Court Opinion

ID: 9367725
Source: CourtListenerOpinion
Date Created: 2023-02-01 19:02:55.676085+00
Date Added: 2024-06-11T17:16:02.955068
License: Public Domain

Filed 2/1/23 Yoon v. Kim CA2/2
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                        DIVISION TWO

DON YOON et al.,                                           B312654

         Plaintiffs and Appellants,                        (Los Angeles County
                                                           Super. Ct. No. BC585932)
         v.

SUNNY MISUN KIM et al.,

     Defendants and
Respondents.

     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.
      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.

                                2
       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.

                                3
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 side-
agreement, 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

                                4
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.

                                 5
       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.

                                 6
       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.

                                 7
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

                                8
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,

                                 9
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

                                10
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

                                11
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.’”].)

                               12
      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.)

                                 13
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”)

                                  14
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”].)

                                 15
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.”

                                 16
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.

                                17
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

                                  18
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.

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                        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.

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