15

statements made by the seller. Generally, a dual agent has the 

“duty to disclose all facts known to the agent materially affecting 

the value or desirability of the property that are not known to, or 

within the diligent attention and observation of, the parties.” 

(§ 2079.16, italics added.)9 The trial court found that the 

evidence in this matter did not support a finding that 

respondents had knowledge of the seller’s false statements, and 

appellants have not brought a substantial evidence challenge to 

this finding on appeal. Thus, the elements of nondisclosure and 

intent to deceive are not supported by the record.

Appellants attempt to prevail on the theory that 

respondents were bound to investigate Choi’s representations 

regarding the rental income. In support of this argument, they 

cite Salahutdin, supra, 24 Cal.App.4th 555. In Salahutdin, the 

buyers worked closely with an agent from Coldwell Banker in 

order to find a property that satisfied their needs. They informed 

their agent that they wanted to subdivide the property, and the 

agent explained to them that because they wanted to subdivide 

the property, they needed a property at least one acre in size. 

(Id. at p. 559.) The plaintiffs “knew nothing about subdivision of 

property before [their agent] informed them” of these 

requirements. (Ibid.) The buyers were willing to wait for such a 

9 As the trial court noted, there is a specific requirement that 

dual agents “may not, without the express permission of the 

respective party, disclose to the other party confidential 

information, including, but not limited to, facts relating to either 

the Buyer’s or Seller’s financial position, motivations, bargaining 

position, or other personal information that may impact 

price . . . .” (§ 2079.16 [“AGENT REPRESENTING BOTH 

SELLER AND BUYER”].)
16

property. (Ibid.) When one came on for sale, the sellers advised 

their agent—also of Coldwell Banker—that the property was one 

acre in size. This representation turned out to be false. The 

buyer’s agent misinformed the buyers that because the property 

was one acre, the buyers would have no problem subdividing it. 

(Id. at p. 560.) Without addressing the dual agency issue, the 

Salahutdin court found that substantial evidence of constructive 

fraud existed as against the buyers’ agent.

Salahutdin does not assist appellants in this matter. The 

Salahutdin court expressly recognized that an agent is not 

required to investigate the truth of a sellers’ representations. 

Instead, the court emphasized the agent’s duty to inform the 

sellers that his statements were not based on his own 

verification: “While he was not required to investigate the sellers’ 

representations or the truth of the description contained in the 

multiple listing service sheet before showing the property to 

plaintiffs, [the agent] was at least required to tell plaintiffs that 

he had not verified the information he was passing on to 

them . . . .” (Salahutdin, supra, 24 Cal.App.4th at p. 563.)10 Here, 

respondents provided such a disclaimer, explicitly informing the 

buyer that the information they were passing on regarding the 

monthly rental income was “not guaranteed.” Because 

respondents did not have an obligation to investigate the seller’s 

statements and notified appellants that they had not verified the 

rental income information, respondents did not breach any 

10 Similarly, in Horiike, supra, 1 Cal.5th at page 1041, the 

Supreme Court noted that the agent was required “to disclose 

such information [concerning square footage], or to alert Horiike 

that his representations were unverified.”
17

obligation to appellants. In short, there was no legal basis for a 

claim of constructive fraud.11

Assilzadeh v. California Federal Bank (2000) 82 

Cal.App.4th 399 (Assilzadeh), also cited by appellants, involved a 

lawsuit brought by a buyer against the seller, real estate broker, 

and broker’s agent for failing to disclose in detail the specific 

defects alleged in a construction defect lawsuit that had been 

filed concerning the property. The buyer’s real estate agent was 

employed by the brokerage hired by the seller, thus the agent and 

his employer acted in the capacity of dual agents. (Id. at p. 405.) 

The Assilzadeh court affirmed summary judgment in favor of the 

defendants, finding that “[t]heir duty was to disclose the 

existence of the lawsuit to put the buyer on notice of alleged 

defects, and they fulfilled that duty.” (Id. at pp. 416-417.) Thus, 

the Assilzadeh court recognized that agents are not required to 

investigate every aspect of a transaction.

In doing so, the Assilzadeh court stated its belief that “a 

dual agent has fiduciary duties to both the buyer and seller.” 

(Assilzadeh, supra, 82 Cal.App.4th at p. 414.) However, the court 

found the agents’ duties to be limited to disclosure of what they 

knew. Because the existence of the lawsuit was disclosed, the 

11 Section 2079.16 also contains a warning to the buyers that 

“you have the duty to exercise reasonable care to protect yourself, 

including as to those facts about the property which are known to 

you or within your diligent attention and observation.” (Ibid.

[“SELLER AND BUYER RESPONSIBILITIES”].) In a case such 

as this where the both the seller and the tenant were making 

deliberate, material misrepresentations regarding the payment of 

rent, it is difficult to charge either the buyer or the agent with 

having knowledge or the ability to observe the true facts, which 

the seller and the tenant were intentionally hiding.
18

agents satisfied their obligation to the client. The agents were 

not “required to read and analyze the legal documents located in 

the court file.” (Id. at p. 416.) Once they informed the buyer of 

what they knew, “[a]t that point the buyer should have 

investigated further and, if necessary, should have hired an 

attorney for advice on the legal aspects of the lawsuit and 

settlement.” (Ibid.) Similarly, here, respondents informed 

appellants of rental income information that the seller provided. 

They also informed appellants that their representations 

regarding the rental income of the property were “not 

guaranteed.” At that point, appellants could have investigated 

further.

Finally, Jorgensen v. Beach ‘N’ Bay Realty, Inc. (1981) 125 

Cal.App.3d 155 was a lawsuit brought by a seller against her 

listing agents. The agents represented both the seller and the 

buyers in the transaction and failed to disclose to the seller the 

buyers’ intention to immediately resell the home and the agents’ 

financial interest in the resale. (Id. at p. 159.) The agents had a 

duty “to disclose all material facts within their knowledge which 

might have affected Jorgensen’s decision to accept the 

purchaser’s offer.” (Id. at p. 160.) Under the circumstances 

present in Jorgensen, the evidence of the agents’ knowledge was 

sufficient to go to a jury on the seller’s claim of breach of fiduciary 

duty and related causes of action. Here, in contrast, following 

trial the trial court found that respondents had no knowledge of 
19

Choi’s misrepresentations. Thus, Jorgensen is not helpful to 

appellants.12

Further, we note that appellants have failed to show that 

they have suffered any prejudice from the court’s decision to 

decline to allow them to amend their pleadings to add a 

constructive fraud claim. Generally, an appellant “‘must “show 

not only that the trial court erred, but also that the error was 

prejudicial”; i.e., “the [appellant] must show that it is reasonably 

probable the ultimate outcome would have been more favorable 

to the [appellant] had the trial court not erred . . . .”’” (Property 

Reserve, Inc. v. Superior Court (2016) 6 Cal.App.5th 1007, 1020; 

see Cal. Const., art. VI, § 13.) Here, the trial court found that 

appellants’ claims against respondents for breach of fiduciary 

duty and professional negligence failed as a factual matter. 

Appellants have not challenged the outcomes on these causes of 

action, nor have they explained how they could prevail on a 

constructive fraud cause of action when respondents were not 

liable for either breach of fiduciary duty or professional 

negligence.

In sum, appellants have failed to show that the trial court 

erred in declining to allow them to amend their complaint to add 

a cause of action for constructive fraud against respondents, nor 

have they shown that any such error caused prejudice.

12 We decline to discuss Lee v. Escrow Consultants, Inc. (1989) 

210 Cal.App.3d 915, as it involved the fiduciary obligations of an 

escrow agency and is therefore irrelevant.
20

DISPOSITION

The judgment is affirmed. Respondents are awarded their 

costs of appeal.

___________________________

CHAVEZ, Acting P. J.

We concur:

_______________________________

HOFFSTADT, J.

_______________________________

BENKE, J.*

* Retired Associate Justice of the Court of Appeal, Fourth 

Appellate District, assigned by the Chief Justice pursuant to 

article VI, section 6 of the California Constitution.